Wednesday, 18 February 2009

UK import prices up over 8 percent

Deflation, deflation everywhere and not a falling retail price in sight.

Sterling's recent collapse has done wonders for import price inflation. As of the third quarter of 2008, prices were up over 8 percent compared to a year earlier.

At least, the Bank of England should be happy. They are very anxious to keep inflation alive and well in the UK.

5 comments:

Anonymous said...

People are going to feel very poor soon.

We are seeing serious increases for goods & services we buy abroad 20 - 30 % (rather than 8%) and these increases have yet to feed into the retail arm.

Paul D said...

How can sterling have slumped the way it has and the cost of our imports not shot much further? Is it "buyer power" that has kept the cost increases to as low as 8%?

John East said...

The poorest, low paid and many pensioners, whose food bills make up a lerge part of their income are particularly suffering at the moment. The politicos are fond of telling us that they are battling deflation, and yet on my last trip to Tesco's I noted:

Tinned tomatoes 35p (6 months ago 20p)
Cucumbers £1.25 (6 months ago 65p)
Tinned tuna 65p (6 months ago 30p)

I could go on, but this is getting boring. Suffice it to say the pound has fallen around 25% over this period but many imported food items have doubled in price.

So much for deflation. Add on the coming central government tax hikes needed to pay for the bail outs, and the obligatory double inflation rate council tax rises, and we will soon all be royally screwed.

Mark Wadsworth said...

Nice to see John East back and blogging again.

As to imported inflation, it's hardly a surprise, seeing as GBP has fallen 25% on a trade weighted basis. For home-owners, this is a real bummer, but for tenants it all evens out as rents will fall slightly so that they are no better or worse off as a result.

Actually for home-owners it is a double-bummer, because property values are ultimately just a balancing figure - they soak up what is left after people have paid for essentials - so if essentials go up, house prices go down. So pensioners who are feeling the pinch ought to sell up and trade down now before house prices fall any further.

Ah well, don't say I didn't warn you.

John East said...

Only part time I'm afraid Mark.