Comments: Back below target

V interesting. I do recall that you wrote about the furniture effect a short while back. Haven't noticed my grocery bills falling - perhaps I'm shopping in the wrong supermarkets?

Posted by Mr Naresh Radson at August 14, 2007 01:14 PM

There was a bit of that around. This is from my piece on July 31, referring to the high-profile price-cut advertising by some of the food retailers:

"Straws in the wind they may be, but the supermarkets are engaged in public jousting over prices."

Posted by David Smith at August 14, 2007 01:25 PM

“if you believe in two-year lags between rate decisions and inflation, it suggests the August 2005 cut wasn't such a mistake after all”

I think the main objection to the 2005 0.25% rate cut is the effect that it had on mortgage approvals (and hence house prices) rather than inflation. There must be a lot of people that have taken on a big mortgage, i.e. leverage, in the last two years that are now starting to ask themselves if they’ve done the right thing.

There suddenly seem to be two likely outcomes from here on – higher interest rates (if global growth continues) or higher unemployment (following a possible US and maybe global recession). That’s not good.

Alan Greenspan said earlier there was a 30% chance of the US being in recession by the end of the year. I wonder what he would say now. But at least Gordon knows – since he put Alan on the payroll.

Posted by sandid at August 15, 2007 11:17 AM

I wonder if the supermarkets have got a bit too canny for their boots and started discounting on items in the cpi basket to lower the cpi inflation rate...something to ponder.

Posted by Kev M at August 15, 2007 12:59 PM

Hi David

A better link here.


IMHO it is a better index than the National Association of realtors, which is a median sale price. Because of the Sub prime, it is getting distorted by the Cheaper houses selling in larger amounts.

Posted by kingofnowhere at August 18, 2007 10:59 AM
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