Interesting Inflation News Links (March 24, 2009)

* February CPI seen at 1 year low (International Herald Tribune)

The official inflation rate is expected to fall further towards its 2 percent target in February but the price gauge used to fix most wage deals will probably turn negative for the first time in nearly 50 years.

* Deflation risk sparked by price falls (ITN Online)

Inflation is expected to have turned negative for the first time in nearly 50 years when figures are released later.

* Q&A: The main measures of inflation (Ashley Seager, Guardian Unlimited)

There are two key measures – the retail prices index (RPI) and the consumer price index (CPI). The RPI is the oldest and broadest measure and is often known as the all-items index. It is this one that had been expected to dip below zero today , marking the onset of deflation , but it actually held up at 0%. The more narrow CPI index showed a surprising rise to 3.2%.

* Brazil’s banks: Spread bets (Economist)

WITH the economy sliding towards recession, at least Brazils Central Bank finds itself able to cut interest rates hard and fast. On March 11th it slashed its benchmark Selic rate by one-and-a-half percentage points, to 11.25%. Further cuts are expected. A welcome novelty: in the past, a fragile currency and roaring inflation prevented such counter-cyclical measures. But the rate cuts are not b…

* Surprise rise in inflation defies City predictions (Julia Kollewe, Guardian Unlimited)

The headline rate of inflation proved surprisingly resilient last month because of higher than expected food and alcohol prices confounding expectations among City economists of a fall.

* Weak pound sparks inflation rise (The Independent Online)

The UK’s annual rate of inflation showed a shock rise in February after retailers offset higher import costs caused by the weak pound.

* Blanchflower sees no sharp rebound (International Herald Tribune)

The economy may not bounce back as sharply as hoped and unemployment will keep surging, Bank of England policymaker David Blanchflower said on Monday, urging the government to take immediate, drastic action.

* Global rally stalls in London after shock inflation rise (James Quinn., Telegraph)

The FTSE 100 index of leading shares fell 1.1pc after the Consumer Prices Index (CPI), the measure of inflation used in economic policy, rose unexpectedly to 3.2pc in February and RPI, which includes housing costs, fell less-than-expected to zero.

* The Global Economy: Threats–and Responses (Beth Ann Bovino, BusinessWeek)

The Global Economy: Threats–and Responses The third of a three-part report looking at how major countries are faring in the global downturn, what they’re doing to combat the weakness, and when they might recover

* Wall Street falls as global rally stalls (Telegraph)

The Dow Jones fell 115.65 points or 1.5pc to 7660.21 after Monday’s 7pc rise, as the nation’s two top banking officials, Ben Bernanke and Timothy Geithner, called for stronger regulation of financial firms and Nobel Prize-winning economist Paul Krugman said the government will have to seize major lenders.

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