Savers you've never had it so good?

Arthurian

Nomad25 - the personal inflation calculator linked to by Martin is too difficult for me to access, too. Try the one at www.bbc.co.uk - search their site for "personal inflation calculator" - and look at the latest news part of the results. It's based on the official calculator. Just check the date at the top quoting the latest RPI figures is recent.

If that's too complicated an explanation, just click on http://news.bbc.co.uk/1/hi/business/7669072.stm
although this link might go out of date in time.

Nomad25

Great - I'll give those two links a go and post back. Thanks Arthurian.

GeorgeHowell

oldagetraveller wrote: »

There are two commas missing and a superfluous question mark in the thread title as follows.
Savers, you've never had it, so good.

LOL !

This must surely represent the Gordon Brown/Ed Balls/Harriet Harperson etc way of looking at it.

FairyElephant_2

Thanks for that BBC link Arthurian - I couldn't get the other one to work at all.

So - my personal inflation rate (or rather mine & DH's 'household inflation rate') is 3.1%.

Actually with the rise in food prices of lots of our 'staple buys' it feels, and probably is, higher. We alrady bought mostly Value or Smartprice goods, but to keep our grocery budget the same we would now have to 'do without' some things, as we can't 'drop a brand' when these prices increase.

Don't get me wrong we are not really suffering too much ATM, thank goodness, as we both still have work and have been careful and prudent with money for the last several years at least.
It does annoy me when people tell me that we are 'lucky' though! Luck has nothing to do with it! We have simply worked hard and lived within our means!
OK, I'll get off 'me soapbox now!!!!!!

GeorgeHowell

We are actually now into deflation. The annual rate of inflation is falling but still positive -- both RPI and CPI. However prices as measured by RPI have actually fallen by 3.8% since last September, and CPI prices have fallen by 1.5% since last October. Whether these trends continue such that by this autumn we have deflation on an annual basis remains to be seen (my guess is not). Nevertheless the future trend of inflation certainly looks downward compared with the recent past. I believe it is in this context that Martin talks of savers being in a more favourable situation going forward than they perhaps realise. If achievable savings rates are around 1.5-2% with inflation at zero then we are better off than savings rates of 5.5-6% and inflation at 5%. So called personal inflation rates for pensioners (virtually impossible to measure with any accuracy) may or may not be above the RPI/CPI levels, but with fuel prices coming down the big disparity of the recent past may not continue for much longer.

A potentally bigger problem is that in "Brownworld", where policy is based much more on political prejudice and electoral survival than it is on sound economic and financial judgment, printing money by the B of E may well lead to double digit inflation down the road. And suppose this should happen following the economically and politically ignorant swathes of the British electorate who saw fit to re-elect the inherently-unfit-to-govern New Labour for a third term, do so yet again. In that scenario watch for the MPC's 2.0% CPI target to be relaxed substantially, "in the wider interests of reinstating consumer demand and economic growth, reducing unemployment, and greater social justice." Then savers really will have something to panic about -- high inflation, modest interest rates, high taxation -- the recipy for penury in retirement.

gozomark

FairyElephant wrote: »

So - my personal inflation rate (or rather mine & DH's 'household inflation rate') is 3.1%.

Actually with the rise in food prices of lots of our 'staple buys' it feels, and probably is, higher. We alrady bought mostly Value or Smartprice goods, but to keep our grocery budget the same we would now have to 'do without' some things, as we can't 'drop a brand' when these prices increase.

so you've calculated your own inflation rate, and you still don't believe it ?

Nomad25

Cra*p - first one comes out at 6.+% :eek: . I'll have a go at the 2nd.

gozomark

whats important to realise is its not just your personal inflation rate over the last 12 months that counts, but the inflation rate over your lifetime (or maybe from when you leave home) - many will have a personal inflation somewhat away from the average in any one year, but over time it will probably average out to close to the average.

lukekelly_2

A potentally bigger problem is that in "Brownworld", where policy is based much more on political prejudice and electoral survival than it is on sound economic and financial judgment, printing money by the B of E may well lead to double digit inflation down the road.

Electoral survival is what essentially all successful politicians do. Politicians who take unpopular but sensible steps don't get re-elected. That's electoral democracy. For all his flaws this is a feature of our political system as a whole, not Brown as an individual.

It's actually even worse than that, politicians who take policies that benefit most people but disadvantage some don't get re-elected. We remember and vote on slights more than favours. This creates heavy inertia in politics. Those benefiting have to benefit to a far greater extent than those being disadvantaged for it to make electoral sense.

And as it happens quantitative easing would be electorally unpopular, and so is an example of policy that will be implemented not if it's sensible but only if it's so overwhelming sensible that the alternative is dreadful. Hence we can reasonably conclude that if the BofE and the Treasury implement it they're doing so, like the governments in the USA and Japan, on the basis of sound economic and financial advice.

GeorgeHowell

lukekelly wrote: »

Electoral survival is what essentially all successful politicians do. Politicians who take unpopular but sensible steps don't get re-elected. That's electoral democracy. For all his flaws this is a feature of our political system as a whole, not Brown as an individual.

It's actually even worse than that, politicians who take policies that benefit most people but disadvantage some don't get re-elected. We remember and vote on slights more than favours. This creates heavy inertia in politics. Those benefiting have to benefit to a far greater extent than those being disadvantaged for it to make electoral sense.

And as it happens quantitative easing would be electorally unpopular, and so is an example of policy that will be implemented not if it's sensible but only if it's so overwhelming sensible that the alternative is dreadful. Hence we can reasonably conclude that if the BofE and the Treasury implement it they're doing so, like the governments in the USA and Japan, on the basis of sound economic and financial advice.

Point 1 -- agreed. Brown is a hopeless and spineless Prime Minister, but he isn't the first and won't be the last.

Point 2 -- you probably have something there too

Point 3 -- quantitative easing may prove unpopular because it savours of desperation. However Brown will no doubt try to dress it up as 'doing something', compared with his ongoing disingenuous rubbishing of the Tories as the 'do nothing' party. New Labour will also see QE as electorally favourable compared with less palatable alternatives involving taking the medicine now in order to get better later. Addressing the cause not the symptoms would involve things like cutting public expenditure in order to revitalise the private sector and stimulate demand. But this is a medium to long term strategy and New Labour hasn't the luxury of time. They know that things like cutting public expenditure and letting nature take its course on unemployment will be deeply unpopular with their client state :- public sector workers, the unions, those on benefits, the left-leaning 'chattering classes' etc. Labour's strategy now is probably damage limitation -- they know that the election is lost and that they are dead and buried in the key marginals so they are trying to save Labour seats. This means getting their traditional supporters out to vote for them. The relatively short term nature of quantitative easing compared with more constructive but longer fuse actions would appear to be consistent with this aim. And if it does all go pear-shaped as a result then it will be a Tory government that will have to pick up the pieces.