I started this blog in June 2007 asking these questions: Are we in a massive asset bubble that will blow up in our faces ??? - ANSWERED YES ! Is western and particularly British society on the verge of social collapse??? What are the best common sense long term investment strategies to keep you rich? When will consumption/debt bubble economics end and a real savings/production economy begin ???

Tuesday, 15 September 2009

UK economists baffled by 1.6% inflation rate - still no deflation ???


"It is obviously another sticky number, inflation has surprised on the upside relative to expectations over the past few months. I think it is a combination of two things. Number one is sterling's impact on inflation and the fact is it has fallen very sharply from its peak in 2007 so that could have been putting upward pressure on import prices and core inflation."

"Secondly is the output gap. If it turns out that we have overestimated the trend rate of growth and the output gap might not actually be as weak as we thought it was ...inflationary pressures might be a little bit closer to the surface than we thought."


"Obviously it is not as good as expected and there is no tendency for core CPI rate of inflation to moderate which must be worrying to the MPC because it casts doubt on their forecasts. Looking at the components this month, we seem to have more of a bounce back in furniture and household equipment after seasonal July sales than is usual."


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