Comments: Disappointing inflation news

Inflation certainly doesn't seem like 4.6% where I stand, but then again, I am not representative.

I wonder what effect the recent rise in petrol prices of a couple of pence over the past few weeks will have on next months CPI?

Posted by Caravaggio at March 20, 2007 02:03 PM

It won't help - last year prices fell marginally (from 89.2p to 89.1p) for unleaded - though it should be outweighed by the drop in utility prices. British Gas's price cuts came through on March 12, a day ahead of price collection day.

Posted by David Smith at March 20, 2007 02:11 PM

Good point about gas prices (I continue to feel pity for those who locked in to high gas prices with the BG fixed price offer, because many of these were probably old aged pensioners fearing even higher prices). Anyway, back to the inflation issue. We have just received our annual water bill and it is up over 50 from a year earlier.

Posted by Caravaggio at March 20, 2007 09:20 PM

Another comedy performance on the 2007 basket changes I see. In comes SatNav, DVD recorders and DAB Radio (are we really listening to more radio?), all we no readjustment for product enhancement. Also in are Mortgage fees and Credit Card fees, obviously in response to the latest huha re overcharging. Finally the unhelpful re-weigting of household fuel - nice timing !

Here are some items not in the basket that I bought/toyed with buying last week. I shall check back next year to see if they have gone up in price:

60.00 Price of speeding fine, 91.3mph on Motorway
25.00 Cost of changing my name to "Godammit" by Deed Poll
1.00 Bag of Value Ball Point Pens from Poundsaver!
81.99 Cost of the next flight out of Liverpool Airport (to Malaga - equally grim)
4.09 KFC Zinger Tower Meal "Go Large"

Posted by Jasper White at March 20, 2007 09:31 PM

Very good. I think the speeding fine has been fixed for a while but if you get caught using your mobile while driving that's just gone up by 100% (plus 3 points). That bag of biros sounds pretty good value though. I sometimes think the compilers of the inflation basket are a bit like the people who put together new editions of the Oxford English Dictionary - they like to demonstrate how trendy and up to date they are. What next? The rising price of illegal drugs?

Posted by David Smith at March 20, 2007 09:49 PM

I heard an interesting factoid on Radio 4 the other day that the UK now consumes more free-range eggs than eggs produced by caged chickens. This made me wonder if the ONS includes free-range and organic food in the basket of goods that determines inflation.

The designation of organic and free-range products is a great segmenting device for supermarkets that allows them to raise prices on food for less price sensitive customers, at the same time that they reduce or maintain prices for price sensitive buyers. As it seems that a big driver of reduced levels of inflation in recent years is cheaper food, I wonder if food prices have actually declined as much as represented in the statistics, or if some of that decrease isn't really a misreading caused by new pricing tactics.

Posted by RichB at March 21, 2007 11:11 AM

Obviously price inflation is most felt in the "bubble" housing market.How much of this "demand" is being funded by UK banks and building societies borrowing from low interest finance-Japan & Switzerland ? With UK interest rates so low for UK savers,the money/credit can't be being created from UK savers.

Posted by Dennis J. at March 21, 2007 09:18 PM
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