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Inflation measure turns negative

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    Inflation measure turns negative

    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?
    Knock first as I might be balancing my chakras.

    #2
    CPI is still very high.
    How did this happen? Who's to blame? Well certainly there are those more responsible than others, and they will be held accountable, but again truth be told, if you're looking for the guilty, you need only look into a mirror.

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      #3
      Originally posted by suityou01 View Post
      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.

      Comment


        #4
        Originally posted by Gonzo View Post
        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?
        The Mods stole my post count!

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          #5
          Originally posted by Pickle2 View Post
          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.
          ǝןqqıʍ

          Comment


            #6
            ... and the fall in the pound will also cause inflation on imported goods !!

            Comment


              #7
              Originally posted by DiscoStu View Post
              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?
              Last edited by Pickle2; 21 April 2009, 09:38.
              The Mods stole my post count!

              Comment


                #8
                Originally posted by Cyberman View Post
                ... 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.
                The Mods stole my post count!

                Comment


                  #9
                  Originally posted by Pickle2 View Post
                  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.

                  Comment


                    #10
                    Originally posted by Pickle2 View Post
                    yet we still have negative RPI.
                    42'' LCD TVs apparently dropped in price compared to last year.

                    HTH

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