UK inflation down; whereart thou, green shoots?

Figures released today show the relatively stable CPI inflation rate down nearly 20% on last month, from 2.2% to 1.8%. This measure has long been discredited as it removes housing costs which are the biggest single component of most peoples' outgoings in the the UK.

The RPI is much better and this shows a drop from -1.1% to -1.6, drop of nearly a third.

The UK is definitely in a deflationary tailspin and the numbers are going to get worse. Only a year ago oil was at nearly $150 and today it is at nearer $50. There is a huge drop to be factored in over the next 3 months. CPI itself may well go negative for a time.

With this is sight, there is no chance of the UK raising bank rates, nor really do I think the Bank of England will stop Quantitative Easing either, despite the respite they have given in the past month.

It is a big jump to see hyper-inflation from here, it may come to pass if too much money is pushed into the system to try and heal it. However, it looks as if the monetary stimulus is increasingly pushing on a string. The debts need to be paid down and the economy (including Public Sector) needs to re-balance to adjust the the new size of the market.

Shame the Labour government wasted all our money in the good times as now would have been a very propitious time to spend more public money to keep us going; sadly, as we are broke this is no longer an option.

It is a long way up from here, years not months.

House Building back in fashion

The markets have been snoozing really this week, with volumes very low and today they are even lower. There has not even been much speculation on the change in Bank of England base rate, quite rightly, as it was left at 0.5%. The first time there has been no cut in 6 months.

However, much to the dismay of Alice and House Price Crash, it does seem as though the government have engineered a blip in the housing market. Yes prices are still falling, but volumes of sales are up, as are mortgage approvals. It is all very early days, but in share price terms it has been amazing. Taylor Wimpey are up 50% in a week, as are Barratt's. No doubt it may be too late to join the throng, but things have come off the bottom.

The Banks shares too like LLoyds and RBS are way up, over 100% off their lowest points of the year.

There is still an odds-on chance of another leg down in the market and the economy, but signs of life in the these bombed out sectors is a good thing; perhaps we are not all going back to live in caves after all. Something to be cheerful for over Easter.