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UK inflation rate turns negative
- 0x006A 11y agoalso known as deflation.
- ed_blackburn 11y agoApparently it needs to be sustained to be deflation.
- _0ffh 11y agoNope, I don't think so. That's just a political talking point. Chancellor: "Negative inflation is not damaging deflation" So it's not "damaging deflation", but it's still deflation. "Economists [...] say proper deflation is a long term term trend of declining prices [...]" So it's not "proper deflation", but it's still deflation. We could also s/inflation/negative deflation/ and that would be absolutely correct. They are avoiding the word for fear of the connotations of a sustained period of deflation. Which will actually make the problem worse, as it sets a precedent for a changed understanding of the word deflation. So next time everyone will be even warier of using the term. Instead they should accustom people to hearing the word without thinking "OMG! WE ARE ALL GOING TO DIE!!1!".
- ExpiredLink 11y agonot only in the UK
- stegosaurus 11y agoNo, it really doesn't. Housing is 50% of my budget. It's 50% of everyone I know's budget, or more. It is most certainly not getting cheaper at all, it is skyrocketing. I don't care what 'inflation rate' the lucky few that own outright face. Why should I? They have won. They've completed the game. Inflation could run 15% for years and they would still win. If you are going to define inflation on such a ridiculous basket that it really is irrelevant what the prices move to then don't pretend that it's a useful indicator of anything.
- adventured 11y agoAfter 50 straight years of inflation, I get amused at the fear mongering that begins with a supposed -0.1% negative inflation rate. The greatest trick the keynesians ever pulled, was convincing the world that some inflation is healthy, and all deflation is cause for fear.
- mauricemir 11y agoIt can be look at how property prices in Japan crashed negative equity is never a good thing
- mrec 11y agoNegative equity is a damn sight better than unaffordable housing.
- TheOtherHobbes 11y agoIf you live in the UK you get savings deflation and unaffordable housing. It's a win win! The greatest trick the anti-Keynesians ever pulled was selling governments on the nonsensical belief that sado-monetarism is ever good for anyone who isn't already extremely rich.
- moomin 11y agoSadly, the two appear to be BFFs.
- JupiterMoon 11y agoDoes this include pump prices for fuel?
- desas 11y agoYes. The ONS maintain an infographic for how they calculate CPI at http://www.ons.gov.uk/ons/infographics/how-cpi-is-calculated/index.html http://www.ons.gov.uk/ons/infographics/how-cpi-is-calculated...
- JupiterMoon 11y agoWell that accounts for the fall then. Pump prices have come down. (Let's not get into whether they've come down in line with world fuel prices.)
- gerty 11y agoThis. Zero (or negative inflation) today is mostly due to lower oil prices and slower increase, even decrease, in non-processed food prices (at least it's the case in parts of continental Europe). Core inflation, which excludes volatile stuff, in the UK is 0.8%. Although slowly decreasing, it's still well above 0%. Core inflation is here the number that matters.
- fulafel 11y agoBoth (core and straight inflation) numbers matter, they have different uses. Food and energy costs are important parts of inflation. For some uses it can be interesting to exclude these, yielding an approximation of the inflation with less volatility. Oil prices for example have been coming down long enough that it's not noise re economic effects any more, so it would be bad to exclude the effect of cheaper oil.
- jacquesm 11y agoSo, how long before we reach a deflation spiral as more and more people hoard their money in hopes that they can buy more stuff for it tomorrow than they can buy today which will totally crash the economy? Just a bit more of this and bitcoin will start to look pretty good!
- porker 11y agoIn the UK hoarding is also known as "trying to buy a house". I've been hoarding for nearly a decade and I'm almost there!
- mavdi 11y agoSadly house prices rates are way higher than my hoarding rate. I'm further away from being able to buy a house than 5 years ago.
- brc 11y agoName a single deflationary spiral that has happened. Identify how much spending you can postpone until next year. Reflect if a deflationary spiral is even remotely likely.
- jacquesm 11y ago> Name a single deflationary spiral that has happened. None whatsoever. > Identify how much spending you can postpone until next year. Everything except for life's necessities. > Reflect if a deflationary spiral is even remotely likely. It isn't but it's an interesting thought experiment. A world with a large deflation is probably a world in which all natural resources have been harvested and the only things that still flow freely are sunlight and rain.
- cynicalkane 11y agoThe extremely strict monetary policies of German president Hindenburg, a reaction to the hyperinflation of a few years before him, caused a deflationary recession that directly preceded the rise of Hitler.
- 11y ago