No base rate rises for at least a year.. maybe 2 or 3 years

Thrugelmir

Really2 wrote: »

Not 100% correct it is travel fuel costs that have inflated.
Gas and electricity are both cheaper than this time last year.

Oil is an energy cost.

Really2

Thrugelmir wrote: »

Oil is an energy cost.

It is, but I was just stating not all energy costs had inflated that is all.

Thrugelmir

Really2 wrote: »

It is, but I was just stating not all energy costs had inflated that is all.

I was being picky.

The issue with energy and food is that it is a high proportion is imported. A weakening currency will maintain a high inflation rate.

Ideally the BOE (along with business) needs a period of a relatively stable currency to see what the effect on the economy is.

JayScottGreenspan

Harry_Powell wrote: »

What sort of inflation could be caused by a weakened currency, yet not controlled by fiscal policy. Only essentials such as fuel & certain foodstuffs, raw materials, etc, many of which have an amount of taxation included in their price - petrol is a good example, isn't something 90% of its price due to tax?

Rather than the government increasing interest rates to control imported inflation, which would be a hammer to crack a nut, it could simply reduce or increase taxation on the items causing inflation.

Decreasing VAT is simply not possible for us. If there is an inflation situation I don't see the UK has any easy way out.

I suppose if VAT goes up as many predict, then for the next twelve months inflation figures they will say "oh, it's just a temporary effect caused by the VAT change". Inflation will be worse, but they will use the excuse to give them a bit more lee-way!

FWIW, I don't think an inflationary problem is likely. I'm hoping it'll just be a case of 'steady as she goes' as the country slowly returns to normality. In that case, interest rates can probably be held at stimulus levels for another six months, then just be allowed to creep slowly towards some historically very low level like 3% or something.

Thrugelmir

Harry_Powell wrote: »

I'm confused about the point you're making. Are you agreeing or disagreeing that BoE rates won't increase much over the next 3 years?

The BOE needs revised Treasury forecasts ( now that we have a new Government) in order to see what the potential impact is on the economy of fiscal policy. This in part explains Merv's frustrations which emerged yesterday.

Depends what you call much. A base rate of 3% - 4% is possibly quite likely in 3 years time. As hopefully the worst will be over by then.

lemonjelly

Thrugelmir wrote: »

Two main factors in rising inflation is currently food and energy costs.

Rising taxation will supress domestic demand and put more pressure on an export led recovery to speed up economic growth. Which isn't looking so promising if this is the case "Our main trading partner is the EU and they're as knackered as we are".

Agree completely. Further news today highlights that the situation in the EU is worsening. In addition, exports aren't rising as has been hoped.

Really2 wrote: »

Not 100% correct it is travel fuel costs that have inflated.
Gas and electricity are both cheaper than this time last year.

Really2 I know we keep clashing over this. I disagree. My view is that fuel costs ARE higher. Not only that, but they are taking up a much higher proportion of household income - thus stretching other budgets.

Gas/Electric over the winter months was especially cruel in cost. I know many who genuinely struggled to maintain their payments. There have been a couple of reductions in fuel costs, but they are still having a significant effect on peoples budgets I feel.

Fuel/transport/petrol costs continue to rise (they appear to have stagnated temporarily, however if the £ devalues anymore it'll creep up!). These costs will be passed onto consumers for the cost of transporting goods & services.

No offence, you're just wrong like...:);)

twadge_face

Still a huuuuge leap of faith to trust that rates will stay that low.

Not saying it's impossible, but it's definitely a gamble.

Funny how people who win at a casino claim it's all in the skill in the way they played, rather than the luck of the hand they were dealt.

HAMISH_MCTAVISH

!!!!!!_face wrote: »

Funny how people who win at a casino claim it's all in the skill in the way they played, rather than the luck of the hand they were dealt.

Funny how people who lose in life claim it's all down to luck, rather than their own lack of skill and judgement.....

chucknorris

HAMISH_MCTAVISH wrote: »

Funny how people who lose in life claim it's all down to luck, rather than their own lack of skill and judgement.....

Wasn't it Jack Nichlaus that said "Funny thing that, the more I practice the luckier I get"

Harry_Powell

JayScottGreenspan wrote: »

Decreasing VAT is simply not possible for us. If there is an inflation situation I don't see the UK has any easy way out.

I suppose if VAT goes up as many predict, then for the next twelve months inflation figures they will say "oh, it's just a temporary effect caused by the VAT change". Inflation will be worse, but they will use the excuse to give them a bit more lee-way!

FWIW, I don't think an inflationary problem is likely. I'm hoping it'll just be a case of 'steady as she goes' as the country slowly returns to normality. In that case, interest rates can probably be held at stimulus levels for another six months, then just be allowed to creep slowly towards some historically very low level like 3% or something.

I was thinking more of the duties that get added, not just VAT. If petrol (for instance) increased too much in price, they could just reduce the duty.