Tuesday, October 16, 2007
Inflation still below target
Posted by David Smith at 10:00 AM
Category: Thoughts and responses

The run of unexpectedly good inflation numbers continued in September, with inflation unchanged at 1.8%, against expectations of a small rise. Core inflation, at 1.5%, was at its lowest this year. The gap between CPI inflation and other measures continues, however, with RPI inflation at 3.9% (down from 4.1%) and RPIX (exluding mortgage interest payments) up from 2.7% to 2.8% - above its old 2.5% target. Details here.

Comments

You are truly ignorant of economics. inflation at 2%. puh. you havent got a clue have you.

Posted by: Joe Bloggs at October 18, 2007 12:44 AM

Keep taking the medication.

Posted by: David Smith at October 18, 2007 10:10 AM

the game's up blockhead.

Posted by: dave at October 19, 2007 12:23 AM

The trouble with opening a site up to comments is that you leave yourself open to the nutters, of which there are many. I suppose it performs a useful social function for the sad and lonely like "Dave".

Posted by: David Smith at October 19, 2007 11:30 AM

Inflation isn't at 2%. It's at least 5% for most people - just look at train fares for example.

CPI is not inflation. It's just a government measure of approximation, which is heavily skewed in favour of deflating Chinese tat.

Now inflation and wages are rising in China, the dodgy CPI basket is going to have some serious 'hedonic adjustments' to keep it around 2%

Posted by: richard at October 27, 2007 05:21 PM

Here we go again, another one who thinks he's discovered the holy grail about inflation by looking at train fares. Have a look at the CPI and RPI baskets and you might get an idea what's happening.

Posted by: David Smith at October 27, 2007 05:59 PM

What's happening is that the Government CPI-RPI bears little relation to the actual increase in the cost of living for most people.

Posted by: richard at October 28, 2007 05:36 PM

The RPI is probably the most trusted statistic produced by the ONS and has a century of history behind it. If there's a criticism it is that it will tend to overstate actual inflation, because it does not fully allow for the kind of switching behaviour - to cheaper products and services - consumers engage in as a matter of course.

The CPI's shortcomings are well known - it excludes housing costs - which is why the government was premature in switching to it as a target.

Posted by: David Smith at October 28, 2007 06:12 PM

"If there's a criticism it is that it will tend to overstate actual inflation"

isn't it a contradiction to then point out one of the main flaws of the CP - i.e. it doesn't include the main cost in most people's lives, the cost of housing, which has been inflating massively over the past decade?

Posted by: richard at October 29, 2007 09:01 AM

Again, very irritating, as is clear from my comment I was talking about the RPI.

Posted by: David Smith at October 29, 2007 10:01 AM

If you look beyond the government produced statistics and actually talk to people about the annual cost of living increases, you will be hard pushed to find anyone who believes that the inflation that matters, the actual cost of living, is at only 2 or 3 percent. Running money supply at 14% all the time means that this money pops up somewhere.

Why do you find this irritating? Don't you like discussion on your blog?

Posted by: richard at October 29, 2007 10:42 AM

I don't mind discussion, I do find it irritating dealing with time-wasters who get hold of the wrong end of the stick or can't understand the basics and then move off onto something else.

Posted by: David Smith at October 29, 2007 10:55 AM