Now Inflation Falls

[youngmafbog]

So I wonder what Balls will have to say to that to put it down?

http://news.sky.com/story/1213427/inflation-drops-below-bank-of-england-target

[Gromit]

Inflation is a sign of economic growth. Very low inflation is an indication that the economy is faltering. The worry is that we will slip into deflation which will mean businesses start making less money, hitting employment, which again harms economic recovery.

http://www.huffingtonpost.com/harlan-green/deflation-is-the-danger_b_3926789.html

[Gromit]

http://blogs.ft.com/the-a-list/2014/01/13/deflation-can-still-pose-a-danger-to-the-fragile-recovery/#ixzz2tgLZlX4v

// Mario Draghi may have offered reassurance last week that the eurozone is not facing a Japan-style deflationary lost decade but, frankly, his reassurance is not terribly convincing. Japan’s problems were partly a reflection of a collective failure to foresee the deflation heading its way. As economists at the US Federal Reserve noted back in 2002: “Japan’s deflationary slump was very much unanticipated by Japanese policy makers and observers alike … this was a key factor in the authorities’ failure to provide sufficient stimulus to maintain growth and positive inflation.”
Over the past 12 months, inflation throughout much of the world has dropped like a stone, ending up at levels wholly unanticipated at the end of 2012. If Japan’s problems partly stemmed from a failure to spot the onset of deflation, might it be that policy makers in the west could be sleepwalking into the very same problem? After all, inflation in both the US and the eurozone is now well below target, a result that should at least give central bankers pause for thought. //

[DTCwordfan]

Your arguments are sound, gromit, only missing the stronger GDP growth that we are now seeing, especially in the Manufacturing sector, overall GDP put at >2.4% for the next 3 years (source pwc).

The issue for the UK is not inflation and whether that transposes into a higher inflation rate but the management of the exchange rate to ensure good competitivity on the export markets......

[Canary42]

It's all just part of the usual Conservative con - make the figures really bad in the early years of the government then on nearing the election allow improvement and boast about the phoney recovery.

[Gromit]

// The last of the "Big Six" energy firms' price hikes fed through in January, with E.ON and EDF Energy raising prices by 3pc. However, the ONS said this was largely cancelled out by British Gas, Britain's biggest energy supplier, which cut prices by 3.2pc to reflect the Government’s recent reduction in environmental levies on bills. //

So the Government manipulated the figures. Without the cut in Environmental levies, the inflation rate would be much higher. Last time inflation was this low was in 2009 when the financial crash was at its height.

[heathfield]

The CPI is now at 1.9%. But at the same time the Retail Price Index (RPI), that was the standard we all used previously, has actually increased, from 2.7% to 2.8%. Doesn't take a genius to figure out why the government prefers the CPI to the RPI.

[DTCwordfan]

Wrong, Canary, as to //It's all just part of the usual Conservative con - make the figures really bad in the early years of the government then on nearing the election allow improvement and boast about the phoney recovery.//

Any government manipulates the figures for propaganda purposes - any government.