Inflation

[TimberWolf]

If insignificant expenses like mortgages and council taxes were included in the price inflation index calculation, would the boom/bust cycle have rung alarm bells for the economy years ago?

We've have had 10 years of high house and tax rises and the correction for this is expected to be deflationary period. Except council taxes of course, which always go up and up and up and then upppitdy, up. Should the inflation index include the biggest consumer expenses that might take a lifetime paying for, or mostly insignificant stuff that's shows how good the economy is performing to make the government look good?

[BrilloPad]

Whatever measure of inflation is targeted tends to misbehave : the BoE needs to look at several indicators.

[Doggy Styles]

If insignificant expenses like mortgages and council taxes were included in the price inflation index calculation, would the boom/bust cycle have rung alarm bells for the economy years ago?

Good point. House price inflation seems to have been far more damaging than the price of a loaf of bread.

I'm not sure about including house prices in the index calculation, but taken on its own it should have been ringing alarm bells in government anyway.

And am I right in thinking the calculation included mobile phones and other technology that always becomes cheaper as the technology develops? That would have skewed the index down even further.

[expat]

And am I right in thinking the calculation included mobile phones and other technology that always becomes cheaper as the technology develops? That would have skewed the index down even further.

It would have influenced the index, but not skewed it, because people really do buy these things.

[swamp]

This has been said before here (by me, amongst others)

If the BoE had been allowed to read the right dial for inflation they would have kept interest rates significantly higher. On its own this wouldn't have stopped the house price boom, but it would have kept it a bit more under control.

Instead they include in things like USB memory sticks in the inflation basket

[Mich the Tester]

Instead they include in things like USB memory sticks in the inflation basket

But they're free. Just have a look on the train seat after a HM Government employee gets off.

[Cyberman]

If insignificant expenses like mortgages and council taxes were included in the price inflation index calculation, would the boom/bust cycle have rung alarm bells for the economy years ago?

We've have had 10 years of high house and tax rises and the correction for this is expected to be deflationary period. Except council taxes of course, which always go up and up and up and then upppitdy, up. Should the inflation index include the biggest consumer expenses that might take a lifetime paying for, or mostly insignificant stuff that's shows how good the economy is performing to make the government look good?

They didn't need to look at inflation. It was obvious to just about every analyst that bank lending was out of control over two years ago and it was well-publicised in the media. HMG should have acted then with credit controls but as usual they act after a cataclismic event that could have been mostly avoided with pre-emptive action.

[Ruprect]

They didn't need to look at inflation. It was obvious to just about every analyst that bank lending was out of control over two years ago and it was well-publicised in the media. HMG should have acted then with credit controls but as usual they act after a cataclismic event that could have been mostly avoided with pre-emptive action.

You mean just before the general election?

[oracleslave]

They didn't need to look at inflation. It was obvious to just about every analyst that bank lending was out of control over two years ago and it was well-publicised in the media. HMG should have acted then with credit controls but as usual they act after a cataclismic event that could have been mostly avoided with pre-emptive action.

You haven't experienced pre-emptive action and a cataclysmic event in decades.

[Cyberman]

You haven't experienced pre-emptive action and a cataclysmic event in decades.

I've never experienced pre-emptive action with this HMG, except to catch tax avoiders.

... and we will see a few more cataclismic events before this lot have been safely despached to the dustbin of political history where they belong.