Comments: A surprise revision

"The ONS also revised down the GDP deflator, which is a key measure of inflation, to an annual rate of 2.2% from 3.4%."

What...I know oil prices have come off the boil but how can they justify a fall of this magnitude ?

Oh sorry, I forgot that because of substitution I'm now putting ethanol in my car instead and that because of hedonistics it tastes better than it used to so actually my purchasing power has not fallen by that much !

Posted by assetpriceinflation at September 27, 2006 01:02 PM

Yes, a big revision, and before the energy price fall. Nothing to do with hedonics, everything to do with the fact that GDP data is subject to huge revisions.

Posted by David Smith at September 27, 2006 05:56 PM

Hi

And it seems to do with computer programmers.

http://www.ft.com/cms/s/dd487e34-4e56-11db-bcbc-0000779e2340.html

Error makes rate rise less likely
By Chris Giles, Economics Editor

Published: September 27 2006 22:34

The Office for National Statistics on Wednesday admitted to an error that dramatically reduced the worry over inflation in the economy and makes a further interest rate rise less likely.

The ONS slashed its estimate of annual inflation in export prices from 3.8 to 0.6 per cent after it found it had introduced an error into the calculation.

After the change to export prices, the ONS's estimate of overall inflation for goods and services produced by British companies and government went down from 3.4 to 2.2 per cent.

After correcting its mistake, the ONS now says the cash value of national income grew by an unsurprising 4.8 per cent annual rate in the second quarter rather than the unsustainable 6 per cent rate it estimated last month.

Posted by Kingofnowhere at September 28, 2006 12:57 PM
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