From the FT;: The main measure of inflation targeted by the Bank of England may be changed to include housing costs, following fears that a failure to take proper account of soaring housing prices may have exacerbated the financial crisis.
Duh? Isn't that the main difference between CPI and RPI which the government is trying to scrap in order to save itself money?
About time too. This was one of Brown's worst mistakes, and that's saying something given his record.
It's one of the differences but there are several others.
Another screeching u-turn by the Treasury? "Quelle surprise."
IIRC the EU (Eurostat) has for a long time been looking to find a way to include housing costs in the HICP which all member states would accept. So I'll believe the change when it happens. And even if the change comes to pass it doesn't mean the CPI will be replaced for all purposes: it'd easy enough to add another measure which is used for the BoE target leaving the old-style CPI for benefits and public sector pensions.
Except that adding them in when they are already at their highest point in
100 years isn't going to solve the problemFor it to work they will have to go back 15 years and add it in retrospectively
tim
Well it probably won't make any difference right now as we're not going to get high house price inflation for a while. But it might in the future.
If only we could...
What I mean is if we have a correction downwards it will show lower inflation (or deflation) when all it is is a correction of previous inflation which (people who get inflation proofed things) haven't been protected against
tim
In message , Tiddy Ogg wrote
Is this because they expects rents to go down if the government are going the cap the amount they are paying in benefits?
They're talking about the measure for the BoE target, not the measure for (people who get inflation proofed things).
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