Comments: Unexpectedly good news on inflation

Come on David. Stick your neck out! Is the next move by the MPC as likely to be down as up now ?

Posted by Simon Woolfson at November 14, 2006 02:15 PM

If I was making the decisions, maybe, but let's see what the Bank has to say tomorrow in the inflation report. But these figures undoubtedly improve the chances of 5% being the peak.

Posted by David Smith at November 14, 2006 02:52 PM

After nearly ten years on New Labour, CPI seems merely another offering of the government's "spin", or dishonesty to use an old fashioned word. For those with mortgages, RPI appears to be much closer to reality. What's your view?

Posted by Tony Green at November 15, 2006 07:01 AM

The CPI operates in a curious vacuum - it is the Bank of England's target but it is not used anywhere else very much. I've often said they should have stuck to RPIX, the original target measure. It is running at 3.2%, also unchanged on the previous month, but above its old 2.5% target.

Posted by David Smith at November 15, 2006 09:49 AM

David,

What is your view as to why the government changed from RPIX to CPI.

Would you favour the BoE compiling the figures themselves for whatever index they are to use for inflation rather than the government?

Posted by Kev M at November 24, 2006 01:37 PM

I've always said it was a mistake to switch. The Bank hasn't the resources to compile its own inflation data. Even if it did, it would be wrong for it to do so. Its performance depends on achieving the inflation target. If it compiled the figures too, it would be judge and jury on its own record.

Posted by David Smith at November 25, 2006 10:35 AM

David,

Do you think the body that compiles the inflation data should be independant of the government? We all know the government fiddle the CPI.

Posted by Kev M at November 27, 2006 09:59 AM

The Office for National Statistics is perfectly capable of producing the data, and steps are being taken to make it more independent of government. The CPI is not fiddled, as you put it. The question is one of coverage. It was chosen to be compiled on the same basis as inflation measures in the rest of Europe. They don't include house prices and property taxes, so ours doesn't either. In my view, as I've always said, it was a mistake to switch but it had nothing to do with making the inflation numbers look better. Within its own parameters the CPI is a perfectly good statistical series but RPIX was better.

Posted by David Smith at November 27, 2006 10:43 AM