New Home Owners And Snagging Forum
Investments => Financial Markets and the economy => Topic started by: The Prophet on January 02, 2012, 12:58:10 pm
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For the first time since the Second World War, real incomes have fallen for a third year running.
The Office for Budget Responsibility is not expecting earnings growth to over take inflation before 2013.
The Institute of Fiscal Studies say that households will be worse off in 2016 than they were in 2006.
Inflation will "fall" next year purely because of the 'base effect' where large increases fall away during the reporting period.
For example if inflation was 100% in the last 12 months and zero over the next 12 months, inflation would be reported as 0%, even though all the prices were still 100% higher than they were two years ago.
So expect some headline "inflation has fallen to 3.9%" in 2012 as all the huge energy, fuel and VAT increases from 2010-2011 start to fall away.