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Everyone; things are really expensive at the moment I’m worried about our finances and our ability to pay for the basics never mind a holiday new telly etc Bank of England; hold my pint
In the spirit of reconciliation and happiness at the end of the Banter Era (RIP) and as a result of promotion I have cleared out my ignore list. Look forwards to reading your posts!
And all those £4k's per year is going straight to the banks.
Not to local businesses, service industry, leisure/entertainment sector etc who will suffer the most.
And there is your recession...
I think there's a degree of inevitability about all this. I mean we spent alot of money avoiding recession (or in the case of covid, mitigating it hugely) and kept easy money going for too long - we just delayed the pain, which is now coming on fast. I just don't see what the alternative is now, remembering that high inflation hurts the poorest the most.
Has anyone ever looked at their own postings for last day or so? Oh my... so sorry. Was Ullaa
One thing you need to remember in this context is, governments like inflation as it pushes up their tax returns amongst other reasons. You say “it’ll work”. When?
As wages try to keep pace with inflation so the cost of government borrowing increases.
The overall mortgage problem was not helped by Truss's lunatic brexit budget.
Sunak claimed that other countries are suffering from the effects of higher inflation. He did not mention any EU countries. However if it is out of UK control then why did he promise to half the amount ?
And dimwitted righties are calling for tax cuts, funded by cuts in public spending. Utter bllox from the righties, as usual. Any temporary increase in pay will be soon offset by a comparative reduction in wage rises.
And I doubt anyone will think they should meet the national debt payments instead of, as often, purchasing imported goods.
Well there is an obvious and much discussed problem. The main lever the BoE has to fix inflation with is raising interest rates. Therefore making many even poorer. But it seems to be the only way -and trying to alleviate the costs some other way will most likely reduce the effectiveness.
As a struggling private renter I do tire of hearing quite so much attention being given to what it all means for home owners. Maybe stretching your budgets so much on your mortgage payments wasn't the best idea.
[Post edited 22 Jun 2023 12:09]
Have you considered buying fewer avocados and cancelling your Netflix?
I'm one of the people who was blamed for getting Paul Cook sacked. PM for the full post.
As wages try to keep pace with inflation so the cost of government borrowing increases.
The overall mortgage problem was not helped by Truss's lunatic brexit budget.
Sunak claimed that other countries are suffering from the effects of higher inflation. He did not mention any EU countries. However if it is out of UK control then why did he promise to half the amount ?
And dimwitted righties are calling for tax cuts, funded by cuts in public spending. Utter bllox from the righties, as usual. Any temporary increase in pay will be soon offset by a comparative reduction in wage rises.
And I doubt anyone will think they should meet the national debt payments instead of, as often, purchasing imported goods.
If you can, listen James Cleverly's interview from this morning. He couldn't answer one way the Government was going to reduce inflation.
There's a guy that J2 has been posting a lot (Gary Stevenson) who has changed my view a bit on this. He's a former trader turned economist and he went over some of this. Originally I was with you and a few others but surely this is just making a bad problem worse for everyone, in that the issues weren't down to people having money to burn but that the inflation was more down to energy costs + knock on from the war.
He argued that it was more down to us pumping the economy with money over the Covid period which flowed into the wealthy (the properly wealthy) and now inflation is rocketing up. Whilst the Government should be focussing on trying to get some of that back, they're not doing a lot on the fiscal side that really caused it.
Meanwhile, BoE does the monetary side and really they only have this one lever to use, which they are doing. They aren't wrong to do it and it'll work but it is at the expense of the middle class and below whilst the wealthy are ready to hoover up even more stuff, increasing inequality which is already getting quite bad.
I think this was the video he went through it.
It's an interesting view.
If you remove energy costs and food costs then you get to a level of "core inflation". The UK's core inflation is currently the worst in the G7 by quite a margin and double places like the US and Japan. Rather worryingly ours is one of the only ones still on an upward trajectory.
Pointing at Putin and saying it's his fault doesn't really cut it. It's not helped and he deserves plenty of blame for so many things but the story is much deeper than that as your post has highlighted.
this in 2021 median pre tax income by age group. clearly there is also a life cycle wealth effect where by older people have savings. plus there is the wealth effects associated with rising house prices and occupational pensions. that doesn't apply to all of the elderly - many don't own houses and don't have private pensions. but in terms of income the elderly are on average not well off.
Age range Median income before tax Under 20 15,900 20-24 19,400 25-29 25,200 30-34 28,300 35-39 30,300 40-44 31,800 45-49 31,800 50-54 30,800 55-59 29,600 60-64 26,600 65-69 23,300 70-74 21,300 75 and over 20,200
[Post edited 22 Jun 2023 13:15]
But are these figures for full time employment or what?
Many reduce their hours as they get older Some retire early altogether so this will skew the figures
I think there's a degree of inevitability about all this. I mean we spent alot of money avoiding recession (or in the case of covid, mitigating it hugely) and kept easy money going for too long - we just delayed the pain, which is now coming on fast. I just don't see what the alternative is now, remembering that high inflation hurts the poorest the most.
Interesting that we are predicted to be at least 2 % points ahead of ECB by end of the year.
But are these figures for full time employment or what?
Many reduce their hours as they get older Some retire early altogether so this will skew the figures
total income.
And so as the loose-bowelled pigeon of time swoops low over the unsuspecting tourist of destiny, and the flatulent skunk of fate wanders into the air-conditioning system of eternity, I notice it's the end of the show
cpih includes rent changes as a proxy for all forms of home occupancy. it doesn't reflect house prices.
And I think I read that the rent part is heavily weighted towards social rents. Any idea why massively inflated property values aren't part of the index? Could it be that massively inflating bank balance sheets doesn't count?
"They break our legs and tell us to be grateful when they offer us crutches."
Think it's 30% mortgage, 40% rent and 30% own outright which were quoted this morning.
Private renters will get hit as landlords push up rents to compensate, so that's that 40% dealt with.
The latter 30% tend to be older, which is of course the Tory target market and they care more about savings rates than debt. So they and they Tories won't give a toss.
And then a deep recession caused by less money being around will stop spending to a degree. They called out the service industry this morning as a contributory factor to inflation. That will be decimated like during Covid over the next 12 months.
Third para - I'm not old (52) and have just paid my mortgage off, and I really DO give a toss, as the chances of TBJnr (20, in the second year of his 6 year degree course) being able to afford to buy a house when he needs to are virtually nil. Plus it's going to have a knock on effect on the rent that I pay for him at the moment. Not even Bank of Mum and Dad is going to sort this one out and I'm not alone.
Also I am 100% not a Tory and this makes me dislike them even more.
I did. It is clear most have not a clue about any of this. Muxh of what is being said by Sunak is point scoring v the ERG nutjobs, rather than doing what is best the country.
What also is not widely understood is that a 2% difference between BoE rates and those of the ECB actually means they are a third higher - that being the difference between 6% and 8%. And as figures out today saying on 18% of brexiters believe brexit has been a success, this from a month back is worth noting.
"For economists, the difference is mainly down to Brexit, an act that made almost every economic activity with the EU more complicated and costly.
Importing food from the EU is characterised by bureaucratic form-filling and duties replacing a previously seamless trade, not to mention delays that could lead fresh fruit and vegetables to spoil. More than a quarter of UK food is imported from the EU.
Brexit has also disrupted Britain’s labour market: many EU staff who previously helped the British supply chain, including seasonal workers, have left the country, leaving companies short-handed.
Brexit is blamed for a third of UK food price inflation since 2019, according to research published by the London School of Economics last month. It says regulatory, sanitary and other border checks added almost £7bn to total domestic grocery bills over the period from December 2019 to March 2023, or £250 per household. It says that prices rose by 25 per cent over the period, compared to a 17 per cent projection had Britain stayed in the EU single market.
Even excluding food and energy, Britain now has the highest core inflation in the G7. John Springford, the deputy director of the Centre for European Reform in London, says Brexit is an obvious factor.
“While it’s very difficult to quantify, it must be part of it because if you impose trade barriers on yourself, then goods are going to be more expensive,” he says. “Inflation is likely to come down in Britain, but it’s just a question of how high interest rates have to go to get it.”
This was not a prediction, any more than stating July is the month that follows June is a prediction. Why were voters so stupid as to believe shy tehawks like Farage that each of you could have any month you wish ?
If you remove energy costs and food costs then you get to a level of "core inflation". The UK's core inflation is currently the worst in the G7 by quite a margin and double places like the US and Japan. Rather worryingly ours is one of the only ones still on an upward trajectory.
Pointing at Putin and saying it's his fault doesn't really cut it. It's not helped and he deserves plenty of blame for so many things but the story is much deeper than that as your post has highlighted.
SB
I’m not entirely sure how all this works, but is core inflation still not impacted by energy costs? Ok, direct energy costs are not accounted for, but if a company has had to increase prices due to soaring energy costs then that price increase is still included in core inflation from what I can gather.
Not disputing anything you are saying, just trying to clarify terminology.
That's been this government's MO since Johnson tool office. Talk a good game, make lots of promises and get some headlines, don't do anything genuinely useful to deliver what has been promised.
I get why people may have voted tory in the last election, even if I fundamentally disagree with them, but anyone still considering voting for this lot, after the damage they have done to our country, needs their head testing.
I was born underwater, I dried out in the sun.
I started humping volcanoes baby, when I was too young.
I’m not entirely sure how all this works, but is core inflation still not impacted by energy costs? Ok, direct energy costs are not accounted for, but if a company has had to increase prices due to soaring energy costs then that price increase is still included in core inflation from what I can gather.
Not disputing anything you are saying, just trying to clarify terminology.
This looks to confirm what I thought unless I am completely misreading it. E.g. a company not in the food or energy sector that has increased its prices due to the cost of energy would be included in core inflation figures? Therefore energy costs can still impact on core inflation. I guess that can be taken further in that if goods have increased in prices due to energy costs and those price increases get passed onto the consumer, this is also included in core inflation.
So all of the bods claiming high core inflation is purely down to the labour market would be incorrect?
This looks to confirm what I thought unless I am completely misreading it. E.g. a company not in the food or energy sector that has increased its prices due to the cost of energy would be included in core inflation figures? Therefore energy costs can still impact on core inflation. I guess that can be taken further in that if goods have increased in prices due to energy costs and those price increases get passed onto the consumer, this is also included in core inflation.
So all of the bods claiming high core inflation is purely down to the labour market would be incorrect?
This looks to confirm what I thought unless I am completely misreading it. E.g. a company not in the food or energy sector that has increased its prices due to the cost of energy would be included in core inflation figures? Therefore energy costs can still impact on core inflation. I guess that can be taken further in that if goods have increased in prices due to energy costs and those price increases get passed onto the consumer, this is also included in core inflation.
So all of the bods claiming high core inflation is purely down to the labour market would be incorrect?
what's happening in labour markets is the only bit which isn't external to us. with strong consumer demand and a tight labour market, private sector employers are conceding wage settlements at an average of 7% and, with strong consumer demand, passing that on in price increases. core inflation is now measured at 7%. while the oil and food prices rises were an initial shock 12 months ago the effect of that should be dropping out of the inflation figure now - that's what is shown in other countries. it isn't dropping our of uk inflation because the labour market here has kicked off a wage price spiral. it's not the only component of inflation but the concern is that it is a persistent source of rising price even after the initial external price shock has passed.
And so as the loose-bowelled pigeon of time swoops low over the unsuspecting tourist of destiny, and the flatulent skunk of fate wanders into the air-conditioning system of eternity, I notice it's the end of the show
...the fix for millions of people struggling to afford food is to make paying for a house so expensive that millions more won't be able to afford food and housing at the same time? At least the governments promise to level up is working by pushing more and more people toward the breadline. We'll all be equally poor!
This looks to confirm what I thought unless I am completely misreading it. E.g. a company not in the food or energy sector that has increased its prices due to the cost of energy would be included in core inflation figures? Therefore energy costs can still impact on core inflation. I guess that can be taken further in that if goods have increased in prices due to energy costs and those price increases get passed onto the consumer, this is also included in core inflation.
So all of the bods claiming high core inflation is purely down to the labour market would be incorrect?
I suppose the problem though is that core inflation is currently increasing when you might have thought it would be coming down if the more volatile items (such as food and energy) that could feed into other items are falling or beginning to fall.
Yeah I think Martin whathischops is campaigning for banks to be ultra relaxed on missed payments and forbearance and that makes a lot of sense. But I'd say the Liberal's idea of mortgage payment support is a proper regressive stinker and would also fly in the face of trying to bring down inflation.
Not sure if this is all short term of not though..
Yep difficult to know what measures to introduce as they all seem to have a downside.
I’ve probably missed something, but for those learned minds on the forum, any reason why we couldn’t have a commercial/business boe base rate and a residential boe base rate. Seems to be consensus that residential mortgages aren’t key to the inflation dilemma, so separate the base rate out (like stamp duty). Discuss.
I suppose the problem though is that core inflation is currently increasing when you might have thought it would be coming down if the more volatile items (such as food and energy) that could feed into other items are falling or beginning to fall.
[Post edited 22 Jun 2023 17:56]
they don't even need to fall. just by having happened more than 12 months ago they should drop out of the calculation and the current headline figure should drop. the fact that it isn't shows that we now have an inflation persistence problem.
And so as the loose-bowelled pigeon of time swoops low over the unsuspecting tourist of destiny, and the flatulent skunk of fate wanders into the air-conditioning system of eternity, I notice it's the end of the show
Yep difficult to know what measures to introduce as they all seem to have a downside.
I’ve probably missed something, but for those learned minds on the forum, any reason why we couldn’t have a commercial/business boe base rate and a residential boe base rate. Seems to be consensus that residential mortgages aren’t key to the inflation dilemma, so separate the base rate out (like stamp duty). Discuss.
The Green Party are going for a wealth tax and inflation matching public sector pay increases. I wonder what the left wing opposition have to offer?..........oh it's platitudes.
Edit....ps your health and education will still cost the same so not inflationary in the same way as private sector pay rises are.
[Post edited 22 Jun 2023 18:10]
"They break our legs and tell us to be grateful when they offer us crutches."
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