Tuesday, 15 September 2009

Inflation numbers are out

Link: Gov stats

The inflation numbers for last month (Aug 09) are:

CPI: +1.6% (was +1.8% in July)
RPI: -1.3% (was -1.4% in July)

If you strip mortgage interest payments out of the RPI it suddenly goes up to +1.4% (was +1.2% in July.) So we still have the effects of the 0.5% base rate helping keep inflation down.

CPI is being depressed by the moment by gas and electricity price hikes which happened 13 months ago and so have dropped out of the back end of the calculation. The prices are still high of course - but the BoE isn't counting them anymore.

The VAT cut, due to end at the end of the year, is also keeping the numbers down.

My take: inflation is still a greater risk than deflation.

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