1960 - that was the last time prices actually declined.

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Fullofsurprises
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Prices are down by 0.1% in April!
http://www.theguardian.com/business/...turns-negative

The last time this happened was 1960. :eek:


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Although this seems like good news, it might not be - deflation is a bad thing if it continues.

It might also be evidence that the economy is too sluggish and even contracting in reality. :sad:
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Arkasia
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So it's a bad thing if it keeps going up, a bad thing if it stagnates, and now it's a bad thing if it goes down?

The government just can't win, can they?
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Fullofsurprises
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(Original post by Arkasia)
So it's a bad thing if it keeps going up, a bad thing if it stagnates, and now it's a bad thing if it goes down?

The government just can't win, can they?
Probably a modest level of inflation, say, 2% or around that figure, is healthy.

All of the experts think this is just a blip, but experts can be wrong and personally I think it's likely the economy is slowing down after a spurt. The general picture is that we are in one of the slowest and shallowest recoveries from a recession since records began and this latest figure tends to confirm that picture.
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The_Mighty_Bush
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This is to be expected with fiat money.
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Rakas21
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(Original post by Fullofsurprises)
Prices are down by 0.1% in April!
http://www.theguardian.com/business/...turns-negative

The last time this happened was 1960. :eek:

Image

Although this seems like good news, it might not be - deflation is a bad thing if it continues.

It might also be evidence that the economy is too sluggish and even contracting in reality. :sad:
Deflation is only really bad if it feeds into price expectations and people feel well off enough to save, the fact that we have so many issues probably means that won't occur. In addition it's mainly down to lower transport, fuel and food (due to transport) prices rather than demand driven.

(Original post by Fullofsurprises)
Probably a modest level of inflation, say, 2% or around that figure, is healthy.

All of the experts think this is just a blip, but experts can be wrong and personally I think it's likely the economy is slowing down after a spurt. The general picture is that we are in one of the slowest and shallowest recoveries from a recession since records began and this latest figure tends to confirm that picture.
This does not really confirm anything about the recovery, for the moment at least there's nothing really to suggest much of a slowdown in the economy and indeed cumulative growth is about on par with Germany since the recession now and well ahead of France but behind the US.

Though we do have some big issues which will cause problems down the line.
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MatureStudent36
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(Original post by Arkasia)
So it's a bad thing if it keeps going up, a bad thing if it stagnates, and now it's a bad thing if it goes down?

The government just can't win, can they?
Not with people like Full of Suprises.

In fact if it's a labour government inflation, stagnation and deflation are all good according to her.
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Sephiroth
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Meanwhile my local bus company just hiked bus fares by up to 20%. The sooner my taxes stop subsidising those rich corporations the better. While we're at it we can open bus lanes to public use and rid half the congestion on the roads leading to less emissions overall.
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Quady
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(Original post by Fullofsurprises)
Although this seems like good news, it might not be - deflation is a bad thing if it continues.

It might also be evidence that the economy is too sluggish and even contracting in reality. :sad:
As long as my pay at least stays the same (and I'm getting a rise in Sept) it will continue to be good news for me.

Not really, oil went from $115 to $45, and is now at $65. Unless you expect us seeing $10 oil again there isn't much else to be said.
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(Original post by The_Mighty_Bush)
This is to be expected with fiat money.
Sorry, deflation is to be expected with fiat money?
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The_Mighty_Bush
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(Original post by Quady)
Sorry, deflation is to be expected with fiat money?
No, that's pretty obviously not what I meant.

That deflation is a rare thing and that constant, fairly rapid inflation is common is to be expected with fiat money.
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Asolare
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When the BBC puts it as:

"A basket of goods and services that cost 100 pound last year, would have cost 99.90 this year."

I would be more inclined to say it seems less detrimental or celebratory than it's being made out to be
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MagicNMedicine
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What happened to all those people warning us that Quantitative Easing was the road to Mugabe economics and hyper inflation was just round the corner?

Or those right wing blogs telling us to buy gold because soon that would be the only thing left with value as western economies were finished...
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(Original post by MagicNMedicine)
What happened to all those people warning us that Quantitative Easing was the road to Mugabe economics and hyper inflation was just round the corner?

Or those right wing blogs telling us to buy gold because soon that would be the only thing left with value as western economies were finished...
The big central bankers have been slugging away with QE and fighting currency wars mainly because of massive deflationary pressures. Despite all the efforts since 2008, bank lending and credit have generally not recovered as well as they should. The world is stuck in a 1920s/30s-style competitive devaluation and deflation and it's going to get much worse. What we're seeing now is what happens when they turn the QE taps off and start to try to return to realism. Unfortunately, the reality is not very nice.
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MagicNMedicine
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(Original post by Fullofsurprises)
The big central bankers have been slugging away with QE and fighting currency wars mainly because of massive deflationary pressures. Despite all the efforts since 2008, bank lending and credit have generally not recovered as well as they should. The world is stuck in a 1920s/30s-style competitive devaluation and deflation and it's going to get much worse. What we're seeing now is what happens when they turn the QE taps off and start to try to return to realism. Unfortunately, the reality is not very nice.
Simple solution.

Massive housebuilding programme all financed by government borrowing.

Central bank purchase all the excess government bonds with newly created money, in fact get the central bank to purchase all outstanding government debt and write it off, with newly created money.

Result a large and permanent increase in the money supply.

Exchange rate of the pound will plummet helping exporters.

Deflation will be averted.
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JayReg
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(Original post by MagicNMedicine)
Simple solution.

Massive housebuilding programme all financed by government borrowing.

Central bank purchase all the excess government bonds with newly created money, in fact get the central bank to purchase all outstanding government debt and write it off, with newly created money.

Result a large and permanent increase in the money supply.

Exchange rate of the pound will plummet helping exporters.

Deflation will be averted.
Surprises me how persistent governments are with QE. It has it's merits but it has been way over done, its effect on asset prices and making the rich richer is ridiculous. So often government seems determined to exacerbate inequality. More ambitious and unorthodox monetary and fiscal policy has never really been properly considered.
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Rakas21
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(Original post by MagicNMedicine)
Simple solution.

Massive housebuilding programme all financed by government borrowing.

Central bank purchase all the excess government bonds with newly created money, in fact get the central bank to purchase all outstanding government debt and write it off, with newly created money.

Result a large and permanent increase in the money supply.

Exchange rate of the pound will plummet helping exporters.

Deflation will be averted.
Can't say i'm a massive fan of constantly weakening the currency although QE should continue so long as we have a deficit and GILTS are not trading at negative real yields. Though it seems i'm a minority in terms of wanting a strong pound.
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Commercial Paper
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Well, I'm certainly feeling the impact of deflation. Off-peak train fares where I live have just been hiked 35% and house price growth is around 10%. Our Satellite TV also went up about 5% amongst other things. Okay, this is very specific. But as someone else said, the perception amongst the public is that inflation is very high, not deflating. And therefore, deflation in this context is an extremely good thing because it compensates for high inflation in specific areas.

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Quady
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(Original post by will2348)
Well, I'm certainly feeling the impact of deflation. Off-peak train fares where I live have just been hiked 35% and house price growth is around 10%. Our Satellite TV also went up about 5% amongst other things. Okay, this is very specific. But as someone else said, the perception amongst the public is that inflation is very high, not deflating. And therefore, deflation in this context is an extremely good thing because it compensates for high inflation in specific areas.

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Off peak prices where I am were frozen this year and will be for the next two years.

Just had a circa 5% cut in my tv/phone/broadband package.

House prices I'm not too sure on, more like a 5% rise I think.
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Fullofsurprises
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(Original post by will2348)
Well, I'm certainly feeling the impact of deflation. Off-peak train fares where I live have just been hiked 35% and house price growth is around 10%. Our Satellite TV also went up about 5% amongst other things. Okay, this is very specific. But as someone else said, the perception amongst the public is that inflation is very high, not deflating. And therefore, deflation in this context is an extremely good thing because it compensates for high inflation in specific areas.

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It will be the cost of fuel more than anything that has brought the RPI down. As you say, many other costs have risen. Food prices are said to be static or declining, because of the alleged levels of competition amongst the supermarkets, but I think in reality they have simply dropped the quality and size of many common brands to compensate.

The press are carrying a number of articles at the moment about the drop in middle class living standards in particular - a lot of middle class salaries have fallen in real terms and many of the things regarded as integral to a middle class way of life have risen sharply in price.
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Fullofsurprises
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(Original post by Rakas21)
Can't say i'm a massive fan of constantly weakening the currency although QE should continue so long as we have a deficit and GILTS are not trading at negative real yields. Though it seems i'm a minority in terms of wanting a strong pound.
Your apparent complacency is ill-founded. QE is effectively a currency devaluation tool, but as everyone that matters has been quantitativating (not sure that's a word :giggle:), the net result has been a currency war of competitive devaluations, just like in the Hooverite era of the Great Depression. Overall demand remains sluggish, bank credit is still stuck and real growth has not regained the lost ground of the crash. As Stiglitz pointed out yesterday, "GDP per capita in the UK is lower than it was before the crisis. That is not a success". :lol:
http://www.theguardian.com/books/201...de-zero-growth
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