Inflation to drop to zero

[DimPrawn]

http://news.bbc.co.uk/1/hi/business/7408833.stm

The Item Club also says that the government's choices include sticking to the current inflation target of 2% - which could mean no more interest rate cuts for some time, and therefore lower economic growth.

It adds that another option is to mitigate the impact of high food prices by reducing other taxes, including Value Added Tax, but given the government's poor finances this option is not a serious one.

Or the UK government could change its inflation target above 2%.

"There is a good case for switching the [inflation] target to core CPI inflation, which excludes the effect of food and energy prices," says the report.


So take out the cost of food and energy now and just include PlayStations and XBOX'es?

[MrRobin]

This is wonderful news! Inflation drops and so BofE rates can come down and then boomed once again! Gordon really will save the economy! Hopw does he make it look so simple?!

[xoggoth]

I can understand how some things outside government control, like oil prices, may not be subject to UK interest rates so maybe two indexes make sense, one a measure of UK internal inflation for the BOE to act on and one to tell us poor saps what is really happening.

I wonder what part tax plays in inflation, given that it is a high percentage (about 70% ?) of fuel prices and that fuel is a major cost of haulage firms (up to 40% ?) and that in turn haulage is a major factor (can't be bothered to look it up but lots%) in food prices.

[HairyArsedBloke]

I can understand how some things outside government control, like oil prices, may not be subject to UK interest rates so maybe two indexes make sense, one a measure of UK internal inflation for the BOE to act on and one to tell us poor saps what is really happening.

The ONS produces loads of different indices apart from the CPI and RPI most of which are published. The Treasury and the BoE study the majority of them and know exactly what is going on. I have always found the term ‘non-core’ ironic as it applies to those items that are at the core of most people’s expenditure such as food and fuel. Since much of these are sourced from abroad, the value of Sterling is important here. Yes, it is doing well against the USD, but only because it has slid down the pan slower than the green stuff.

The behaviour of senior people not just the BoE, but more importantly, the Treasury (i.e. successive Chancellors) goes beyond negligent and well into treason. The damage done now will take something in the region of 50 years to put right.

[BrilloPad]

This is wonderful news! Inflation drops and so BofE rates can come down and then boomed once again! Gordon really will save the economy! Hopw does he make it look so simple?!

WHS

Interesting how whatever measure you try to target it misbehaves? M0, M1, M2, M3, M4, RPI, CPI, Core.

Surely there is a better way?

[sasguru]

The damage done now will take something in the region of 50 years to put right.

What makes you think it will be put right? This country is now firmly a second rate country, with only the occasional pockets of excellence keeping it afloat.
However it is our own fault - we have created a culture where mediocrity is celebrated.

[BrilloPad]

What makes you think it will be put right? This country is now firmly a second rate country, with only the occasional pockets of excellence keeping it afloat.
However it is our own fault - we have created a culture where mediocrity is celebrated.

Big brother and the sun not enough for you?

Seriously - I blame fatherlessness.

[ratewhore]

What makes you think it will be put right? This country is now firmly a second rate country, with only the occasional pockets of excellence keeping it afloat.
However it is our own fault - we have created a culture where mediocrity is celebrated.

Blimey - I have to agree with SAS

[HairyArsedBloke]

Seriously - I blame fatherlessness.

Yeah, them Jesus types are behind it all.

[DiscoStu]

Blimey - I have to agree with SAS

Me too