Inflation

[Tedx]

Britain Set to Break From Eurozone with Cooling Core Inflation

Britain’s underlying price pressures are set to diverge with those in the eurozone, with signs of cooling inflation intensifying the debate over whether the Bank of England should halt its cycle of interest rate increases.

https://financialpost.com/pmn/business- ... -inflation

[Adamski]

Britain’s underlying price pressures are set to diverge with those in the eurozone, with signs of cooling inflation intensifying the debate over whether the Bank of England should halt its cycle of interest rate increases

I hope not. Their main focus should be on getting inflation down. The last thing we'd want is an extended period of high inflation. I don't think a small rate rise is going to crash the economy. As long as BoE keep quarter percent increases should be OK.

[1nvest]

Britain’s underlying price pressures are set to diverge with those in the eurozone, with signs of cooling inflation intensifying the debate over whether the Bank of England should halt its cycle of interest rate increases

I hope not. Their main focus should be on getting inflation down. The last thing we'd want is an extended period of high inflation. I don't think a small rate rise is going to crash the economy. As long as BoE keep quarter percent increases should be OK.

https://www.ons.gov.uk/economy/inflatio ... ion/latest

Nov 22, Dec 22, Jan 23 CPI monthly rate of changes = 0.4%, 0.4%, -0.6%, respectively, 0.2% compounded for that 'quarter', a less than 0.8%/year rate. If that continues then they'd be looking to cut rates or otherwise see the dreaded deflation and undershooting of 2% remit target rate. Some of the monetary policy committee might propose a small increase as you suggest, others might be suggesting a small cut, on balance I suspect they might just leave things as-is and wait and see what Feb/March rates of inflation indicate, or with greater insight (headline rate of change) could very well ponder a small-cut (0.25%), however with the US looking at possibly raising rates a UK cut would incline a flight from Pounds to US Dollars that might do more harm than good.

[Tedx]

German inflation falls sharply

Spain inflation halves

Both Bloomberg today.

[dealtn]

German inflation falls sharply

Spain inflation halves

Both Bloomberg today.

Can you explain, or provide a link?

https://tradingeconomics.com/germany/inflation-cpi For instance

German CPI falls from 8.7% to 7.4% and above the market expectation of 7.3%. So slightly higher than forecast and not anywhere close to halving.

[Tedx]

No.

I dont have a subscription. I was merely quoting the headlines verbatim.

....And it didnt say the German inflation had halved.

[dealtn]

No.

I dont have a subscription. I was merely quoting the headlines verbatim.

....And it didnt say the German inflation had halved.

Apologies I misread what you said. "Falls sharply" could mean many things to different people I guess.

[CliffEdge]

CPIL (CPI LIDL) still raging away, shredded cheese, around 10% per week for the past two months

[Alaric]

CPIL (CPI LIDL) still raging away

Perhaps we also need CPI Aldi as other supermarkets seemingly use Aldi as a benchmark for their own prices.

[scotview]

Opec+ have just cut oil supply.

If this pushes up UK inflation (which it probably will), what effect will the BoE raising interest rates (which it probably will) achieve, apart from a lot of pain ?

[dealtn]

Opec+ have just cut oil supply.

If this pushes up UK inflation (which it probably will), what effect will the BoE raising interest rates (which it probably will) achieve, apart from a lot of pain ?

A reduction in demand and a lowering effect on prices.

[scotview]

Opec+ have just cut oil supply.

If this pushes up UK inflation (which it probably will), what effect will the BoE raising interest rates (which it probably will) achieve, apart from a lot of pain ?

A reduction in demand and a lowering effect on prices.

Will it really, even for stuff based on the cost of oil ?

[dealtn]

A reduction in demand and a lowering effect on prices.

Will it really, even for stuff based on the cost of oil ?

It will lower demand, and prices, compared to the alternative scenario(s) of keeping rates the same (or lowering them). This is a macroeconomic tool, affecting inflation, not a micro one for every single product, and price, across the economy.

[Tedx]

And do they ever actually achieve these production reductions? I've read lots of stories about OPEC countries ignoring newly proposed limits in the past.

[dealtn]

And do they ever actually achieve these production reductions? I've read lots of stories about OPEC countries ignoring newly proposed limits in the past.

Generally speaking the direction is achieved, if not the absolute.

[Nimrod103]

And do they ever actually achieve these production reductions? I've read lots of stories about OPEC countries ignoring newly proposed limits in the past.

Generally speaking the direction is achieved, if not the absolute.

The big worry here is not necessarily the effect on inflation, but the Global strategic realignment which might underlie the increase in oil prices. The dangerous Saudi crown prince looks like he is trying to help Putin, while sticking two fingers up to the USA.
https://www.telegraph.co.uk/business/20 ... il-prices/

Saudi crown prince hands Putin his biggest weapon in the energy war
West creaks as Russia befriends the powerful Saudi snubbed by Biden

[scotview]

And do they ever actually achieve these production reductions? I've read lots of stories about OPEC countries ignoring newly proposed limits in the past.

I think we are entering a new regime where the BRICS countries and now Saudi are creating a pivot to the East. They may have an incentive to make the cuts happen and protect their HC legacy which they have given away cheaply.

The West's drive to net zero may be about to have self inflicted inflation consequences, of course I could be very wrong and talking garbage, who knows. Not sure that Andrew Bailey can do a thing about this if the BRICS strategy does materialise though.

[1nvest]

Opec+ have just cut oil supply.

If this pushes up UK inflation (which it probably will), what effect will the BoE raising interest rates (which it probably will) achieve, apart from a lot of pain ?

Pain as in inability for high demand/reduced supply being unaffordable for some/many such that demand decreases more towards matching supply. If interest rates are raised to attractive levels then the Pound could also strengthen as inflows of other currencies grab the higher interest rates helping to reduce the cost of the imports.

[Tedx]

Britain’s Inflation Rate May Fall at Sharpest Pace in 30 Years


Well, we shall see. In recent we have built quite a reputation for being number one in the inflation game. We dont want to give that up. Plus we are grand masters at kicking our own backsides, so a lot can go wrong. And even if it does come in lower than expected, Baily has a fetish for squeezing the balls of normal folk whilst making sure his crowd are just fine. So he'll find 'something in the data to allow him to stick another 1/2 % on rates (for cash balances over £300k only)

Anyway, 8 2 to 8.4% is what's expected. Mainly due to 'base effects' (I.e. wholesale energy futures falling 90% from their peak. Raising interest rates did that you know.

Anything less than that and Bailys bond mates will be loading up at 4% and cracking open the champagne.

https://uk.news.yahoo.com/britain-infla ... 00934.html

[Alaric]

Anyway, 8 2 to 8.4% is what's expected.

That's the rate of increase in prices and some distance from a stable set of values.