Inflation

[DimPrawn]

From the BBC:

Transport prices drove UK consumer price inflation (CPI) to 2.3% in July from 2% in June, Office for National Statistics (ONS) figures show.
Surging crude prices drove fuel higher, taking CPI to its highest level since records began in 1997, the ONS added.

The stronger-than-expected increase is likely to reduce the chances of another cut in rates, experts said.

Headline retail price inflation (RPI) which includes housing costs, remained at 2.9% for a second month.

If inflation is being influenced by rising fuel costs, how does raising interest rates control this, when fuel costs are driven by only two factors, tax (the biggest) and crude oil, both of which are not under the control of base rates?

Or am I missing something?

[Lucifer Box]

Interest rate increases don't directly target fuel costs (or any other cost for that matter), but they reduce the amount of money people spend on other things, in theory balancing things out.

As Eddie George said, "using interest rates to control the economy is like trying to pull a brick with a piece of elastic. Nothing happens for ages then all of a sudden it shoots forward and hits you in the face".

[threaded]

Because when the only tool you've got is a hammer everything looks a lot like a nail.

[milanbenes]

look Dim it's like this,

How to Run an Economy by Gordon Brown:

1, Use interest rates to control the economy

2, goto 1



Milan.

[DimPrawn]

while(!gordonBrown.EOF)
{
taxRates++;
bankOfEngland.InterestRates.Tweak();
gordonBrown.MoveNext();
}

[Jabberwocky]

I have fired people for the indiscriminate use of capitalization for method names. There are standards for a reason.

[Lucifer Box]

People who can't spell capitalisation should be the first against the wall.

[DimPrawn]

Jabber you nob. C# uses Pascal Casing for methods and properties, Camel Casing for parameters, local variables.

I'd fire you for being a tw@t.

[Churchill]

Jabber you nob. C# uses Pascal Casing for methods and properties, Camel Casing for parameters, local variables.

I'd fire you for being a tw@t.

I'd twat the pair of you for spending so much time on this forum and not enough time getting the job done!

[BlasterBates]

...well DP, hmm how shall I explain ....

You see cutting interest rates stimulates demand so, generally causing inflation.

Now if you add oil price hikes this increases goods coming out of factories, then "plebs" eg BA catering staff, bus drivers etc start demanding more wages, this casues prices to go up to pay the plebs, the "plebs" then notice that prices are going up, so they demand pay increases, this casues the price to go up, the "plebs" then notice that prices are going up, so they demand pay increases, this casues the price to go up, the "plebs" then notice that prices are going up, so they demand pay increases, this casues the price to go up, the "plebs" then notice that prices are going up, so they demand pay increases, this casues the price to go up, the "plebs" then notice that prices are going up, so they demand pay increases, this casues the price to go up, the "plebs" then notice that prices are going up, so they demand pay increases, this casues the price to go up, the "plebs" then notice that prices are going up, so they demand pay increases, this casues the price to go up,