Comments: Inflation down from the peak

That was rather quick off the mark - well before the FT had anything posted.

Interesting to see that furniture had a downward impact after pushing the rate up a lot last time. It's probably a key test case for the pricing power.

Clothing (and footwear) probably affected by the EU trade protectionist actions against China pushing up prices. My daughter's impression is that other shops are following Primark's prices downward after trying to resist.

Posted by paulbiv at May 15, 2007 12:27 PM

Hi David,

I feel compelled to write to you regarding the figures published by ONS.

I dont believe the figures they produce are representative of reality on the ground. Well NU labour is still spinning what they can....by the looks of it they also have the Times newspaper on board to publish and enforce their cooked up drivel.

Infact many families are experiencing inflation of more than twice the official rate published by the Government, according to figures produced for The Daily Telegraph by Capital Economics.

There is a massive disparity between the living costs experienced by different types of households, with pensioners and middle-class families facing price rises of more than 7pc, the figures show.

"This trend should continue over the coming months. Nonetheless, those people heavily exposed to energy or food prices, or those with children at private school or in the first year of university, are still seeing much higher rates of inflation than the published national average figure of 2.8pc."

He said more financially pressed families, for whom utility bills are a significant cost, along with other living expenses, could be experiencing inflation of 4.3pc. But, for young adults living at home, the inflation rate is just 0.6pc, since they tend to be shielded from the rise in mortgage costs and bills.

But that is just our NU reality right?
Very dissapointed that your forum isnt more balanced

Best wishes

Arik schickendantz

Posted by Arik Schickendantz at May 16, 2007 08:10 AM

Calm down. If you want to believe the Daily Telegraph, fine, but its exercise with Capital Economics doesn't amount to much. On certain stylised assumptions you can produce whatever individual inflation rate you want to - high or low. The Telegraph is responding to the supposed inflation squeeze on its middle-class readers, when the groups experiencing the highest inflation are almost certainly pensioners and those on low incomes. An inflation measure is an average and, as I've often said, the RPI is probably our most trusted statistic. If you don't understand the notion of an average, you shouldn't be looking for balance - you should be looking elsewhere.

Posted by David Smith at May 16, 2007 09:51 AM

If Arik is concerned, and as David has pointed out, the ONS has a facility on its web page to calculate your own inflation rate: http://www.statistics.gov.uk/pic/.

Posted by Paul C at May 16, 2007 01:15 PM

Pity the ONS's weighting of items in the CPI basket is an absolute con!

Posted by Kev M at May 17, 2007 11:24 AM

Complete nonsense I'm afraid. The weighting is based on a sample of household spending patterns, as was the RPI. This kind of criticism is usually followed by the claim that the CPI is dominated by cheap electronic gizmos. TVs, Ipods, DVD recorders and all the rest have a weight in the CPI of just 29 parts in 1,000.

Posted by David Smith at May 17, 2007 12:24 PM

CPI revised up to 2.9%, I am afraid, and Brent crude at $71/bbl does not bode well.
My prediction for BoE rate is 6% by August
Best

Posted by Michele at May 25, 2007 05:57 PM

I think you may be getting your CPI and GDP mixed up. CPI 2.8%, GDP - increase over 12 months - 2.9%. Growth exceeding inflation is quite healthy.

Posted by David Smith at May 25, 2007 10:32 PM
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