The UK’s 200 largest privately sponsored defined benefit (DB) pension schemes saw their deficits increase by £15.7bn to £77.6bn during October, according to Aon Consulting.

The shrinking of the deficit in September, down from £78bn to £61.9bn, has been almost entirely undone. Deficits are now firmly well north of the £70 billion mark again, a region where they have now spent four of the last five months.

According to Sarah Abraham, consultant and actuary at Aon Consulting,

“Currently many investors believe that the Government will be unable to deliver its annual inflation target of 2%. This increases pension scheme deficits because most pension schemes promise to pay benefits that are linked to inflation.

And it is this belief that price inflation will exceed the 2% target level, combined with a softening of asset prices, which has caused deficits to widen again.

With the largest 200 DB pension schemes combined having spent all of 2009 so far in deficit, the likelhood of moving out of the red any time soon is beginning to verge on wishful thinking.

UPDATE: The standard 750 x 500 pixel version has been added to Flickr.

Based on the data released by Office for National Statistics released earlier today, and used in articles elsewhere, the following two charts have been added to our Flickr account.

Monthly change in the Consumer Prices Index and the year-on-year CPI inflation rate. Period: September 2007 through September 2009. Size 750 x 450 pixels.

Inflation’s Ups and Downs. Which month’s normally see an increase in the CPI and which a drop? And what is the average percentage change in those months? This chart answers those questions. Size is 750 x 450 pixels.

A variation on the Property Price Performance Across Five Currencies chart, from 28 September, has been added to our Flickr account. Usual Creative Commons licensing rules applies.

Maximum size is 750 x 450 pixels.

Based on the latest Nationwide Consumer Confidence Indices 4-in-1 chart, as updated yesterday with the September data, two charts have been added to our Flickr account. Which means, subject to the usual Creative Commons requirements, they are useable.

All four indices covering September 2007 through September 2009. Size 515 x 350 pixels.

The very telling gap of between the Present Situation Index and Expectations Index. Size is 750 x 450 pixels.

A variation on the Euro Health Care chart, from 23 September, has been added to our Flickr account. Usual Creative Commons licensing rules applies.

Maximum size is 750 x 450 pixels.

Today’s release of data from Land Registry showed prices fairly flat in August, with the average house price in England and Wales £155,968, down 0.1% on the month and 9.4% on the year.

In US$ they rose $2,367 to $257,955. In Yen, up ¥374,219 to ¥2.451 million. The Euro price was down €625 to €180,876 and in Gold the price was down 8.19 ounces to 266.3 ounces, which is still a vast improvement on the February low of 229.8 ounces which was less than a third of the July 2004 high of 704.1 ounces. Though given the brief foray to £700 an ounce in February, the right purchaser could have traded even fewer ounces for the average property that month.

Our own Five Currencies Index chart, based on Land Registry and Bank of England data, has been updated. Whilst prices in £, $, ¥ and € may be at 2005, 2004, 2003 and 2002 levels respectively, the price in gold is still down nearly two thirds form the 2004 peak and only barely above the January 1995 level.

Transactions Trending Up

The number of sales in June were up for a fifth straight month, at 48,903, and the highest since July 2008. It was also the second month above the 12-month simple moving average, which is now at 40,270. That said, the moving average is still in a downtrend and the approaching winter months are likely to prove the real test.

The interactive chart showing sales and average prices has been updated.

Quality Over Quantity

As can be seen in the above chart (which is also available via Flickr), quality is continuing to out perform quality. With detached properties continuing to prove themselves the preferred choice. In simple terms, the more neighbours the bigger the initial declines.

Given that those moving to detached properties are likely to have both reasonable income and equity, finance deals are more likely to be forthcoming. Buyers want quality homes and lenders want quality borrowers. Which is why the late-to-the-party bubble chasers and those who treated their homes as ATMers are failing to meet the tightened lending criteria.

Much of this also plays in to what I have discussed previously, especially in 2006’s ‘Sell Now! Why You Don’t Want to be a Homeowner’ and 2008’s ‘Killing the Homeowner Dream: Debt, Delusion and Demographics’. In particular the secular bears in homeownership, house prices on a P/E ratio and in personal debt and the secular bull in household size will impact housing and house prices over the long-term. The under supply of quality detached and semi-detached properties compared to the oversupply of flats should maintain the quality over quantity trend for some considerable time to come.

Today’s release, by Office for National Statistics [PDF], of the first estimate retail sales statistics for August, showed that:

• Seasonally adjusted volume of retail sales in August 2009 was unchanged on July 2009 but rose by 2.1% compared with August 2008, of which:
  • Predominantly food stores increased by 3.3% compared to the same period a year ago.
  • Predominantly non-food stores increased by 0.2 per cent, comprising:
    • Non-specialised stores increased by 4.2%
    • Textiles, clothing and footwear stores increased by 4.2%
    • Household goods stores decreased by 3.9%, driven by a decrease in electrical stores.
    • Non-store retailing and repair increased by 12.4%
• The value of retail sales declined by 0.1% in August 2009 compared with July 2009 and rose by 1.6% compared with August 2008, of which:
  • Predominantly food stores rose 5.5%
  • Predominantly non-food stores declined 2.8%, comprising:
    • Other stores down 4.2%
    • Household goods stores down 3.7%
    • Textile, clothing and footwear stores down 3.2%
    • Non-specialised stores up 1.6%

This continued skewing of spending with Food Stores as opposed to Non-Food Stores, or more simplicitically Essentials as opposed to Discretionary, is symptomatic of the increased need by cash-strapped housheolds to get the most from limited budgets.

The Retail Sales Index interactive chart has been updated.

Note: The August 2009 period covered 4 weeks from 2 to 29 August. Retail sales volume is the total takings adjusted for inflation and the value of retail sales is the total actual takings. All volume statistics referred to above are seasonally adjusted and chain linked.

I originally watched these three videos, which make up one documentary, on Goldseek. Given that money printing is not just a U.S. phenomenon, and that the Labour Government has indulged in similar bailouts and the U.K. also faces huge unfunded liabilities, I figured I’d post them. American or not, you may also want to check out the National Inflation Association.

Part 1

Part 2

Part 3

Whatever you take away from these videos, take away these four things:

1. When old bubbles burst they can’t be re-inflated, trying to do so only creates new bubbles elsewhere.
2. When the currency can’t be trusted, the people will find something else to take its place.
3. When printing fails, price controls are introduced. And price controls always lead to reduced supply and empty shelves.
4. Precious metals are finally starting to take their place in the public consciousness.

Copies of the latest Nationwide Consumer Confidence Indices 4-in-1 chart, as used here, have been added to our Flickr account. Charts are the usual 500 x 325 pixels.

4-in-1 chart with Reality/Hope disconnect comment.

4-in-1 chart without comment.

The Bank of England’s Monetary Policy Committee (MPC) today voted to:

• Keep the official Bank Rate at 0.5%, where it has been since 5 March 2009.
• Continue with its asset purchase programme though the Asset Purchase Facility (APF), aka Quantitative Easing, currently set at £175 billion.

Purchases of almost £146 billion have been made under the APF since its use for monetary policy purposes was first announced after the March meeting.

The APF was initiated on 5 March 2009 as a £75 billion programme. On 7 May 2009 it was increased by £50 billion to £125 billion. Then again, on 6 August 2009, it was increased by another £50 billion to £175 billion. At the same time, the practice of Gilt-Lending was announced.

The Committee expects the announced programme to take another two months to complete. The scale of the programme will be kept under review.

Given the massive amounts of debt being incurred by the incumbent Government, and in light of credit ratings agencies putting UK national debt on watch pending possible downgrading, it is expected that further expansion of the APF is extremely likely.