Why we are better off than we should be
Article Abstract:
United Kingdom retail price inflation has risen to some 4% according to official figures, but this may be no more than 3.2%. This overestimate means that the government is overcompensating those in receipt of welfare benefits and holders of government securities, as are payers of capital gains tax who benefit from an inflation allowance. Deflation may occur when some goods such as computers drop in price, and changing consumption patterns also affect the cost of living, factors that official measures of inflation do not adequately reflect.
Publication Name: Investors Chronicle
Subject: Business
ISSN: 0261-3115
Year: 1998
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Index-linked gilts show their mettle
Article Abstract:
Index-linked government securities (gilts) appear cheap in relation to UK equities with yield gaps near zero. Yield convergence could be due to low inflation but inflation expectations could change. UK consumer and wage inflation could rise in 1997 leading to poorer inflation prospects. There could still be risks involved in index-linked gilts such as an increase in yields for overseas bonds which would increase index-linked yields and cause a capital loss.
Publication Name: Investors Chronicle
Subject: Business
ISSN: 0261-3115
Year: 1997
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