Inflation versus deflation
Discussion
can we have an up to date discussion on this please?!
most economists are of the view of below trend but still reasonable growth for UK and quite strong growth (relative to that) in US and A-P.
we're witnessing inflation.
but a lot of actuaries and the like seem to have deflationary bees in their bonnetts.
do you share their views?
if so why?
what sort of time frame are you talking?
if we had delfation it'd have to be as a result of 'importing it' from other economies, right?
if so, is there really that much spare capacity?
most economists are of the view of below trend but still reasonable growth for UK and quite strong growth (relative to that) in US and A-P.
we're witnessing inflation.
but a lot of actuaries and the like seem to have deflationary bees in their bonnetts.
do you share their views?
if so why?
what sort of time frame are you talking?
if we had delfation it'd have to be as a result of 'importing it' from other economies, right?
if so, is there really that much spare capacity?
With RPI still running at around 5% despite base rates at one tenth that level and I think this should be a short topic.
If you want to see some small-scale deflation just look at the price of beer, wine, computers and cars over the past 20 years.
If you want to see some small-scale inflation look at healthcare, water, electricity and petrol over the same period. Maybe food too.
The second category will IMO continue to "win" in the overall balance. Especially when interest rates start to rise. At present most savers are losing around 2.5% pa in real terms.
If you want to see some small-scale deflation just look at the price of beer, wine, computers and cars over the past 20 years.
If you want to see some small-scale inflation look at healthcare, water, electricity and petrol over the same period. Maybe food too.
The second category will IMO continue to "win" in the overall balance. Especially when interest rates start to rise. At present most savers are losing around 2.5% pa in real terms.
BigJonMcQuimm said:
Inflation all the way!!! VAT bomb is going to hurt!
Why? Surely people will buy less goods if VAT goes up. People aren't commited by law to buy anything, so simply raising a sales tax won't necessarily bring in much more revenue.It's a bit like many companies saying the have to 'pass' on a rise in raw materials to their customers. The customers simply buy less or go elsewhere.
Silver993tt said:
BigJonMcQuimm said:
Inflation all the way!!! VAT bomb is going to hurt!
Why? Surely people will buy less goods if VAT goes up. People aren't commited by law to buy anything, so simply raising a sales tax won't necessarily bring in much more revenue.A VAT rise would collect extra tax from all the free loading chavs n spivs, rather than just from the grafters. It'll also collect a bit more from the 'rich' when they spend money here.
Lots of people on above average incomes make adjustments to their finances to help offset income tax rises (and NI), but probably won't do anything about a VAT change.
Sure it'll be inflationary, and with the rate labour were running the printing presses I'm not at all concerned about deflation anytime within the next 10 years - the sheer volume of money created will see to that.
7thCircleAcolyte said:
Would an extra £25 on top of something costing £1000 really put you off?
Well, paying £200 on top of the base price would certainly put me off. A rise of 2.5% would make the increase psychologically much higher. In fact many would see it as nearly a quarter of the price.When will interest rates go up?. They better do soon, most tory voters are savers; hell libour bent over backwards to help thier voting base, how about something for the people who put you in power dave?. You will NEVER get in again if you dont, the small c conservative lifestyle is based around careful saving; without a return on investment, well we might as well have winkys(millipede's)? lot back in and tolerate the odd intrusions of the state.
7thCircleAcolyte said:
Sure it'll be inflationary, and with the rate labour were running the printing presses I'm not at all concerned about deflation anytime within the next 10 years - the sheer volume of money created will see to that.
Agree, though collapsing asset prices can also lead to deflation - which is why it's a good idea to include house prices in the basket of inflationary goods - but as long as they pull all the stops out to keep asset prices level i can't see the UK going into a deflationary cycle. Besides all the countries we import stuff (and therefore inflation) from appear to be suffering from inflation (China, India, etc.) Edited by fido on Wednesday 16th June 22:30
"Inflation in the eurozone hit a 20-month high last month, European Union data has shown.
Annual inflation in the 16-nation bloc rose to 1.7% in July, up from 1.4% in June and the highest rate since November 2008, Eurostat said.
The figure was boosted by more expensive fuel costs for transport, and higher alcohol and tobacco prices.
Across all 27 nations in the European Union, prices were up 2.1% in July, compared with a rise of 1.9% in June.
Some countries - Finland, Greece, Spain, Portugal and Romania - raised their rates of VAT in July, which also helped to push prices higher.
"The core inflation rate is slightly higher but with the VAT hikes that there have been in the eurozone, that's not surprising," said Astrid Schilo, Europe economist at HSBC.
On a month-on-month basis, prices in the eurozone fell 0.3% in July, and in the wider EU fell 0.2%."
http://www.bbc.co.uk/news/business-10985708
Is there much evidence to support the deflation argument?
Annual inflation in the 16-nation bloc rose to 1.7% in July, up from 1.4% in June and the highest rate since November 2008, Eurostat said.
The figure was boosted by more expensive fuel costs for transport, and higher alcohol and tobacco prices.
Across all 27 nations in the European Union, prices were up 2.1% in July, compared with a rise of 1.9% in June.
Some countries - Finland, Greece, Spain, Portugal and Romania - raised their rates of VAT in July, which also helped to push prices higher.
"The core inflation rate is slightly higher but with the VAT hikes that there have been in the eurozone, that's not surprising," said Astrid Schilo, Europe economist at HSBC.
On a month-on-month basis, prices in the eurozone fell 0.3% in July, and in the wider EU fell 0.2%."
http://www.bbc.co.uk/news/business-10985708
Is there much evidence to support the deflation argument?
I thought it was the US that was endanger of deflation and for us it's inflation or is it the other way round?
I have no idea why the hell I'm saving each month for .5 % plus an introductory bonus
My HSBC offers australian dollar fixed deposit accounts giving over 4% but then theres the tax on gross interest to pay and the amounts lost in conversion.
I have no idea why the hell I'm saving each month for .5 % plus an introductory bonus
My HSBC offers australian dollar fixed deposit accounts giving over 4% but then theres the tax on gross interest to pay and the amounts lost in conversion.RichyBoy said:
I thought it was the US that was endanger of deflation and for us it's inflation or is it the other way round?
I have no idea why the hell I'm saving each month for .5 % plus an introductory bonus My HSBC offers australian dollar fixed deposit accounts giving over 4% but then theres the tax on gross interest to pay and the amounts lost in conversion.
Depends if you're a UK tax payer or not I have no idea why the hell I'm saving each month for .5 % plus an introductory bonus
My HSBC offers australian dollar fixed deposit accounts giving over 4% but then theres the tax on gross interest to pay and the amounts lost in conversion.
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