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Sir Humphrey

CPI 1.9%

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This really is taking the p-ss.

 

The con is back on. In fact, this is what good conspiracy theories are really made of. Surprise, surprise.

 

"This will boost expectations that interest rates have peaked at 5.75%, especially as the current turmoil in global credit and financial markets further dilutes the case for higher interest rates, for now at least."

 

http://newsvote.bbc.co.uk/1/hi/business/6945557.stm

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Astonished! Food price inflation has been horrific recently, things such as broccoli and cauliflower seem to have doubled this month, petrol has been back up to its highs as well. Election this year anyone?

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Astonished! Food price inflation has been horrific recently, things such as broccoli and cauliflower seem to have doubled this month, petrol has been back up to its highs as well. Election this year anyone?

Here's the lie.

 

The lower cost of food - from bread and cereals to meat, fish and fruit - was the biggest contributor to the surprise fall in consumer price inflation as supermarkets slashed prices to compete for market share.

 

Sorry, have not seen this at all. Total Lies. When did the price of bread come down? Did they find a Sainsbury's or Tesco's flogging some off at the end of the day for 20p a loaf?

 

And even if it is true, how does this result in a 0.5% fall? When prices were going up, it tends to be 0.1 or 0.2% at most? And prices have been going up for a lot longer and more consistantly, but these one off falls in CPI seem to be enormous by comparison, but not reflected in any shop prices. It's a total con job and you do wonder given the last week or two on the markets if this can be just a coincidence? However, the point is this, other than amazement that we might show, NO ONE IN THE MAINSTREAM is going to question this. :lol:

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James Knightley, an economist at ING, said: "It is likely that the wet weather played a significant part in price falls as retailers used the tactic of heavy discounting to attract customers into shops.

 

So, people stopped eating because of the wet weather and didn't go food shopping, forcing the food retailers into a price war?:lol:

 

Any excuse will do.

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So, people stopped eating because of the wet weather and didn't go food shopping, forcing the food retailers into a price war?:lol:

 

Any excuse will do.

 

That wasn't the part I had in mind.

 

"Moreover, food prices look set to rebound sharply due to flooding."

 

Is more sensible.

 

---

 

Perhaps they selected shops in Tewkesbury, Gloucester and Oxford. :blink:

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That wasn't the part I had in mind.

Is more sensible.

 

---

 

Perhaps they selected shops in Tewkesbury, Gloucester and Oxford. :lol:

This is a good point. It is as if the floods, almost biblical in the way they were reported, affected the whole country, they did not. They may well result in food prices going up in the future, but even this might be an excuse just to put prices up. Did the bad weather really affect the country that much? A little flooding and the country falls apart. I travelled through Leamington Spa, Banbury and Oxford the Tuesday after the floods and guess what? I saw no flooding, just a few wet fields between Banbury and Oxford. To listen to the news, it was as if this was the UK's New Orleans. I do wonder sometimes.

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This is a good point. It is as if the floods, almost biblical in the way they were reported, affected the whole country, they did not. They may well result in food prices going up in the future, but even this might be an excuse just to put prices up. Did the bad weather really affect the country that much? A little flooding and the country falls apart. I travelled through Leamington Spa, Banbury and Oxford the Tuesday after the floods and guess what? I saw no flooding, just a few wet fields between Banbury and Oxford. To listen to the news, it was as if this was the UK's New Orleans. I do wonder sometimes.

 

There was isolated flooding elsewhere. A work colleague was flooded out of this (Housing Association) flat in NW London. There was a river in a culvert under the street.

 

There were some very heavy storms, but I missed the worst as I was in Belgium at the time.

 

The weather was abysmal last month, which will have reduced demand for cold lager, BBQ food etc. For once, it may not be complete BS. I do not think it explains such a huge drop though.

 

Furniture prices seem to go up and down like a yo-yo owing to regular heavy sales, with loads of "free" credit so I would not read too much into that.

 

According the Guardian, core inflation is down too, which excludes food.

 

Personally, I doubt the BoE will cut on this data alone. Also, I would happily trade another 0.25% rise for the chaos in the credit markets that we are having.

 

Bear in mind that IIRC CPI rose 0.5% in one month last year. It can jump around a bit.

 

CPI is obviously not a reflection fot he cost of living. However, RPI is much better and it fell too last month. Whilst I would expect inflation to be a little underestimated, I do not buy this "it must be 15%, because Milton Friedman would have said it should be" nonsense.

 

EDIT

 

I know Oxford well as I lived there for three years as a student. Only a small part got flooded, next to the Thames in Botley. I would expect that Port Meadow would have absorbed a lot of the water. Oxford is a sort of star shape, with suburban development running along the main roads, with lots of parkland and floodplain in between.

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This is without doubt the best bit of the reporting for the recent floods:-

 

Not for the first time that day, a reporter stands in a puddle next to a stretch of water and explains how Oxford will soon be engulfed in an Atlantis style flooding while a passer-by pinches her bum.

 

With regards to the CPI figures, it does seem a large drop, maybe we are heading for deflation after all :lol:

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I didn't wish to downplay the effect of the flooding in those areas that got seriously hit by it and I experienced some of the bad weather myself (I was in a motorway tailback and took 6 hours to complete a 2hrs 30 journey), but we do have a habit of going over the top. I was staying with someone who had Sky tv and they kept showing a clip of one small boat crashing into a bridge over and over again. That and home owners wondering how they would be able to sell their property now or whenever (wait 6 months and everyone will have forgot and make sure the agent hides the fact it is in an flood risk area). For Sky and BBC 24, it was as if this was the UK's New Orleans big one, when it was nothing of the sort. And now we are told it had an positive effect on inflation, which will soon turn negative as prices go up.

 

Is flooding good for the economy?

 

Economic effects

 

For the economy as a whole, flooding has some obvious effects and some subtle ones. The obvious effects include workplaces and schools closed, jobs lost, transport disrupted, deliveries delayed.

 

Current estimates of the insurance cost for the thousands of homes and business flooded across the UK in the last month are climbing above the £1 billion mark, according to the Association of British Insurers.

 

However, as studies of the effects of previous natural disasters have shown, economies only dip for a month or two after the event.

 

Once insurance money is tapped, once government spending on flood relief work starts flowing, there is a surge of new spending. Certainly I have neighbours who will be spending heavily on new carpets, soft furnishing and quite a bit of building work.

 

http://money.uk.msn.com/investing/articles...umentid=5414426

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I didn't wish to downplay the effect of the flooding in those areas that got seriously hit by it and I experienced some of the bad weather myself (I was in a motorway tailback and took 6 hours to complete a 2hrs 30 journey), but we do have a habit of going over the top. I was staying with someone who had Sky tv and they kept showing a clip of one small boat crashing into a bridge over and over again. That and home owners wondering how they would be able to sell their property now or whenever (wait 6 months and everyone will have forgot and make sure the agent hides the fact it is in an flood risk area). For Sky and BBC 24, it was as if this was the UK's New Orleans big one, when it was nothing of the sort. And now we are told it had an positive effect on inflation, which will soon turn negative as prices go up.

 

Is flooding good for the economy?

 

It was no New Orleans, but the flooding was bad for the UK. Sheffield, Hull and a lot of Shropshire and Thames Valley were affected amongst others.

 

The media always act like drama queens (particularly during the "silly season") and the UK was not a disaster zone. However, it was the worst July weather I can recall as a 27 year old, even away from the floods.

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bit more info from the report:

 

Transport drops, with average petrol prices recorded across July falling by around 0.3p per litre, compared with an increase of nearly 2p last year;

 

Housing and household services, as energy bills continued to fall due to the phasing in of gas and electricity tariff reductions and some new cuts this month.

 

Recreation and culture, where July saw some price reductions for digital cameras and camcorders, personal computers, recording media and theatre admissions.

 

Another large downward contribution came from furniture and furnishings, with average prices falling over the month by more than 10 per cent , a record for July, following record increases for June last month. Widespread sale prices were available on a range of items in July including kitchen, bedroom and lounge furniture.

 

Large price increases in the cost of beef and milk last year moved out of the yearly figure.

 

I've also noticed broccoli is in there having replaced sprouts this year, so that should be in next months, Sainsburys have really jacked up the price.

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Another large downward contribution came from furniture and furnishings, with average prices falling over the month by more than 10 per cent , a record for July, following record increases for June last month. Widespread sale prices were available on a range of items in July including kitchen, bedroom and lounge furniture.

I've raised this before but the CPI supposedly doesn't include many things because they are seen as volatile, yet they include "sale prices". I can't think of anything more volatile than sale items, surely it should be the headline price, as the sale item is often not available across the country as a whole for the sale price. Just another way of distorting the figures because we now have sales all the time and I suspect the ONS must rotate the items so that once something is no longer on sale, the actual real price is not suddenly included in the CPI.

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The Office for National Statistics said the annual CPI inflation rate slumped to 1.9 pct in July from 2.4 pct in June, well below analysts' forecasts for a decline to 2.2 pct.

 

This is the lowest CPI rate since March 2006 and is also the first time since that date that inflation has been below the 2.0 pct level that the Bank of England is charged with targeting.

 

At 9.52 am BST the pound was at 2.0008 usd, after dipping to 1.9997 usd briefly. Ahead of the data the pound was trading at 2.0068 usd

 

@: http://www.forbes.com/markets/feeds/afx/20...afx4016406.html

 

= = =

 

That's a YOY figure. More detail would be nice

 

CHART and Data

imagezs6.gif ... monthly index

 

Citigroup economist Michael Saunders noted that July's inflation reading is historically more erratic than other months, partly due to the timing of price cuts for summer sales.

The unusually wet weather in June and July, which saw flooding across the country, could also have distorted prices Saunders said.

"If part of the drop in inflation is erratic, then this may not affect medium term inflation prospects," Saunders told clients in a noted. "Nevertheless, the MPC may not fully have anticipated this drop in inflation, and it may not be clear for several months if the dip in inflation is erratic or not."

"At the very least, these data increase the temptation -- already rising from credit market wobbles -- for the MPC to do nothing on rates in the next month or two and see how data unfolds," he added.

Also Tuesday, the Office for National Statistics said that retail price inflation -- a measure often used in industry to set wage increases -- fell to 3.8% in July from 4.4% in June, due to similar factors that affected consumer price inflation.

Economists had been expecting retail price inflation to dip to around 4.3%

 

-from: http://www.marketwatch.com/news/story/uk-i...D849F1E36B4C%7D

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From the horse's mouth (horse meat being cheaper this year than last no doubt).

 

CPI annual inflation – the Government's target measure – was 1.9 per cent in July, down from 2.4 per cent in June.

 

The largest downward contribution came from food prices, as supermarkets led price cuts across a range of products including bread and cereals, meat, fish, fruit and vegetables. In addition, price increases last July on beef and shop bought milk were not repeated this year.

 

Another large downward contribution came from furniture and furnishings, with average prices falling over the month by more than 10 per cent, a record for July, following record increases for June last month. Widespread sale prices were available on a range of items in July including kitchen, bedroom and lounge furniture.

 

Other large downward contributions came from:

 

* Transport, with average petrol prices recorded across July falling by around 0.3p per litre, compared with an increase of nearly 2p last year;

 

 

* Housing and household services, as energy bills continued to fall due to the phasing in of gas and electricity tariff reductions and some new cuts this month; and;

 

 

* Recreation and culture, where July saw some price reductions for digital cameras and camcorders, personal computers, recording media and theatre admissions.

 

The only large upward effect on the CPI annual rate came from clothing and footwear, with the effect of summer sales being smaller this July than a year ago, particularly for women's outerwear.

 

RPI inflation fell to 3.8 per cent in July, down from 4.4 per cent in June and was influenced by similar factors to those that affected the CPI. RPIX inflation – the all items RPI excluding mortgage interest payments – was 2.7 per cent in July, down from 3.3 per cent in June.

 

As an internationally comparable measure of inflation, the CPI shows that the UK inflation rate is above the average for the European Union as a whole. The provisional inflation rate for the EU 27 in June was 2.1 per cent, compared with the UK rate of 2.4 per cent for the corresponding period.

 

http://www.statistics.gov.uk/cci/nugget.asp?id=19

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LIES, DAMNED LIES...

 

Headline Underlying Consumer Prices Index

(previously known as Harmonised Index of Consumer Prices)

Annual % Index Annual % Index Annual % Index

2007

Jan 4.2 201.6 3.5 196.1 2.7 103.2

Feb 4.6 203.1 3.7 197.1 2.8 103.7

Mar 4.8 204.4 3.9 198.3 3.1 104.2

Apr 4.5 205.4 3.6 199.3 2.8 104.5

May 4.3 206.2 3.3 200.0 2.5 104.8

Jun 4.4 207.3 3.3 200.7 2.4 105.0

 

2006

Jan 2.4 193.4 2.3 189.4 1.9 100.5

Feb 2.4 194.2 2.3 190.1 2.0 100.9

Mar 2.4 195.0 2.1 190.8 1.8 101.1

Apr 2.6 196.5 2.4 192.3 2.0 101.7

May 3.0 197.7 2.9 193.6 2.2 102.2

Jun 3.3 198.5 3.1 194.2 2.5 102.5

Jul 3.3 198.5 3.1 194.2 2.5 102.5

Aug 3.4 199.2 3.3 194.9 2.5 102.9

Sep 3.6 200.1 3.2 195.3 2.4 103.0

Oct 3.7 200.4 3.2 195.5 2.4 103.2

Nov 3.9 201.1 3.4 196.2 2.7 103.4

Dec 4.4 202.7 3.8 197.4 3.0 104.0

 

@: http://www.moneyextra.com/dictionary/UK-In...ory-003663.html

 

- - -

LOOKS LIKE a key reason for the drop in inflation was losing that

big month (Jul-Aug'06: 102.5 to 102.9: +0.4) from the YOY data

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