PowerSwitch

http://www.bbc.co.uk/news/business-32793481

The main measure of UK inflation turned negative in April for the first time on record, with the rate falling to -0.1%.

It is the first time Consumer Price Index (CPI) inflation has turned negative since 1960, based on comparable historic estimates, the Office for National Statistics said.

The biggest contribution to the fall came from a drop in air and sea fares.

See also: http://www.bbc.co.uk/news/business-32287336

Deflation: What it means in practice

good for me - cheaper goods

The biggest contribution to the fall came from a drop in air and sea fares.

That's going to make a huge difference for the average person in the UK isn't it!! It will, though, make a difference for the Kleptocracy as they fly off to their tax havens.

This is, apparently, a temporary blip caused by recent falls in oil prices. However, the underlying Core Rate is 0.8%, which is still pretty low and may be more of a concern.

This is not altogether surprising when one recognises that much of the reduction in unemployment over the last couple of years will have been from people migrating onto min. wage and/or zero hours contract jobs, or into self-employment which may be paying little or nothing in the way of a living wage.

Wage inflation is, apparently, running at 2%. I'm not sure how this is calculated, but I'm guessing it won't take into account the above changes in the employment market. The real figure may therefore be quite a bit lower.

Wages could increase if the level of economic activity reached a point where labour became in short supply but, given increasing levels of people being replaced by technology and an open door to a potential labour force of 400 million+ people, I think that is unlikely.

Low to zero inflation could become the new normal. Even an energy price recovery would only have a short term effect on inflation, just as the recent reductions have led to a short term negative inflation.

The house of cards is falling over: without the 3% growth (read inflation) the national debts can't be outrun.

Like all ponzi schemes, unless there is 'growth' the pyramid collapses.

Welcome back, Maudibe.

I would suspect that much of that wage inflation is from top earner's wages. Also the government and *ankers are bemoaning the low levels of productivity increase. This means that they want people to be replaced with fossil fuelled power usage, at a time when we are supposed to be reducing our reliance on carbon fuels, which would mean higher unemployment. There's no consistency in government thought and they still don't get it on climate change and global warming.

Thanks for the welcome back Ken... I never really went away and was just lurking

But my oh my it is quiet on this board now....

Regards your comment, totally agree - - but with the addition that I am now convinced that despite their education/academic prowess, the MPs have not got a frecking clue about how it all actually works (or doesn't).

Either that, or they are better liars than they are dressed up to be. LOL

I am most interested to see how things pan out over the next couple of years.

Just as a note, RPI went negative in 2009. RPI is now 0.9%. So it depends upon which ruler you use.

House price inflation is also about 10%,


Peter.