Inflation measure turns negative

[suityou01]

Annual inflation measured by the Retail Prices Index (RPI) went negative in March for the first time since 1960, to -0.4%, down from zero in February.

Linky

So we are in deflation now?

[HairyArsedBloke]

CPI is still very high.

[Gonzo]

So we are in deflation now?

No. After twelve months when the mortgage rate reductions have moved out of the figures you will start to see the RPI rise again to an alarming level.

[Pickle2]

No. After twelve months when the mortgage rate reductions have moved out of the figures you will start to see the RPI rise again to an alarming level.

Why? Where will businesses find the pricing power from in an environment of vastly reduced supply of money & credit, rising unemployment, and a new era of consumer frugality?

What business owner will be able to raise his prices into that? Is your ltd whacking up its prices?

[DiscoStu]

Why? Where will businesses find the pricing power from in an environment of vastly reduced supply of money & credit, rising unemployment, and a new era of consumer frugality?

What business owner will be able to raise his prices into that? Is your ltd whacking up its prices?

Umm, the money supply is being increased through QE.

[Cyberman]

... and the fall in the pound will also cause inflation on imported goods !!

[Pickle2]

Umm, the money supply is being increased through QE.

Nowhere near as fast as the supply of credit is being destroyed. Inflation is the increase of the supply of money and credit. If money goes up by x, but credit goes down by x + 1, we have deflation.

Creating inflation is the aim of QE. It failed in Japan. It will fail in the US and UK too.

Why all the belief in the Brown's government ability to manage the economy all of a sudden?

[Pickle2]

... and the fall in the pound will also cause inflation on imported goods !!

The fall in the pound has happend. The pound is up 10% against the euro since xmas. Any inflationary effects are allready cooked in - and yet we still have negative RPI.

[BrilloPad]

Nowhere near as fast as the supply of credit is being destroyed. Inflation is the increase of the supply of money and credit. If money goes up by x, but credit goes down by x + 1, we have deflation.

Creating inflation is the aim of QE. It failed in Japan. It will fail in the US and UK too.

Why all the belief in the Brown's government ability to manage the economy all of a sudden?

I agree. Issue currently is that people are borrowing too much. We have to learn to live within our means : both as individuals and as a country.

[AtW]

yet we still have negative RPI.

42'' LCD TVs apparently dropped in price compared to last year.

HTH