Snapshot of _Inflation hits fresh 40-year high of 9.1% amid cost of living crisis_ :
An archived version can be found [here.](https://archive.is/?run=1&url=https://news.sky.com/story/inflation-hits-fresh-40-year-high-amid-cost-of-living-crisis-12638030)
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I think we could see 15%. The main measure they could use to combat inflation, raising interest rates to a decent level isn't available to them as they've cultivated a debt laden housing market.
House prices must be protected at all costs.
LISA... If you're going long term, it gives you a 25% idiot proof bonus which is great for indexing. Now the s&p is in bear market territory, it's an even safer bet... Unless
Nuclear war
Pandemic 2.0 Monkey-19 hybrid
Great depression 2.0
Hyperinflation nation
But that risk is always there anyway lol
I feel like the people who are downvoting me are predicting the end of the world or something. In which case money won't mean anything anyway so I don't get it.
**long term**.
Find me an index that isn't a bull over the entire course of its history. I did say *index trackers* as well so its not like I was being imprecise.
possibly. Its hard to do in a bull market but maybe its easier in a bear one if you're able to pick the stocks that are coming up.
For the vast majority of people that sort of individual risk just isn't worth it.
Virgin Money are up to 1.56%, and Chase are 1.5%. Fixed term rates are up too. It might take a little bit of time to trickle through, but interest rates for consumers are rising.
This worries me more than anything. We've let housing run rampant to feed investor demand so buyers are mortgaged to the point of defaulting but the interest rates are so low. If the interest rates creep up even a couple of points, thousands will be defaulting and go homeless.
>You'd of thought we'd of learned something after that fiasco
We did though, we learned the ones who cause it will be bailed out the rest of us will pay for it.
Not trying to be an arsehole, but it's "You would *have* thought" and "we would *have* learned", not "of". The mistake comes from mishearing the contraction you'd've or we'd've.
Not even just housing but debt in general. You’d be surprised how many companies (even technically profitable ones) survive on cheap debt on the local level. If the debt bubble bursts the entire economy from Costa to DHL will be at risk
The rates have to go higher than inflation to affect companies negatively... Otherwise, much higher inflation than rates are a godsend to those who are highly leveraged by debt.
Of course the prospect of recession is a lot worse threat for almost any company, but that's a different issue
Thousands defaulting compared to 68 million others who are effected by rising prices alongside low wage growth..
If we consider how many homes are owned outright, sixty odd percent isn't it? theres like 25% in growth over the last 2 years alone. Prices would need to drop lower than that to force negative equity for the majority of people and realistically, maybe only about 10,000 people have potential of negative equity as they bought with high LTV's, or overpaid in the last 2 years.
We are sacrificing the entire country for the sake of these people.
It's normally affording the mortgage payments that's the issue, and yes slightly rising interest could massively affect house prices as it has a massive effect on mortgage payments. And at the end of the day it's the affordability of the mortgage payments that effectively sets house prices.
borrowing 500k at 1.5% as the IR was at the end of last year was £1726 pcm.
borrowing 500k at 3.3% as it is now is £2190.
A difference in monthly payment of £464
Heating that house now costs double too.
It isn't hurting house prices yet and that baffles the life out of me. Maybe it's delayed... but how far do we need to go? Are people fucking stupid?
Thing is, if the default rate goes too high then it suddenly stops being the mortgageholder's problem and starts being the lender's - there's no point repossessing if the market is illiquid (as it instantly would be) and the cash buyers are all offering 30% below the last sale price.
If rates go too high and wages stagnate too low, then all you really get is a de facto mortgage strike. Which with my Leninist acceleration hat on, I say "fuck yeah!", but it would be the sort of wild ride you see at those unregulated US theme parks from the '70s where they claimed every ticket came with a liability waiver, and coming home with all your teeth and fingers was a win.
One of the two types of affordability checks that banks run before offering a mortgage is the ability of the borrower/s to make payments in the event of an interest rate spike. Banks have accounted for something like this to happen whilst offering mortgages over this period of low base rates. We shouldn't see anything like the US in 2008 here.
Commercial mortgages could be a different story though.
> If the interest rates creep up even a couple of points, thousands will be defaulting and go homeless.
Which would allow thousands more to get on the property ladder....
We have a winner - if you HAVE capital and borrowing is expensive, buying stock now will likely give you a nice passive income and the asset is likely to raise in value once things 'correct' the conspiracy theorists and their blackrock nonsense are already screaming that it's all the New World Order when it's just buisness, but that's so dark and scummy it looks evil perhapes
Because it's not so much oil companies reducing capacity but OPEC who can't really be compelled to produce more.
Raising interest rates is good for reducing demand, as it means that money invested in debt will get a better return, and debt servicing will go up so less demand for goods and services. The problem is that this doesn't address the cause of the inflation if the cause is, as you say, less supply.
Unfortunately there are some people who dogmatically believe that the *only* cause of inflation is the money supply increasing.
Increasing interest rates typically leads to a stronger pound.
BoE are not increasing at the rate of the Fed so £ is losing value to $.
The bulk of the inflation is from Energy and Wheat / Grain which are priced in $.
So a stronger £ could reduce inflation.
Yea but those figures are not directly comparable.
Taking some roughly rounded average mortgage figures.
£250,000 mortgage
2.0 % interest rate
Monthly repayment = £1060
Interest rate up by 0.5% (as has happened so far)
Monthly repayment is £1122
So roughly a 6% increase in mortgage repayments.
Also mortgage interest rates are not directly related to BoE interest rate. Mortgage interest rates have gone up by an average of 1-2% in the last year. So average mortgage payments are probably up 15-20%.
>The main measure they could use to combat inflation, raising interest rates to a decent level isn't available to them
It is available but it likely won't have any effect. How will it when most of the increase is from supply disruption? Unless of course you mean raising them so high that it causes huge unemployment (the usual mainstream argument) along with trail of devastation.
This is a somewhat unsexy answer and others have done the glib one liners, so let's give the real answer.
Inflation rates have been rising because they compare to a year ago, but the actual inflationary pressure only really started about 8 - 10 months ago. At the moment therefore we have 2 - 4 months of low or flat inflation and 8 - 10 months of high inflation coming out at 9.1%.
If you had a 6 month inflation rate (which obviously you wouldn't because it doesn't take into account seasonal impacts), then it would have flattened off now (5.5% in the last 6 months this month v 5.6% last month). Unless something else changes then we'll probably hit 11% and not higher.
There are also some baked in price rises caused by the phasing out of some of the Covid measures (VAT reductions all over the place) - they'll drop off the chart sooner rather than later, so that will reduce inflation.
> If you had a 6 month inflation rate (which obviously you wouldn't because it doesn't take into account seasonal impacts), then it would have flattened off now (5.5% in the last 6 months this month v 5.6% last month).
CPI for May 2022 was 120.8; it was ~~114.7 in December~~ 114.5 in November 2021. The annual rate extrapolates to ~~(120.8/115.1)^(12/6) = 1.101 = 10.1%~~ **(120.8/114.7)^(12/6) = 10.9%** [APY](https://www.investopedia.com/terms/a/apr.asp).
Here's the data: https://www.ons.gov.uk/economy/inflationandpriceindices/timeseries/d7bt/mm23
CPIH in May 2022 was 119.7; in ~~December~~ November 2021 it was ~~114.7~~ 114.1 . The annual rate extrapolates to ~~(119.7/114.7)^(12/6) = 1.089 = 8.9%~~ **(119.7/114.1)^(12/6) = 10.1%** [APY](https://www.investopedia.com/terms/a/apr.asp).
Here's the data https://www.ons.gov.uk/economy/inflationandpriceindices/timeseries/l522/mm23
Both of these figures are higher than the whole year rates.
Edited to correct pre-coffee errors.
Exactly. If you ran the same set of figures for April then you come out with a near on identical number - inflation rate is only going up because the first couple of months of the last 12 months was low and that is going to work itself out of the system so that the rate doesn't keep going skyward. Hence the BoE think it will peak at 11% (which is what your numbers show).
(Side note that you need to compare with November which was 114.5)
> If you ran the same set of figures for April then you come out with a near on identical number - inflation rate is only going up because the first couple of months of the last 12 months was low and that is going to work itself out of the system so that the rate doesn't keep going skyward. Hence the BoE think it will peak at 11% (which is what your numbers show).
I expect inflation to rise in the winter because the more expensive energy and food get due to the War in Ukraine, the more heavily they will be weighted in the index, and so e.g. the next increase in the price cap will have a bigger impact than the last one.
Increasing energy prices will also drive up both manufacturing and transport costs, and I expect there to be a jostling effect as workers attempt to renegotiate pay & conditions to limit the harm. This will lead to an inflationary spiral until the economic pecking order is established.
This is not helped by the reinstatement of the triple lock, which is both dissipative and highly inflationary due to its impacts upon taxation and the money supply, especially given that giving pensioners money for nothing isn't synonymous with allocative efficiency. (I assume that *chicks for free* is a policy held in reserve by the Chancellor until the final pre-election budget...)
Matters are also not helped by homeopathic interest rates which are less than a tenth of the rate deployed the last time that inflation was this high. Historically, one would have expected that interest rates would be about the same as inflation.
Setting the Bank of England base rate below that offered by the Federal Reserve seems likely to stoke inflationary pressure by causing Sterling to depreciate against the Dollar. This is unhelpful given our reliance upon imports given that the Government seems uninterested in investing in people below pensionable age to increase labour productivity or grow manufacturing industry, not to mention all the post-Brexit barriers to trade which this series of miss-begotten Conservative administrations have inflicted upon our productive industries to placate the economically illiterate Brexit mob.
For these reasons, I would not be surprised by inflation approaching 15% by the end of this year or the start of next year.
The idea that inflation will fall in the short term is a bit like saying:
"Although the Government have driven the economy off the road, it is unlikely that they will drive it off the cliff we are rapidly approaching, as that sort of irresponsible and incompetent behaviour would be utterly out of character for the fine, upstanding, competent people we have elected to run the country..."
It will be very interesting to see how the UK's performance compares with the rest of the G7 over the next 18 months or so.
> (Side note that you need to compare with November which was 114.5)
Thanks. Fixed.
I think that inflation will prove to be more "sticky" than expected due partly to human behavior.
For the last 20-odd years, inflation has been of minor concern to businesses and consumers. Annual price rises have not necessarily been the norm.
Once people have seen the effect of sudden inflation (up to 50% of some input costs), they will be loathe to stop lifting their prices. Some will do it anyway if they think they can get away with it.
Between 1993 and 2008 inflation maxed out at 3.1% and at its lowest was 0.5%. That's remarkably stable. Even after that it has mostly been relatively stable (even if it was high during the financial crisis and the peak of Osbourne's tax hikes and spending cuts of 2011).
I get the point about rising prices and that will happen in some industries that are less elastic, but my feeling is that there are some changes that are a shock that are being added to the system. They are mostly supply side changes (not demand side) and they will eventually fall out because they were 'one offs'.
Obviously the ongoing issues with fuel and energy will probably last as long as sanctions do (which could be years rather than months - a very long 'one off') and ultimately they are also business input costs too, so they'll push up prices of everything else.
I would also like to see updated stats from the Office of National Statistics, in respect of our demographic timebomb.
In January 2022, they updated their projections and stated the UK would hit a demographic turning point 2 decades ahead of schedule - by 2025 more people would die than would be born in the UK.
>falling fertility rates could be linked to a lack of affordable childcare, poor employment and insecure housing which was stopping young people from having children.
>
>The ONS estimated that by 2045, the number of people aged 85 years and over would nearly double to 3.1m — 4.3 per cent of the population.
Ironically, whatever remains of the UK by 2030 (England & Wales presumably), will require massive immigration of working age people.
Guessing computer games refers to price of graphics cards coming down?? Love how sky keeps reporting on inflation, but is hyper critical of workers organising to try and deal with it. We should be in a state of depressed apathy, knowing our fate but powerless to stop it.
>Guessing computer games refers to price of graphics cards coming down??
I said this lower down as well, but the ONS are a bit coy on this - it's likely that the prices they attribute to computer games are based on the games that are in the top 5 or whatever at that particular point in time. What that means is that if a game comes out that is £10 cheaper than other games and hits the top 5 then it will pull the stat down, even if all the prices of the games stay the same (or go up by less than £10!).
In this case they are talking about downloads, so it is possible that a game for download on mobile has come along that is popular that is cheaper.
it's a weird one too because there are so many free to play games, indy games and etc - meanwhile there are also endless Diablo and Sims style games which could bankrupt a billionaire with in game purchases and add-on packs.
Entertainment is general is a really awkward category and really muddies the water when it's included, there are the same issues comparing any historic pricing as trends and tastes change but with entertainment it's just so chaotic that i can't see how it's ever going to make any sense.
If it's in reference to graphics cards then that's a red herring.
There was a graphics card shortage during the pandemic, and therefore the prices have been dramatically over exaggerated for a year or two at least.
Driven heavily by crypto mining, which (due to rising electricity costs and falling crypto prices) is no longer profitable for the vast majority of miners. I used my old GTX 1080 to mine for a year and generated about £400 in profit, but jacked it in after my fixed rate energy tariff came to an end, as I worked out it would now lose me about 60p a day.
It's still largely in BTC at the moment, but I split a bit off into other cryptos. I actually made more money from a browser game called Crypto Royale. I managed to withdraw £740 (half of my winnings) when the price spiked in December. Also playing Coin Hunt World which is netting me about £15 a week at current values.
There’s the “the last Labour Government” tool. It doesn’t fix the problem, but it does (correctly) place the blame for the transfer of powers to the independent Bank of England.
My point is the independence of the BoE is only as practical as it is for the public to accept that inflation is no longer a political problem.
And given the latter is completely unrealistic; yes, it does make me question whether the former was a good idea.
>he said the steep rises in food and record high petrol prices had been "offset" by the price of clothes rising less than they did this time last year, along with a drop in computer game costs.
Is Rishi for real? Most people aren't buying new clothes and computer games right now. How is that an offset?
Edit: not Rishi, but rather Grant Fitzner, chief economist at the ONS.
I don't think I've ever thought of him as smart, but I guess I can see what you mean.
"He's the chancellor of the UK, he *must* be smart."
*Rishi opens is mouth*
"Oh..."
I mean he's not in that position because he's the best at it. He's in that position because he backed Johnson and brexit.
That's how we're governed now
I think it’s pretty naïve to think like that. He’s intelligent to his own ends - making himself richer, not intelligent as chancellor of the exchequer. Whether he knows what the best thing to do for the economy is or not is irrelevant, he’ll only do what’s best for people like him, Tory donors and other vested interests of the wealthy.
You can think that way... but then there's those times he's tried to do PR stunts and it's backfired horribly because the guy is just completely clueless. He had a great shot at being PM (I think through sheer luck of being in the right job at the right time) and he completely blew it in a matter of months.
He doesn't even seem like a mastermind just in it for his own gain, just a clueless grifter.
Sadly there's a whole lot of those under the guise of 'professional qualifications' throughout the UK.
So many qualified people who can ace exams and essays, but are shite at putting the theory into practice and have next to no communication skills.
Does my head in.
Rishi didn't even say that?
Chief economist at the ONS did and said so to explain the breakdown of the 9.1% - i.e. food and petrol prices contributed most to the upward trend in CPI, while clothes and computer games had the most negative contribution.
Even putting aside the complete disconnect between what he considers to be ‘essentials’, video games have no dropped in price. Most new games for the new consoles now cost £70. Even on the older consoles, new games are between £50-60 which is what they’ve been for years so he’s talking out of his arse.
Probably due to indie games picking up a larger market share on consoles as they make it easier to produce for their platforms, bringing the average down? It's going to be something disingenuous like that.
The report talks about computer game downloads and how that section can be volatile because it does depend on what is popular at the time. If a game that is cheaper becomes more popular it pushes down CPI even if the price for the game hasn't changed.
It just highlights what a crock the CPI figures are.
Essentials should be heavily weighted and any sensible inflation measure should include housing. RPI is better, but still not ideal.
Rpi is awful. CPI includes housing costs (rent), cpih is better as it covers some more occupier costs. I waver on the imputed rent side, but I get the argument for it.
Essentials are given the exact weighting with which people buy them.
CPIH is CPI including the housing element. ONS leads publications with CPIH and supplements with CPI. It's the media, not ONS, who focus on CPI.
RPI has the same problem that CPI has - it has weightings already and they aren't changed frequently. RPI was dropped because it included mortgage interest payments, which not everyone has and was influenced too much by house prices and interest rates (so BoE rises in interest rates will push up RPI, but have no impact on someone who doesn't own a house).
CPI has things like food and so on being weighted more heavily, but they tend not to not change the overall weightings that frequently (I believe they do some 'substitution' which doesn't count as a reweighting, just a new value for the same 'product', although last time I looked I couldn't find any details of it). They will look to see if people are spending more on some types of goods than in the past about once a year - usually it doesn't need to change that often.
Anyone else been getting email after email from clothing sites you've previously used offering money off vouchers and early sale access? Seems to me a lot of companies are already feeling the pinch if they're trying hard to incentivise shopping.
Edit just to say literally on hitting post on this I got another one from Adidas reminding me I have a 20% voucher lol.
Lots of places are closing down local to me. Mainly small businesses but some medium sized ones have gone. I'm currently looking at closing mine.
Sales are a sign of people struggling. I guess there are some deals to be had though.
Things also take a while to have an effect. There are plenty of people running round though that insist this will only last a few months. I don't think so and after not receiving a penny through brexit and covid we simply don't have the funds left to be able to weather the current economic climate.
DROP IN COMPUTER GAME COSTS??
1. Are the fucking seriously using that as a metric
2. are they blind?? AAA games are launching for £60, even £70 in some cases for the basic edition,
They're not saying there was a drop, they're saying they increased under inflation.
If fuel increases by 20% but games increase by 5%, then games would bring the average down.
I’m just not paying full price for new triple A games, (or similarly priced games) anymore when launched.
Way less expensive to wait for a discount, get the game on one of those console subscriptions or for it to show up on eBay second hand for half the price or less.
'Food prices have been rising ridiculously quickly but it's okay because clothes prices are still rising but not quite as quickly!!! Me and my billionaire mates are doing such a good job!!!'
I still buy new video games; PS5 games are £70 Rishi, you madlad!
Tbf, he's got enough cash to probably own a peng PC, maybe he thinks Steam Sales is how we all buy our vidyas
At this point they're just saying anything to make it sound like they're on top of it.
How is it being offset by the price of clothes and computer games? That would imply:-
- people spend an equal amount on food, and clothes + computer games
- if clothes not rising as much, then it's only offset if I've had a pay rise. Which most people haven't.
What the fuck is he smoking?
Computer game costs, including digital, are actually increasing due to the new generation. Rumblings in the industry of next-gen games increasing to £70 for standard editions has been a controversial point for a while.
Using people’s sense of style and hobbies to downplay an actual crisis is just another play to move responsibility and guilt away from the government to the consumer.
What's the "fix" for inflation? If people are already close to the breadline, and government is saying don't expect wages to go up as much as inflation, large groups of people will no longer be able to afford rent / mortgages / food.
RPI is 11.7% (up from 11.1%). Factory gate prices up 15.7%. Factory input prices up 22.1%.
But whichever measure you pick, it's up.
There's something suspicious about Radio 4 earlier trying to spin this as a decline in inflation, although if I'm being generous I'll forgive them for a clumsy sentence.
"Prices not rising as much as before" - i.e. (by CPI) it's only a 0.1 percentage point increase.
No, you mean, "the rate by which prices have risen is still rising but at a slower rate", i.e. it's a third derivative.
If you are saying that the increase in inflation is slowing, then you are claiming that the rate of change of the first derivative of inflation is negative.
0 Prices
1 Inflation
2 Rate of chance of inflation
3 rate of change of the rate of change of inflation
It’s the third derivative
Ukraine of course! If only they hadn’t been dressed like an independent country, Putin wouldn’t have been so tempted! And then Boris wouldn’t have been forced to join the international scolding and oil prices would still be okay.
Government and Bank of England: Please don't change jobs or ask for pay rises because we live in a communist society and in no way should we all be looking out for ourselves.
No way man.
I was laughing so much when just 5 months later whole nation was at home and could do with free internet to help with home schooling, work from home etc.
The most prudent move for the government, as touched on this week already, is encouraging raising wages for those who work in multibillion profit companies, whilst giving tax breaks to smaller companies.
As we know, this isn’t inflation caused by wages, this is caused by global issues.
Raising wages will allow the BOE more wiggle room with interest rates and takes the sting off ordinary people. It’s time to tax the big companies more who don’t pay their workers well. Stop letting companies raise prices to shield their profits. Let small companies cope.
It’s so obviously the answer here but the government are too thick to see it.
Has anyone seen a decent summary of why inflation is doing this? I’d love to read a good summary but haven’t come across anything. Not just in the UK but globally I mean
I hope this isn’t a stupid question, but isn’t a large part of this because we pulled hundreds of billions out of thin air for covid for 2 years to help businesses and individuals, pay for the vaccine, safety measures, etc?
Isn’t this expected right now? In the UK and globally as well?
That'd be the case if people had too much money to spend.
But we don't. Infact most people have less money post pandemic it's because the entire supply chain got expensive with increases in specific parts like oil and gas affected by current events
Not really, if you look at the breakdown and read the report it is energy going into housing costs and fuel going into transport costs that is causing this. Food is a fair chunk as well. I haven’t done the calculations but I imagine swapping the contributions from those categories to a more normal period would reduce the total number by over half.
It is yes, but it wasn’t universally accepted that more money creation would cause inflation.
When central banks did QE for the first time after the great financial crisis*, many people thought it would cause massive inflation, it didn’t. In fact, most CBs were fighting deflationary pressures at that time and for most of the 2010s.
Because of the experiences with QE over the last decade, I imagine it was thought that CBs had a greater ability to support government policy by monetising government debt than they in fact did. Central banks have been caught with their pants down.
* As always with macroeconomics, BOJ doesn’t count
QE did cause massive inflation after 2008, just not in consumer prices, it appeared in housing and all assets instead.
Stimulus during covid saw the inflation in the stock market first which has now spilled over into consumer prices, we’ll see housing defaults in 1 - 2 years as mortgage fixed rates expire.
Seen a lot of arguments over the past couple years that try to refute this, arguments for which I don't have the economics nouse to properly understand independently.
I guess wait a few years (hoping it only lasts that long) and the true picture might become clearer, a bit like the virus itself
Yes, shutting down the economy, while at the same time printing hundreds of billions of pounds to pay people to do nothing, while having the lowest interest rates ever seen was always going to result in record inflation.
Many did warn about this in 2020/2021 but were derided as conspiracy theorists, COVID deniers and other insults.
As I understand it is a complex mix. More cash representing the same wealth. Yes. But if that were the only case there would be no problem in wages following. Something costing £1 would cost £1.10 and someone earning £20k would earn £22k and all would be well. But at the same time, we've seen a lot a businesses go to the wall, domestically, and internationally, we've made trade harder with our biggest partner which will also reduce their inclination. Supply has been hammered pretty hard. Meaning we'll also see cost inflation that won't be mirrored in wages. The fact that both are going on at once is also an opportunity for some industries while seeing some cost increases and a need to increase prices are taking the opportunity to extract more profit on top of that either due to reduced competition, or sluggishness in the market (people can't immediately change suppliers, or don't know what a fair market price should be when everything is moving so quickly. Some of this part represents price gouging or profiteering.
Yes but anyone who spoke about this was shunned. It was a lovely 2 years on here. Anytime you spoke of the future consequences of all this you got accused of being happy to see people die of covid
It's not like letting the pandemic overwhelm everything wouldn't have caused massive economic problems, a huge part of the issue at the moment is the global supply chain disruptions which are a direct effect of covid. It's impossible to say which would have been worse economically so most people decided it's better to go with the one that results in less death.
I wouldn't be so sure on that front.
Pretty much everyone says that the majority of this inflation is coming from the elevated price of fuel due to the ongoing situation in Russia and Ukraine. If the majority if inflation is due to thus, then it matters not how much or how little we did during covid. The proce of oil gas and petrol would still be the same.
If the proce of oil and petrol goes up by however much a barrel that's nothing to do with us, who produces basically none and can pull no levers to alleviate this.
They’re 70 on newer consoles and a lot of new games are 60 on steam. Between ~2000-~2019 it was 40. Computer games have a habit of sticking to the same price structure for years, though for the last decade they monetise in other more increasingly insidious methods.
> Between ~2000-~2019 it was 40
Depending on what you were playing on, if my memory serves me correctly, N64 games were around £50 each back in the 90s.
Pfft, thats rookie numbers for those of us in Turkey. Government says its 70%, an NGO says its 160%. Guess which one is true lol.
In any case, I hope everyone over in UK is affected as low as possible.
So house prices have really only gone up a couple of percentage points above inflation. But because salaries are only rising by about 3% the difference is still at least 9% more out of reach. But whatever you do don’t ask for a pay rise like those pesky rail workers /s.
You think it's bad now, wait until winter when the Russian gas gets cut off to most of Europe and energy costs go stratospheric in line with the massive spike in demand from cold weather.
This crisis is beyond our power to resolve alone and our government is mostly a passenger in how this will play out.
All we can do is stockpile resources, establish ways to harvest, mine or drill for more fossil fuels immediately and work on the fastest long-term transitions to renewable energy which we control exclusively, as soon as possible.
Food and fuel are included in the CPI figure, some things are up, some things are down. On average, across a basket of goods, prices are up 9.1% since last May.
According to [this personal inflation calculator](https://www.rathbones.com/personal-inflation-calculator) inflation for me is 19.2%.
I know the 9.1% is supposed to be a national average but this is after I've cut all non-essentials out of my life and am living paycheque to paycheque now; I'm wearing my Jolly Roger hat to watch films or shows, no take-outs or deliveries not even on payday (which was my normal treat day), no gym, I don't even drive out to the New Forest or South Downs on the weekends for walks. It just fucking sucks.
Honestly, the last one pisses me off the most.
Recently EVERY park I have been to has introduced paid parking. Literally nothing is free. People can't even take the kids to the park with a bloody jam sandwich unless they've got the money now.
It seriously pisses me off and I'm personally not struggling yet myself. It just feels like the greed and mismanagement in this country is rampant though, nothing is sacred.
The 9.1% is across a large number of goods, some of which will have inflated more, others less. Your individual exposure to inflation can be much higher (or lower) than the 9.1%
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Looks like the BoE need to get back to their fan charts for **another** amendment. Could we see 12% by autumn? Do I hear any advance on 12%?
I think we could see 15%. The main measure they could use to combat inflation, raising interest rates to a decent level isn't available to them as they've cultivated a debt laden housing market. House prices must be protected at all costs.
At least people with savings will get a welcome interest rate boost... What's that? The banks are keeping interest rates at 0.2% on savings accounts?
It's to encourage you to speculate. Economic stability 101. /s
"why keep your money safe in these crappy low interest accounts when you can open a S&S ISA and we can gamble all your money away for you"
stocks, especially index trackers are extremely reliable over the long term.
LISA... If you're going long term, it gives you a 25% idiot proof bonus which is great for indexing. Now the s&p is in bear market territory, it's an even safer bet... Unless Nuclear war Pandemic 2.0 Monkey-19 hybrid Great depression 2.0 Hyperinflation nation But that risk is always there anyway lol
I feel like the people who are downvoting me are predicting the end of the world or something. In which case money won't mean anything anyway so I don't get it.
until they're not
**long term**. Find me an index that isn't a bull over the entire course of its history. I did say *index trackers* as well so its not like I was being imprecise.
Hell, does Warren Buffet still have that bet out for fund managers if they outperform an Index Fund?
possibly. Its hard to do in a bull market but maybe its easier in a bear one if you're able to pick the stocks that are coming up. For the vast majority of people that sort of individual risk just isn't worth it.
Virgin Money are up to 1.56%, and Chase are 1.5%. Fixed term rates are up too. It might take a little bit of time to trickle through, but interest rates for consumers are rising.
Ooo weee can’t wait to get my negative real rates of -8%
This worries me more than anything. We've let housing run rampant to feed investor demand so buyers are mortgaged to the point of defaulting but the interest rates are so low. If the interest rates creep up even a couple of points, thousands will be defaulting and go homeless.
The Big Short 2: Boris Boogaloo
Not like we haven't been there before in recent memory... You'd of thought we'd of learned something after that fiasco.
>You'd of thought we'd of learned something after that fiasco We did though, we learned the ones who cause it will be bailed out the rest of us will pay for it.
Not trying to be an arsehole, but it's "You would *have* thought" and "we would *have* learned", not "of". The mistake comes from mishearing the contraction you'd've or we'd've.
After reading your explanation, you would of thought I'd learned.
House prices are a religion at this point. A bit like crypto.... hmmm...
Not even just housing but debt in general. You’d be surprised how many companies (even technically profitable ones) survive on cheap debt on the local level. If the debt bubble bursts the entire economy from Costa to DHL will be at risk
The rates have to go higher than inflation to affect companies negatively... Otherwise, much higher inflation than rates are a godsend to those who are highly leveraged by debt. Of course the prospect of recession is a lot worse threat for almost any company, but that's a different issue
Thousands defaulting compared to 68 million others who are effected by rising prices alongside low wage growth.. If we consider how many homes are owned outright, sixty odd percent isn't it? theres like 25% in growth over the last 2 years alone. Prices would need to drop lower than that to force negative equity for the majority of people and realistically, maybe only about 10,000 people have potential of negative equity as they bought with high LTV's, or overpaid in the last 2 years. We are sacrificing the entire country for the sake of these people.
It's normally affording the mortgage payments that's the issue, and yes slightly rising interest could massively affect house prices as it has a massive effect on mortgage payments. And at the end of the day it's the affordability of the mortgage payments that effectively sets house prices.
borrowing 500k at 1.5% as the IR was at the end of last year was £1726 pcm. borrowing 500k at 3.3% as it is now is £2190. A difference in monthly payment of £464 Heating that house now costs double too. It isn't hurting house prices yet and that baffles the life out of me. Maybe it's delayed... but how far do we need to go? Are people fucking stupid?
Thing is, if the default rate goes too high then it suddenly stops being the mortgageholder's problem and starts being the lender's - there's no point repossessing if the market is illiquid (as it instantly would be) and the cash buyers are all offering 30% below the last sale price. If rates go too high and wages stagnate too low, then all you really get is a de facto mortgage strike. Which with my Leninist acceleration hat on, I say "fuck yeah!", but it would be the sort of wild ride you see at those unregulated US theme parks from the '70s where they claimed every ticket came with a liability waiver, and coming home with all your teeth and fingers was a win.
One of the two types of affordability checks that banks run before offering a mortgage is the ability of the borrower/s to make payments in the event of an interest rate spike. Banks have accounted for something like this to happen whilst offering mortgages over this period of low base rates. We shouldn't see anything like the US in 2008 here. Commercial mortgages could be a different story though.
so a good time to scrap mortgage affordability test then?
> If the interest rates creep up even a couple of points, thousands will be defaulting and go homeless. Which would allow thousands more to get on the property ladder....
Or a handful big companies buy up all the housing stock and rent them out
We have a winner - if you HAVE capital and borrowing is expensive, buying stock now will likely give you a nice passive income and the asset is likely to raise in value once things 'correct' the conspiracy theorists and their blackrock nonsense are already screaming that it's all the New World Order when it's just buisness, but that's so dark and scummy it looks evil perhapes
Depressingly valid concern
It would be an unusual housing crisis where banks still leant as prices crashed.
These people would be the last to be able to afford it - the homes would be snapped up by buy-to-let landlords.
Only if they've got enough to buy in cash.
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Because it's not so much oil companies reducing capacity but OPEC who can't really be compelled to produce more. Raising interest rates is good for reducing demand, as it means that money invested in debt will get a better return, and debt servicing will go up so less demand for goods and services. The problem is that this doesn't address the cause of the inflation if the cause is, as you say, less supply. Unfortunately there are some people who dogmatically believe that the *only* cause of inflation is the money supply increasing.
Wouldn't work anyway. Increasing interest rates works in an overheated economy - the opposite of what we're seeing here.
Increasing interest rates typically leads to a stronger pound. BoE are not increasing at the rate of the Fed so £ is losing value to $. The bulk of the inflation is from Energy and Wheat / Grain which are priced in $. So a stronger £ could reduce inflation.
This is all so bonkers. My rent is tied to CPI - so will increase by 9.1%. But god forbid mortage rates increase by 0.25%. Everything is fucked.
Yea but those figures are not directly comparable. Taking some roughly rounded average mortgage figures. £250,000 mortgage 2.0 % interest rate Monthly repayment = £1060 Interest rate up by 0.5% (as has happened so far) Monthly repayment is £1122 So roughly a 6% increase in mortgage repayments. Also mortgage interest rates are not directly related to BoE interest rate. Mortgage interest rates have gone up by an average of 1-2% in the last year. So average mortgage payments are probably up 15-20%.
Pensioneers own houses. Pensioneers vote tory.
If the BoE choose not to destroy the economy by raising rates they are instead choosing to destroy the currency.
>The main measure they could use to combat inflation, raising interest rates to a decent level isn't available to them It is available but it likely won't have any effect. How will it when most of the increase is from supply disruption? Unless of course you mean raising them so high that it causes huge unemployment (the usual mainstream argument) along with trail of devastation.
This is a somewhat unsexy answer and others have done the glib one liners, so let's give the real answer. Inflation rates have been rising because they compare to a year ago, but the actual inflationary pressure only really started about 8 - 10 months ago. At the moment therefore we have 2 - 4 months of low or flat inflation and 8 - 10 months of high inflation coming out at 9.1%. If you had a 6 month inflation rate (which obviously you wouldn't because it doesn't take into account seasonal impacts), then it would have flattened off now (5.5% in the last 6 months this month v 5.6% last month). Unless something else changes then we'll probably hit 11% and not higher. There are also some baked in price rises caused by the phasing out of some of the Covid measures (VAT reductions all over the place) - they'll drop off the chart sooner rather than later, so that will reduce inflation.
> If you had a 6 month inflation rate (which obviously you wouldn't because it doesn't take into account seasonal impacts), then it would have flattened off now (5.5% in the last 6 months this month v 5.6% last month). CPI for May 2022 was 120.8; it was ~~114.7 in December~~ 114.5 in November 2021. The annual rate extrapolates to ~~(120.8/115.1)^(12/6) = 1.101 = 10.1%~~ **(120.8/114.7)^(12/6) = 10.9%** [APY](https://www.investopedia.com/terms/a/apr.asp). Here's the data: https://www.ons.gov.uk/economy/inflationandpriceindices/timeseries/d7bt/mm23 CPIH in May 2022 was 119.7; in ~~December~~ November 2021 it was ~~114.7~~ 114.1 . The annual rate extrapolates to ~~(119.7/114.7)^(12/6) = 1.089 = 8.9%~~ **(119.7/114.1)^(12/6) = 10.1%** [APY](https://www.investopedia.com/terms/a/apr.asp). Here's the data https://www.ons.gov.uk/economy/inflationandpriceindices/timeseries/l522/mm23 Both of these figures are higher than the whole year rates. Edited to correct pre-coffee errors.
Exactly. If you ran the same set of figures for April then you come out with a near on identical number - inflation rate is only going up because the first couple of months of the last 12 months was low and that is going to work itself out of the system so that the rate doesn't keep going skyward. Hence the BoE think it will peak at 11% (which is what your numbers show). (Side note that you need to compare with November which was 114.5)
> If you ran the same set of figures for April then you come out with a near on identical number - inflation rate is only going up because the first couple of months of the last 12 months was low and that is going to work itself out of the system so that the rate doesn't keep going skyward. Hence the BoE think it will peak at 11% (which is what your numbers show). I expect inflation to rise in the winter because the more expensive energy and food get due to the War in Ukraine, the more heavily they will be weighted in the index, and so e.g. the next increase in the price cap will have a bigger impact than the last one. Increasing energy prices will also drive up both manufacturing and transport costs, and I expect there to be a jostling effect as workers attempt to renegotiate pay & conditions to limit the harm. This will lead to an inflationary spiral until the economic pecking order is established. This is not helped by the reinstatement of the triple lock, which is both dissipative and highly inflationary due to its impacts upon taxation and the money supply, especially given that giving pensioners money for nothing isn't synonymous with allocative efficiency. (I assume that *chicks for free* is a policy held in reserve by the Chancellor until the final pre-election budget...) Matters are also not helped by homeopathic interest rates which are less than a tenth of the rate deployed the last time that inflation was this high. Historically, one would have expected that interest rates would be about the same as inflation. Setting the Bank of England base rate below that offered by the Federal Reserve seems likely to stoke inflationary pressure by causing Sterling to depreciate against the Dollar. This is unhelpful given our reliance upon imports given that the Government seems uninterested in investing in people below pensionable age to increase labour productivity or grow manufacturing industry, not to mention all the post-Brexit barriers to trade which this series of miss-begotten Conservative administrations have inflicted upon our productive industries to placate the economically illiterate Brexit mob. For these reasons, I would not be surprised by inflation approaching 15% by the end of this year or the start of next year. The idea that inflation will fall in the short term is a bit like saying: "Although the Government have driven the economy off the road, it is unlikely that they will drive it off the cliff we are rapidly approaching, as that sort of irresponsible and incompetent behaviour would be utterly out of character for the fine, upstanding, competent people we have elected to run the country..." It will be very interesting to see how the UK's performance compares with the rest of the G7 over the next 18 months or so. > (Side note that you need to compare with November which was 114.5) Thanks. Fixed.
I think that inflation will prove to be more "sticky" than expected due partly to human behavior. For the last 20-odd years, inflation has been of minor concern to businesses and consumers. Annual price rises have not necessarily been the norm. Once people have seen the effect of sudden inflation (up to 50% of some input costs), they will be loathe to stop lifting their prices. Some will do it anyway if they think they can get away with it.
Between 1993 and 2008 inflation maxed out at 3.1% and at its lowest was 0.5%. That's remarkably stable. Even after that it has mostly been relatively stable (even if it was high during the financial crisis and the peak of Osbourne's tax hikes and spending cuts of 2011). I get the point about rising prices and that will happen in some industries that are less elastic, but my feeling is that there are some changes that are a shock that are being added to the system. They are mostly supply side changes (not demand side) and they will eventually fall out because they were 'one offs'. Obviously the ongoing issues with fuel and energy will probably last as long as sanctions do (which could be years rather than months - a very long 'one off') and ultimately they are also business input costs too, so they'll push up prices of everything else.
Depends what you count as summer. By end of Q3 I think it (inflation) will reach 10.5% maybe even 11%.
!RemindMe 100 days to see how off I was.
!RemindMe 100 days
I was wrong.
The BoE have already predicted 11% because of the energy bill situation.
50% by Christmas?
*Laughs in Zimbabwean dollar*
I would also like to see updated stats from the Office of National Statistics, in respect of our demographic timebomb. In January 2022, they updated their projections and stated the UK would hit a demographic turning point 2 decades ahead of schedule - by 2025 more people would die than would be born in the UK. >falling fertility rates could be linked to a lack of affordable childcare, poor employment and insecure housing which was stopping young people from having children. > >The ONS estimated that by 2045, the number of people aged 85 years and over would nearly double to 3.1m — 4.3 per cent of the population. Ironically, whatever remains of the UK by 2030 (England & Wales presumably), will require massive immigration of working age people.
Guessing computer games refers to price of graphics cards coming down?? Love how sky keeps reporting on inflation, but is hyper critical of workers organising to try and deal with it. We should be in a state of depressed apathy, knowing our fate but powerless to stop it.
>Guessing computer games refers to price of graphics cards coming down?? I said this lower down as well, but the ONS are a bit coy on this - it's likely that the prices they attribute to computer games are based on the games that are in the top 5 or whatever at that particular point in time. What that means is that if a game comes out that is £10 cheaper than other games and hits the top 5 then it will pull the stat down, even if all the prices of the games stay the same (or go up by less than £10!). In this case they are talking about downloads, so it is possible that a game for download on mobile has come along that is popular that is cheaper.
it's a weird one too because there are so many free to play games, indy games and etc - meanwhile there are also endless Diablo and Sims style games which could bankrupt a billionaire with in game purchases and add-on packs. Entertainment is general is a really awkward category and really muddies the water when it's included, there are the same issues comparing any historic pricing as trends and tastes change but with entertainment it's just so chaotic that i can't see how it's ever going to make any sense.
If it's in reference to graphics cards then that's a red herring. There was a graphics card shortage during the pandemic, and therefore the prices have been dramatically over exaggerated for a year or two at least.
Driven heavily by crypto mining, which (due to rising electricity costs and falling crypto prices) is no longer profitable for the vast majority of miners. I used my old GTX 1080 to mine for a year and generated about £400 in profit, but jacked it in after my fixed rate energy tariff came to an end, as I worked out it would now lose me about 60p a day.
Did you actually get £400 or is it locked up in crypto assets and the like?
It's still largely in BTC at the moment, but I split a bit off into other cryptos. I actually made more money from a browser game called Crypto Royale. I managed to withdraw £740 (half of my winnings) when the price spiked in December. Also playing Coin Hunt World which is netting me about £15 a week at current values.
What tools are the government using exactly?
Boris Johnson
The biggest tool of all!
*And in the darkness binds them.*
Bravo.
The BoE is independent of the government, so when it comes to monetary policy they don't really have many/any tools.
There’s the “the last Labour Government” tool. It doesn’t fix the problem, but it does (correctly) place the blame for the transfer of powers to the independent Bank of England.
What are you trying to imply here? Making the BoE independent was (imo) the correct decision, or do you disagree with that?
My point is the independence of the BoE is only as practical as it is for the public to accept that inflation is no longer a political problem. And given the latter is completely unrealistic; yes, it does make me question whether the former was a good idea.
That's not really true though. Inflation doesn't exist in a vacuum where only monetary policy applies, therefore it is a political problem.
Well the last Labour government...
to measure inflation? they go into shops and look at the price of goods
The chancellor says government is "using all the tools at our disposal" Not sure what tools exactly they claim to be using.
Have you not seen the crates of Prosecco being delivered to no. 10?!
A wrecking ball?
>he said the steep rises in food and record high petrol prices had been "offset" by the price of clothes rising less than they did this time last year, along with a drop in computer game costs. Is Rishi for real? Most people aren't buying new clothes and computer games right now. How is that an offset? Edit: not Rishi, but rather Grant Fitzner, chief economist at the ONS.
Rishi is a what I call a smart stupid person. Smart on paper until he opens his mouth.
I don't think I've ever thought of him as smart, but I guess I can see what you mean. "He's the chancellor of the UK, he *must* be smart." *Rishi opens is mouth* "Oh..."
Well connected != intelligent
I mean he's not in that position because he's the best at it. He's in that position because he backed Johnson and brexit. That's how we're governed now
I think it’s pretty naïve to think like that. He’s intelligent to his own ends - making himself richer, not intelligent as chancellor of the exchequer. Whether he knows what the best thing to do for the economy is or not is irrelevant, he’ll only do what’s best for people like him, Tory donors and other vested interests of the wealthy.
You can think that way... but then there's those times he's tried to do PR stunts and it's backfired horribly because the guy is just completely clueless. He had a great shot at being PM (I think through sheer luck of being in the right job at the right time) and he completely blew it in a matter of months. He doesn't even seem like a mastermind just in it for his own gain, just a clueless grifter.
Sadly there's a whole lot of those under the guise of 'professional qualifications' throughout the UK. So many qualified people who can ace exams and essays, but are shite at putting the theory into practice and have next to no communication skills. Does my head in.
Rishi didn't even say that? Chief economist at the ONS did and said so to explain the breakdown of the 9.1% - i.e. food and petrol prices contributed most to the upward trend in CPI, while clothes and computer games had the most negative contribution.
You're actually right, although I feel that BBC have updated their reference at some point this morning - it definitely said Rishi. Il amend.
Yeah, I had several bytes of computer game for breakfast and then went back to eating cereal. It's not the same thing.
Surely only a nibble these days? I'll get my Software Engineer coat and leave....
what if we start rounding up and eating the nonces?
Even putting aside the complete disconnect between what he considers to be ‘essentials’, video games have no dropped in price. Most new games for the new consoles now cost £70. Even on the older consoles, new games are between £50-60 which is what they’ve been for years so he’s talking out of his arse.
He must've walked past a Cex and saw a sticky copy of FIFA 19 being sold for £1.
You joke, but that's pretty much how his boss works. Take whatever you saw or heard last, and extrapolate from it.
obv u hvnt seen teh last steam sale ! /s
Probably due to indie games picking up a larger market share on consoles as they make it easier to produce for their platforms, bringing the average down? It's going to be something disingenuous like that.
Bet there's some fuckery going on with averages, a bump in indy game publishing could artificially lower the average cost of video games.
Probably counting mobile games too
The report talks about computer game downloads and how that section can be volatile because it does depend on what is popular at the time. If a game that is cheaper becomes more popular it pushes down CPI even if the price for the game hasn't changed.
It just highlights what a crock the CPI figures are. Essentials should be heavily weighted and any sensible inflation measure should include housing. RPI is better, but still not ideal.
Rpi is awful. CPI includes housing costs (rent), cpih is better as it covers some more occupier costs. I waver on the imputed rent side, but I get the argument for it.
Essentials are given the exact weighting with which people buy them. CPIH is CPI including the housing element. ONS leads publications with CPIH and supplements with CPI. It's the media, not ONS, who focus on CPI.
RPI has the same problem that CPI has - it has weightings already and they aren't changed frequently. RPI was dropped because it included mortgage interest payments, which not everyone has and was influenced too much by house prices and interest rates (so BoE rises in interest rates will push up RPI, but have no impact on someone who doesn't own a house). CPI has things like food and so on being weighted more heavily, but they tend not to not change the overall weightings that frequently (I believe they do some 'substitution' which doesn't count as a reweighting, just a new value for the same 'product', although last time I looked I couldn't find any details of it). They will look to see if people are spending more on some types of goods than in the past about once a year - usually it doesn't need to change that often.
New games are like £75 now it’s an absolute joke
Rishi gave you a PS5, and now he will get you a 100 Pound Steam voucher.
Anyone else been getting email after email from clothing sites you've previously used offering money off vouchers and early sale access? Seems to me a lot of companies are already feeling the pinch if they're trying hard to incentivise shopping. Edit just to say literally on hitting post on this I got another one from Adidas reminding me I have a 20% voucher lol.
Unsubscribed from every marketing email I ever got. I realised I didn't actually read them. If I need new shoes/clothes, I'll go buy them.
Lots of places are closing down local to me. Mainly small businesses but some medium sized ones have gone. I'm currently looking at closing mine. Sales are a sign of people struggling. I guess there are some deals to be had though. Things also take a while to have an effect. There are plenty of people running round though that insist this will only last a few months. I don't think so and after not receiving a penny through brexit and covid we simply don't have the funds left to be able to weather the current economic climate.
I wanna know where he's getting his games. Back in th 360 days AAA title would go for 32 to 40 now it's up to like 60-70.
DROP IN COMPUTER GAME COSTS?? 1. Are the fucking seriously using that as a metric 2. are they blind?? AAA games are launching for £60, even £70 in some cases for the basic edition,
They're not saying there was a drop, they're saying they increased under inflation. If fuel increases by 20% but games increase by 5%, then games would bring the average down.
Also the last bit isn't even true. New video game releases on PlayStation/Xbox used to cost £50, now they cost £70.
I’m just not paying full price for new triple A games, (or similarly priced games) anymore when launched. Way less expensive to wait for a discount, get the game on one of those console subscriptions or for it to show up on eBay second hand for half the price or less.
Mfw I thought £30 was a lot
'Food prices have been rising ridiculously quickly but it's okay because clothes prices are still rising but not quite as quickly!!! Me and my billionaire mates are doing such a good job!!!'
Just start eating clothes instead.
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I still buy new video games; PS5 games are £70 Rishi, you madlad! Tbf, he's got enough cash to probably own a peng PC, maybe he thinks Steam Sales is how we all buy our vidyas
At this point they're just saying anything to make it sound like they're on top of it. How is it being offset by the price of clothes and computer games? That would imply:- - people spend an equal amount on food, and clothes + computer games - if clothes not rising as much, then it's only offset if I've had a pay rise. Which most people haven't. What the fuck is he smoking?
Computer game costs, including digital, are actually increasing due to the new generation. Rumblings in the industry of next-gen games increasing to £70 for standard editions has been a controversial point for a while. Using people’s sense of style and hobbies to downplay an actual crisis is just another play to move responsibility and guilt away from the government to the consumer.
Well given how this is clearly all driven by the poor being poor, have they tried not spending their money. That will solve the problem! /s
I vote that everyone stops spending their money on everything at the same time. I think the chaos of a gridlocked economy would be fun at this point.
The evergreen of fiscal strikes.
What's the "fix" for inflation? If people are already close to the breadline, and government is saying don't expect wages to go up as much as inflation, large groups of people will no longer be able to afford rent / mortgages / food.
Raise interest rates. We should have done it far earlier.
Worth noting that this will create a recession
At this rate we’ll be in a recession anyway
A bigger recession then
Mmmm levelling up, chaos with Ed Milliband, strong&stable, party fiscal responsibility, all in it together eh lads?
don't forget "We want high wage economy" and "Brexit dividend"
Back to basics, where the basics are the general malaise of living in the end of history.
RPI is 11.7% (up from 11.1%). Factory gate prices up 15.7%. Factory input prices up 22.1%. But whichever measure you pick, it's up. There's something suspicious about Radio 4 earlier trying to spin this as a decline in inflation, although if I'm being generous I'll forgive them for a clumsy sentence. "Prices not rising as much as before" - i.e. (by CPI) it's only a 0.1 percentage point increase. No, you mean, "the rate by which prices have risen is still rising but at a slower rate", i.e. it's a third derivative.
Second derivative, the rate of change of the rate of change. Edit: I was wrong, it is indeed the third derivative.
If you are saying that the increase in inflation is slowing, then you are claiming that the rate of change of the first derivative of inflation is negative. 0 Prices 1 Inflation 2 Rate of chance of inflation 3 rate of change of the rate of change of inflation It’s the third derivative
BBC lunchtime news was saying that labour should be embarrassed by the rail strikes yesterday so I don't trust them as a credible source
So who will Boris blame? Europe?, the last Labour Government?, the Immigrants being shipped to Rwanda?, Sue Grays Report?, Unions?
Ukraine of course! If only they hadn’t been dressed like an independent country, Putin wouldn’t have been so tempted! And then Boris wouldn’t have been forced to join the international scolding and oil prices would still be okay.
Government and Bank of England: Please don't change jobs or ask for pay rises because we live in a communist society and in no way should we all be looking out for ourselves. No way man.
Worse performer in the G7 yet again - thank you, Brexit.
Can people just stop asking for pay-rises so that this inflation will stop.. It's so inconsiderate /s
Tories: 'HoW cOuLd LaBoUr Do ThIs tO uS!?'
It could have been worse, we could have got free internet
I was laughing so much when just 5 months later whole nation was at home and could do with free internet to help with home schooling, work from home etc.
If that had happened, inflation would surely be 20%! ThE moNEy hAs tO coMe froM sOmeWherE guys!!
Much better to spend those billions on dodgy PPE and an app that didn't work. At least Johnson's mates got rich that way!
This inflation is caused by the pandemic response spending, Central Bank money printing, and the war in Ukraine. This isn't a left/right issue.
The most prudent move for the government, as touched on this week already, is encouraging raising wages for those who work in multibillion profit companies, whilst giving tax breaks to smaller companies. As we know, this isn’t inflation caused by wages, this is caused by global issues. Raising wages will allow the BOE more wiggle room with interest rates and takes the sting off ordinary people. It’s time to tax the big companies more who don’t pay their workers well. Stop letting companies raise prices to shield their profits. Let small companies cope. It’s so obviously the answer here but the government are too thick to see it.
Has anyone seen a decent summary of why inflation is doing this? I’d love to read a good summary but haven’t come across anything. Not just in the UK but globally I mean
I hope this isn’t a stupid question, but isn’t a large part of this because we pulled hundreds of billions out of thin air for covid for 2 years to help businesses and individuals, pay for the vaccine, safety measures, etc? Isn’t this expected right now? In the UK and globally as well?
That'd be the case if people had too much money to spend. But we don't. Infact most people have less money post pandemic it's because the entire supply chain got expensive with increases in specific parts like oil and gas affected by current events
>we pulled hundreds of billions out of thin air And gave way too much of it to Tory mates and neighbours.
Not really, if you look at the breakdown and read the report it is energy going into housing costs and fuel going into transport costs that is causing this. Food is a fair chunk as well. I haven’t done the calculations but I imagine swapping the contributions from those categories to a more normal period would reduce the total number by over half.
It is yes, but it wasn’t universally accepted that more money creation would cause inflation. When central banks did QE for the first time after the great financial crisis*, many people thought it would cause massive inflation, it didn’t. In fact, most CBs were fighting deflationary pressures at that time and for most of the 2010s. Because of the experiences with QE over the last decade, I imagine it was thought that CBs had a greater ability to support government policy by monetising government debt than they in fact did. Central banks have been caught with their pants down. * As always with macroeconomics, BOJ doesn’t count
QE did cause massive inflation after 2008, just not in consumer prices, it appeared in housing and all assets instead. Stimulus during covid saw the inflation in the stock market first which has now spilled over into consumer prices, we’ll see housing defaults in 1 - 2 years as mortgage fixed rates expire.
We did QE to fund ~18 months of reduced productivity though. At least with previous QE trickery, we didn't slash productivity.
Seen a lot of arguments over the past couple years that try to refute this, arguments for which I don't have the economics nouse to properly understand independently. I guess wait a few years (hoping it only lasts that long) and the true picture might become clearer, a bit like the virus itself
Yes absolutely, the bulk of inflation has been caused by the massive expansion in the money supply.
Partially but it's been exacerbated by a whole bunch of shit hitting the fan all at once.
Yes, shutting down the economy, while at the same time printing hundreds of billions of pounds to pay people to do nothing, while having the lowest interest rates ever seen was always going to result in record inflation. Many did warn about this in 2020/2021 but were derided as conspiracy theorists, COVID deniers and other insults.
As I understand it is a complex mix. More cash representing the same wealth. Yes. But if that were the only case there would be no problem in wages following. Something costing £1 would cost £1.10 and someone earning £20k would earn £22k and all would be well. But at the same time, we've seen a lot a businesses go to the wall, domestically, and internationally, we've made trade harder with our biggest partner which will also reduce their inclination. Supply has been hammered pretty hard. Meaning we'll also see cost inflation that won't be mirrored in wages. The fact that both are going on at once is also an opportunity for some industries while seeing some cost increases and a need to increase prices are taking the opportunity to extract more profit on top of that either due to reduced competition, or sluggishness in the market (people can't immediately change suppliers, or don't know what a fair market price should be when everything is moving so quickly. Some of this part represents price gouging or profiteering.
Yes but anyone who spoke about this was shunned. It was a lovely 2 years on here. Anytime you spoke of the future consequences of all this you got accused of being happy to see people die of covid
There , you just brought it up again... You just killed granny , again. How does it make you feel?
It's not like letting the pandemic overwhelm everything wouldn't have caused massive economic problems, a huge part of the issue at the moment is the global supply chain disruptions which are a direct effect of covid. It's impossible to say which would have been worse economically so most people decided it's better to go with the one that results in less death.
And Brexit impacts are being realised
I wouldn't be so sure on that front. Pretty much everyone says that the majority of this inflation is coming from the elevated price of fuel due to the ongoing situation in Russia and Ukraine. If the majority if inflation is due to thus, then it matters not how much or how little we did during covid. The proce of oil gas and petrol would still be the same. If the proce of oil and petrol goes up by however much a barrel that's nothing to do with us, who produces basically none and can pull no levers to alleviate this.
FaStEsT gRoWiNg eCoNoMy iN tHe g7!!!1!1!1!
Aged like milk stuck in a warm trailer waiting to be exported to the EU due to all the additional paperwork required.
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They’re 70 on newer consoles and a lot of new games are 60 on steam. Between ~2000-~2019 it was 40. Computer games have a habit of sticking to the same price structure for years, though for the last decade they monetise in other more increasingly insidious methods.
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> Between ~2000-~2019 it was 40 Depending on what you were playing on, if my memory serves me correctly, N64 games were around £50 each back in the 90s.
Play games while drinking the pain away.
They may be getting cheaper but so many are pay to win now
We’re popping off Highest rates of inflation in 40 years you’ll never sing that
Why stop there by July we can turn this 40 years into 80 in no time for that Blitz spirit we all have been craving for.
I was told that inflation had levelled out and was starting to fall, life is a lie!
By who and when?
Pfft, thats rookie numbers for those of us in Turkey. Government says its 70%, an NGO says its 160%. Guess which one is true lol. In any case, I hope everyone over in UK is affected as low as possible.
Ah, the ole’ thrice in a lifetime recession eh.
So house prices have really only gone up a couple of percentage points above inflation. But because salaries are only rising by about 3% the difference is still at least 9% more out of reach. But whatever you do don’t ask for a pay rise like those pesky rail workers /s.
You think it's bad now, wait until winter when the Russian gas gets cut off to most of Europe and energy costs go stratospheric in line with the massive spike in demand from cold weather. This crisis is beyond our power to resolve alone and our government is mostly a passenger in how this will play out. All we can do is stockpile resources, establish ways to harvest, mine or drill for more fossil fuels immediately and work on the fastest long-term transitions to renewable energy which we control exclusively, as soon as possible.
All we will do however is stockpile nothing, harvest nothing, transition slowly, and go cold.
It's been "40 year highs" for six months. Wake me up when it's a new headline, jfc.
9.1% my arse. How about reporting figures that actually matter to people?
Please, oh great statistical god, share your measure of inflation.
The stuff that matters to you and I? How about petrol, food and fuel costs which are up what 20 to 30% more year on year?
Food and fuel are included in the CPI figure, some things are up, some things are down. On average, across a basket of goods, prices are up 9.1% since last May.
They're under reporting, inflation is much higher.
Right? Fuel and energy bills have gone up by more than double that. And everything depends on energy and fuel... No way in hell it's only 9.1%.
According to [this personal inflation calculator](https://www.rathbones.com/personal-inflation-calculator) inflation for me is 19.2%. I know the 9.1% is supposed to be a national average but this is after I've cut all non-essentials out of my life and am living paycheque to paycheque now; I'm wearing my Jolly Roger hat to watch films or shows, no take-outs or deliveries not even on payday (which was my normal treat day), no gym, I don't even drive out to the New Forest or South Downs on the weekends for walks. It just fucking sucks.
Honestly, the last one pisses me off the most. Recently EVERY park I have been to has introduced paid parking. Literally nothing is free. People can't even take the kids to the park with a bloody jam sandwich unless they've got the money now. It seriously pisses me off and I'm personally not struggling yet myself. It just feels like the greed and mismanagement in this country is rampant though, nothing is sacred.
Yeah sorry but if my energy bills and fuel prices have gone up by more than double that, there's no way in hell inflation is only 9.1%.
The 9.1% is across a large number of goods, some of which will have inflated more, others less. Your individual exposure to inflation can be much higher (or lower) than the 9.1%