Inflation

7% now. Get ready for some civil unrest in the autumn.

 

All these price increases and now even inflation is going up!

 

Indeed. This doesn't yet include the 54% energy prise uplift, and the big issues of scarcity from the Ukrainian invasion won't yet be biting. We've also got the next price cap increase due for October which could be yet another huge spike.

 

Happening all over the world we are not the only country don’t know what anybody expects after a worldwide epidemic.

 

Yes but we got Brexit done!

 

won't happen. only happens when the Tories are in opposition. Remember the fuel protests when petrol was approaching 99p a litre? All the Tory voting hauliers out in force. a decade of this mob and silence.

and let's not forget any protest that is too loud or annoys any of our 'betters' and it's jail time.

 

Are other countries working to mitigate the effect?

Is every other country raising taxes for the poor, lowering them for their mates?

Are any other countries actually helping people with fuel price rises?

edit to add:
You’re confusing a worldwide problem with having no choice about how it’s handled. Kinda missing the point of why we have government

 

That Corbyns got a lot to answer for.

 

Mortgage rates are continuing to creep up. Over 1% higher rate for a 5 year fix now than in October.

 

No way am I economically minded, I know nothing, but am I right in thinking that if inflation goes up then interest rates will rise, so peoples mortgages and borrowing will go up, and with ever increasing costs of gas, electricity, fuel and general household food, clothes etc, things beyond our control, then won't inflation go up again, interest rates, etc etc.
Once we get into runaway inflation where does that leave us?
Or am I being a simplistic know-nowt?

 

The traditional method by which to control inflation is by raising interest rates. So while one doesn't necessarily follow the other, raising interest rates requires an active decision, that does tend to be the case.

 

Some countries are doing far more to help. But then if you are driven by free-market ideology you have to leave it to the market. Except when it comes to leaving the world’s biggest free market of course.

 

A really good question and one which i think is a challenge against the usual economics.

Traditionally inflation has been driven by consumer demand, too many purchasers chasing too few goods driving up prices. In that scenario raising interest rates depresses demand and seeks to head off further inflationary pressure.

What is happening at the moment is commodity driven inflation and, in particular, energy. In this case inflation is being driven, not by consumer demand but the cost increases associated with energy prices.

In this scenario raising interest rates has little to no impact on inflation as the core driver of inflation is commodity price driven not consumer demand.

If central banks try to act in the best interest of the economy it’s hard to justify why further interest rate rises will reduce inflation or help the average household.

 

And doing so will bring its own cost of living problems as people who have never known anything other than historically low interest rates reach the end of their fixed terms.

 

Bet you’re glad we didn’t go for Chaos with Ed Miliband, right?

 

It'll be a disaster if interest rates are raised. People maxed themselves out taking on properties only affordable due to unheard of low interest rates. But even at those low rates every bit of the wage was gone at the end of the month. Now there's inflation and the rise in energy prices and there's not enough money to pay the bills. And if mortgage repayments go up...

But it's already a disaster. It costs 500 quid a month to rent a two bed terrace in Barnsley, rising all the time. It is impossible for me to ever afford a house because by the time I've paid the rent and the bills and paid for transport to work there's nothing left. When I retire I will be homeless. This is a fact. If I don't die before I will die freezing and penniless on the street. I already know this for certain.

 

You won't. You can come and lodge at mine if you behave yourself!

 

I think they've muddled the soundbite.

"We got done by Brexit", is far more accurate.

 

You're right, inflation is deemed to be naturally counter acted by interest rate raises.

This is based on the false premise that inflation only rises when an economy booms and people "over spend". So eating into personal budgets to restrict excessive inflationary spending.

In this case our spending isn't booming, nor is our economy, and society is highly divided based on the impact of this inflation.

The hope is that the effect of high inflation dissipates when you reach the centenary of the initial rises. Given the issues with Russia and the potential support of markets in ME and the Far East, there could be a whole wave of realignment.

 

I certainly think the Bank of England will try & hold off interest rate hikes, due to fear of us going into recession. That said, if European banks up theirs, they won't have much choice in following suit, as the fall in sterling it would cause would push up the cost of imports higher. Even cost push inflation, which we have at the moment isn't immune to forcing up rates at times.

There is no economic or political good news to be found anywhere.

Thank the Lord that Matty Wolfe has signed a new deal...