Tuesday, September 14, 2010
Stubborn inflation, falling house price inflation
Posted by David Smith at 02:00 PM
Category: Thoughts and responses

For years Britain had very low consumer price inflation against rapid house-price inflation. Now we are seeing something of the opposite. Consumer price inflation had been expected to dip from the 3.1% recorded in July but instead stayed at that rate in August. Retail price inflation edged lower, but only from 4.8% to 4.7%.

There were some hefty price increases in August, including a 16.1% rise in air fares, a 2.8% increase in clothing and footwear prices and higher food price inflation. Had it not been for a drop in fuel prices, inflation would have risen. Some of these price rises will not stick but, nevertheless, this was a disappointing set of numbers. More here.

Meanwhile, the Royal Institution of Chartered Surveyors reported a balance of 32% of agents experiencing falling prices, the biggest since May 2009 (when, admittedly, the main surveys were reporting rising monthly prices). The mini boom is over, though RICS thinks more realistic prices will bring out buyers. More here.

The Department of Communities and Local Governnment (DCLG) said house prices slipped by 0.3% in July, after a 0.4% June rise. The annual rate of increase dropped from 9.9% to 8.4%. A slip rather than any collapse.