Short term or long term inflation?

Chris lancashire

If you think you can pump £200bn into the economy over a very short period of time, run a £200bn+ budget defecit (don't believe the ludicrous £184bn), have the £ slide further (look out for £1=1) and not suffer inflation of 4%+ then you're either a fool or a liar.

It will take at least 2 years to bring inflation back under control.

Sir Graphus

Inflation only works for any of us in debt if we can persuade our employers to give us inflationary pay rises.

Chris W

So now just watch for the public sector pay settlements at inflation plus! Pure bribery.

Frank P

What will happen to house prices in this short-term/long-term inflation. In the past periods of inflation, rising house prices for those already on the ladder have saved us from penury. Does either party intend to artificially stifle the rise of prices through rigged valuations in mortgage transactions, or higher deposit requirements, or steep rises in interest rates?

Frank P

Add this to your prognostications:

http://moneynews.com/Headline/greece-euro-collapse-dollar/2010/02/15/id/349903?s=al&promo_code=9752-1

Dennis Churchill

“...the nation faces a dramatic decline in living standards.”
Falling living standards? As our population has increased due to Labour’s Open Door(Rub their Noses in it)immigration policy what are the comparison per capita figures for ,say,2000 and 2008?
I accept our population figures are not accepted by most people but nevertheless just how “richer” did we become?
The Nanny and Cleaner employing classes may be better off but how did Mr. & Mrs. (Ms?) Average do?

oldtimer

Two observations:
(1) There are suggestions (Moodys and Council of Mortgage Lenders) that there could be a severe mortgage credit crunch as QE ends and is unwound. This is expected to cause house prices to fall and the price of mortgages to go up.
(2) Presumably the Bank assumes that VAT stays at 17.5%. An increase to a 20% rate would push inflation up again.

We should not be surprised when we all finish up on the receiving end of Brown`s day of financial reckoning.

Percy

@Frank P, I think you'll find that house prices are having considerable artificial support now.

Marcher Baron

Meanwhile, those, like pensioners, on fixed incomes with savings and no debt are well and truly shafted. Only the feckless who have lived beyond their means will feel the slightest benefit. Some morality!

Gawain

Inflation is like ground elder in a garden border. You may think its gone away but the roots are there, depp, lurking and ready to spring into vigorous leaf the moment you relax and stop digging it out. My perception (based on my own household budget and what I see going around me) is that inflation is more embedded than some economists think and it will take longer to reduce than expected. we also have a highly unionised public sector that has an inflationary culture. The rise in inflation is likely to make it more difficult to control public sector pay (shop stewards love inflation targets to stir up resentment). Any suggestions for raising the current inflation target above 3 per cent should therefore, in my opinion, be strongly resisted.

Naomi Muse

This is short term inflation, from what we can see.

The figures which show the adjustments for the flurry of purchasing in December and January, give little indication of the longer term.

It's all such a phoney time with Broon still not having gone to the Palace that any figures may indicate last-minute-itis rather than a real trend of any sort.

We shall watch and wait.

Several bankers are expecting to find stagflation by September.

Moraymint

Chris lancashire
February 16th, 2010 12:52pm

... and don't forget to add in the imminent soaring costs of energy:

http://tinyurl.com/yelbsyd

http://tinyurl.com/yghws74

http://tinyurl.com/cpb8hr

My own view is that, more than anything else in family budgets over the next few years, the cost of energy will be the "unforeseen" killer. Unforeseen, that is, except for those of us who, er, foresee it.

Very few economists, central bankers and politicians seem to be factoring in the energy crunch. Too difficult probably; as if we/they don't have enough to worry about in the here and now.

Without wishing to put too fine a point on it, we've reached the end of mankind's era of cheap energy. We'll only realise this for certain when we look in the rear-view mirror. Meantime, methinks hard times loom large before us.

David B

I suggest anyone listen to Brendan Barber interview on the Today program. He is calling for inflation busting public sector pay rises to boost demand.

DB

" inflation may eat a little of Brown’s debt mountain"

Please don't characterise this as a positive. It is merely taking from the thrifty to benefit the feckless.

2trueblue

Isen't it wonderful that Brown has managed to devalue everything? Not a surprise though. Like all things Brown will leave us with inflation will linger on like a bad smell.
The figures that we get are not real anyway, the real rate of inflation is much higher, and in most cases the basics have risen quite sharply.

As a pensioner I am fed up with subsidising the banks, building societies, and those with mortgages, whilst I get a rubbish rate on my hard earned cash. It seems that those who prudent are always the ones that end up paying.

Kiwi Mark

The forthcoming election is a poison chalice par excellence.

As far as I can see things have moved to a place such that there is now no combination of fiscal or monetary tinkering that can prevent a slow crushing of the economy.

My belief is anything that Cameron does will precipitate or coincide with a currency/inflation/jobs/housing/real economy crisis.

People have very short memories. It won't be more than 2 or 3 months before the general public blame the government of the day for whatever ills currently befall the UK.

Almost worth having Labour hold on again to watch them having to take the blame for the mess.

Nick

The reason it hasn't affected the markets is that the market has sold all its gilts to the government (and us mugs in the process)

Assets being devalued by inflation doesn't matter.

Nick

Part of Cameron's problem is to constantly remind people of where the blame lies.

Doomsday book of Government liabilities and a labour tax on all payslips should do it.

pablo

house prices have already had their inflation...future cpi inflation will only encourage tighter monetary policy and hence house price declines