Inflation to hit 15%

[onthefencesitter]

www.independent.co.uk/news/business/inflation-bank-england-cost-living-b2137311.html

www.theguardian.com/business/2022/aug/03/uk-inflation-could-reach-15-by-start-of-2023-experts-say

What do you all think?

Since I mostly only buy food and the inflation on that is running at 25% (I keep a price books so can see it) - this is no surprise.

What does that mean for say to day life?

Expensive mortgages if not fixed it when fix comes to an end.

Will food and clothes get even more expensive?

Presumably wages will not rise with inflation so we end up with less disposable income.

What else?

People spend less so more businesses fold so unemployment rises

There are some injustices though. DH and I worked out that the increase in the daily standing charge had nothing like the proportionate increase on our bills than it would if our bills were far less.

We are old and DS has moved out so one less to feed and therefore little change re the food bills except they have not reduced.

We have no mortgage and are safeguarded there but conversely with borrowing rates increasing savings rates are NOT increasing as they did in the 70s and 80s.

My heart goes out to young families receiving 3% increases to cover eye-watering increases, with already high nursery bills and contracted commitments: monthly payments for example on cars, sky, broadband, phones all on contracts that are binding for specific periods. It will be tough, very tough.

Bollocks. It’s a combination of factors, including both lockdowns and the consequences of economic warfare with Russia

This. Obviously it’s a combination of a number of factors and to blame just one is nonsensical
(sp?) The supply side issues are real but mainly to do with global supply chains rather than supply in the UK increasing costs. So partly to do with lockdown in other countries I guess, but also partly because the shipping containers are all in the wrong place and shipping costs are astronomical at the moment. Increase in fuel costs (including fuelled by speculation on commodities markets which as I understand can push prices higher in terms of uncertainty) also pushed prices up throughout the supply chain, and that did increase due to the invasion. And QE, of which I agree is a blunt tool that has kept the economy going since 2008.

Bless you @likeminded do you not realise that there are people who work full time and are still on benefits ? Privileged much.

As if this isn't all bad enough about inflation , I read today online that gas and electricity bills could reach £100 a week for many households by next year.
Truly scary.

Right - I might have re-phrased it as ‘kept it on life support’ since 2008 and papered over many cracks.

It is an important factor - but not the only one. It’s a ‘perfect’ storm, which is compounded by climate issues this year affecting farming,
which will make themselves felt next year for some food types :(

The only thing that the first rounds of QE did post 2008 was that it supported asset prices, especially government bonds, and helped the state to finance its spending. QE this time around went straight into people's pockets.

inflating asset prices also went straight into people's pockets

@downfield

You could argue that stopping asset prices declining through QE (printing money) is not quite the same as inflating asset prices.

But this is splitting hairs and broadly you are correct and indeed asset prices have risen considerably since 2008 because of QE. But the benefit of rising asset prices was not evenly spread across socio economic groups - wealthier people were able to borrow more cheap money so benefitted more or in simple terms the rich got richer.

@Arbitrage

I fully agree with you that the electorate and politicians seem fixated by Keynesian economics and I am also a much bigger fan of the Austrian School of Economics.

But you are looking at it from a "trader" perspective and need to see this is where politics and economics interact especially since the rise of populist politics. The electorate just want the upside and not the downside or in the words of Rizzle Kicks "I wanna get fit but I don't like running". Any politician that is honest and explains that yes you can have better services but it is going to cost more in taxes or debt just won't get elected.

So faced with the perceived risk of everyone dying from Covid (I agree whipped up by daily death toll announcements, Government messaging and social media) the risks of mass unemployment without furlough payments, the risk of the local pizzeria going bust without £600 m of eat out to help out and the risk. Versus a risk in the two years time of rising inflation, declining real incomes and very real risk for many of "eat or hear". Then the majority of the electorate supported a £450 billion spend on Covid measures and you are right that they are now paying for that decision.

But this is a democracy- the electorate made their choice and we are now living through the consequences much like in many way Brexit.

Rising asset prices (e.g. house prices) might have made many Brits feel wealthier.

My inlaws recently sold off an inherited property that had gone up by about 3/4s of a million & my parents downsized with equity of about 1.5m. I know lots of people who have inherited a staggering amount in the last few years from house price gains, that money did exist.

But the benefit of rising asset prices was not evenly spread across socio economic groups - wealthier people were able to borrow more cheap money so benefitted more or in simple terms the rich got richer.

agree

Aye, of course it wasn't. There were winners and losers.

But this is a democracy- the electorate made their choice

Unless there was an election in the spring of 2020 which I somehow missed, that isn’t true.

Ah, I read your posts with interest @Arbitrage but you’ve lost me. It’s clear you’re using MN as a platform for shilling your YouTube channel. Nice little earner is it?

😂

The lockdown itself and the support measures were supported by the majority of people. Indeed Rishi Sunak's popularity soared at the time. Indeed who doesn't like free money, time off and still getting paid or half priced Nando's.

Except there is always a price to pay which we are currently doing and will do more of.

Of course there were some who warned of the consequences of the lockdown, the generous support and Government measures against Covid.
However these voices were shouted down as granny killers, Covid is a once in a generation event (ignoring the HK flu of 1968 and Asian flu of the 1950s) or anti vaxx Covid deniers.

Many went along with the lockdowns, coerced injections (human rights abuses) & money printing because they either lazy, greedy, or both

No most went along out of fear.

Why is it greedy to take furlough which may have been less than your salary when you can't go to work?

The lockdown itself and the support measures were supported by the majority of people.

Of course they did because otherwise it wouldn't have happened. How do you control millions of people? You need compliance. People were wondering why we hadn't locked down months before.