Pre Election House Price Bubble On Its Way

According to the Office for National Statistics (ONS) House prices rose 0.4% in June compared to the previous month, the year on year rise now stands at 3.1% compared with 2.9% in May.

This increase outstrips price inflation (CPI) which was 2.9% in June.

Howard Archer, chief UK economist at IHS Global Insight, is quoted in the Telegraph:

"We now expect house prices to rise by at least 3pc over the rest of 2013 and to then increase by 7pc in 2014."

House price bubbles of course will benefit the government in the run up to the election, as people (rather foolishly, given that the rise is relative) feel better off when the house that they live in rises in value.

Inflation Falls

Inflation has taken a surprisingly sharp turn downwards from 2.8% in March to 2.4% in April, the so called "experts" had predicted 2.7%.

The fall has been caused by sharp falls in transport costs (eg air fares which fell by 6.4%). Unfortunately, the cost of food and non alcoholic beverages has increased by 0.7%.

In other words, those who are on tight budgets will continue to be squeezed.

British Gas Raises Prices

As we face another winter, British Gas has announced that it will raise the prices that it charges for gas and electricity by 6% as from 16 November.

Npower are expected to announce its price rises (rumoured to be higher than 6%) this afternoon.

Inflation Down

For the first time in this Parliament, CPI inflation has fallen from 3.5% in March to 3% in April. For the record, RPI inflation fell from 3.6% to 3.5%.

This also means that it is the first time the George Osborne has not received a letter from the Governor of the Bank of England, to explain why the inflation target has been missed. An open letter is triggered if the CPI rate remains above 3% or below 1% for three months in a row.

Drinks all round!