Changes announced in the Summer Budget could be brewing up a storm in the buy-to-let market. Dominic Frisby explains what that means for house prices.
The UK bank rate
If the UK's bank rate (what we all used to call 'base' rate) rises, mortgage rates won't be far behind. That could mean higher mortgage payments for millions.
This chart will give you an idea of just how low the UK bank rate currently is. It shows the bank rate in red, and RPI minus the bank rate in blue going back to 1948.
In other words, RPI is about as high as it's been compared with the Bank's core interest rate since the early 1980s. For how long can this continue?
CRB/Reuters food index
With around 11% of the UK CPI consisting of foodstuffs, this index is a useful indicator of future cost of living rises. Food prices are more volatile than changes in the overall cost of living.
The index rose by more than 10% over the last decade, but as of now, the index is about 8% lower year-on-year.
That could indicate that Britain's inflationary pressures are decreasing for the moment.
Many of the goods we buy in our shops are made in China. So China's inflation rate is now a major determinant of the UK's cost of living.
For years, we've been used to paying lower prices on our Chinese imports. But soaring wages and pricier food drove up CPI in China, and that meant higher costs for British consumers.
Chinese inflation has slipped since 2011. June's Chinese CPI was up by 1.4% year-on-year.
The CBI MTE survey
This survey gives the latest snapshot of UK manufacturing trends. It's a handy guide to price pressures at the factory gate – and to CPI inflation.
For June, this sub-index stood at -7, ie, 7% more survey respondents expected their selling prices in three months' time to be lower rather than higher.
The index leads UK inflation by some two months. The broad downtrend suggests inflationary pressure is falling for the moment.
The producer price index (PPI)
The 'output' PPI - often called the 'factory gate' price – measures what the UK's manufacturers charge their retail customers, who in turn sell on to us.
PPI output prices tend to be more volatile than consumer prices, but the overall trend is similar and they are a handy warning indicator.
June's output PPI was 1.5% lower year-on-year. The downtrend in PPI suggests inflationary pressure is easing for the moment.
UK average weekly earnings (AWE) index
If wages rise, employers try to pass these costs onto customers by raising prices, thus pushing up inflation. UK labour costs are rising.
May's AWE index shows total UK wages rising an annualised 1.0%.
A sudden jump in pay packets would add to inflationary pressures and could force a rate hike sooner than expected.
The BRC Nielsen shop price index
This is a key indicator of what's happening to prices in Britain's shops. So it's a very handy guide as to what to expect from UK CPI inflation.
In June, the BRC Neilsen Shop Price index was down 1.3% year-on-year. It tends to be 1-2% below UK CPI.
The overall downtrend in the SPI suggests inflationary pressure is easing in Britain for the moment.
The failure of business and the government to explain why Jeremy Corbyn’s ideas are dangerous risks making them more influential, says Matthew Lynn.
Britain’s prisons are overcrowded and violent places – and overstretched staff can’t cope. With more budget cuts on the way, what hope is there for change? Simon Wilson reports.
Supermarket suppliers would have you believe the retailers are driving them out of business. But they’ve nobody to blame but themselves, says Bengt Saelensminde.
Greece is just cutting back on the extravagant bribes and payoffs to zombies, says Bill Bonner.
Activist investors have made the headlines recently, but what do activists do? And are they a help or hindrance in the long run? Piper Terrett investigates.
Be it blackmailing unfaithful husbands or taking remote control of a speeding car, opportunities for hackers are endless. But so is the market for cybersecurity, says Matthew Partridge.
A downturn in profit growth has put paid to America’s share buyback frenzy.
Greece has signed up to a deal in the nick of time that will see it begin negotiations over a third bailout package.
The government wants to tackle the problem of equal pay between men and women. But not everyone agrees that it’s going about it in the right way.
The first US interest-rate rise since 2006 is looks to be just a few months away.