The true inflation rate is closer to 10 per cent than five, and may even be higher

the_flying_pig

Malcolm. wrote: »

Which is another reason why house prices will not crash. Physical (long term appreciating) assets act as a hedge against future inflation. It woulld take a severe blow to disposable income and numbers in employment to see the crashes of the scale many on here predicted.

That seems like a nonsense to me.

A dash to assets [assetz?] would make sense if there was some kind of wage-price spiral going on... given that the price of land increases more or less one for one with the population's income it would be a terrible waste to keep money in cash, or indeed not to take out lots of debt, in an environment with lots of wage inflation since those savings, or indeed that debt, would rapidly become a trivial consideration.

But right now even nominal wage inflation is very low. Higher consumer prices, without wage inflation, will simply mean that people have less to spend on other things, including pwoperdee.

Jonbvn

marklv wrote: »

Maybe I'll emigrate to Switzerland: http://www.bbc.co.uk/news/world-europe-10886215

You wouldn't like Switzerland. Most of the population are politically right of Atilla the Hun.;)

BTW, the Torygraph article is somewhat disingenious:

1. £70 to fill up the family car - only if it's a Chelsea tractor.
2. "genteel literary festivals" - !!!!!! - shall I go to Hay-on-Wye or shall I pay the mortgage?
3. How many middle-aged people have hurriedly signed up for expensive private healthcare insurance? Purely discretionary expdenditure I believe.

I'm with Gen on this. Complete boltox.

Batchy

I know wage inflation is at a low at the moment (around 1% annually), but if you factor in the fact that people have reduced their average spend on socialising from around 18% to around 9% of income then this extra 9%(the difference) is going somewhere, so its either on Beer from supermarkets, DVDs or... HOUSING, or savings (same as paying debt down).

People have prioritised, they are using the money they would have otherwise spent enjoying it, by getting better value with it OR, with providing a safety net for their family. In the form of Savings, paying the mortgage down, paying the debt down, or Spending extra at the supermarket to make up for lack of socialising.

I think Asset prices are rising, it will take time to come through in inflation numbers as volumes are low. Real Car prices have increased significantly over the last 2 years IMO, probably around 15% if not 20% for RRP. But discounts are a lot more stingy than before.

For example, when volumes where high they had to shift cars, especially when they were all lined up in fields, waiting to be sold, sellers, are now not lining them up, they are built to order. And as a result discounts are few and far between.

For example a punto sporting was 14k RRP in 2008, Cash price 10.4k then , now 13k cash
A civic type R GT was 19k RRP in 2008, cash price 16.5k, now RRP 22k, and 20k Cash

I could do this for a lot of cars... People have stopped buying them as they depreciate like MAD (but actually they havent).

For the last 6 months Ive been looking at second hand cars, and for the last 6 months ... 4k cars are now asking 5k, I thought they would have come down more over the last 6 months.

Its crazy...

Houses on the other hand are stagnating, effectively falling, as they are literally not going up in price... hence its getting a better time to buy, effectively cheaper, inflation is the way the government are lining themselves to get out of this mess, hence BOE, index linking investments in its pension fund, hence pulling the NS&i PRI linked savings, hence pensions being linked to CPI rather than RPI (ready for BOE rate rise, which will obviously increase mortgage interest payments, and probably rents too). Hence government publically announcing they will freeze all public sector pay for 2 years, THEY KNOW whats going to be coming our way... PUBLIC sector workers will be losing a lot of ground over those 2 years, probably greater than any other 2 year period.

I stand by what im saying, I believe it, I can see it with my own eyes. So I am about to buy a house, exchange within the next 2 weeks hopefully.
I think non depreciating assets is where you need to be at the moment. Investments are just FAR too volotile ... but if you know what your doing im sure you can make a killing. And it will be my next pie that I get my teeth into in the future, but only when they feel more stable.

Batchy

Jonbvn wrote: »

You wouldn't like Switzerland. Most of the population are politically right of Atilla the Hun.;)



BTW, the Torygraph article is somewhat disingenious:

1. £70 to fill up the family car - only if it's a Chelsea tractor.
2. "genteel literary festivals" - !!!!!! - shall I go to Hay-on-Wye or shall I pay the mortgage?
3. How many middle-aged people have hurriedly signed up for expensive private healthcare insurance? Purely discretionary expdenditure I believe.

I'm with Gen on this. Complete boltox.

Chelsea Tractor would probably be around £100
£70 is pretty much any 4 door family saloon, with a 60ltr tank.
My small civic hatchback costs £55, A mondeo I would have thought would be £70.
BMW 5 series Diesel 2.0d is about £80+

amcluesent

>probably greater than any other 2 year period<

Hmm, I well remember my parents standard of living went down the toilet in 1977-1979 with inflation at 25% and 'wage restrained' pay increases for the public sector way, way below that. No wonder the Unions brought the country to halt in the Winter of Dsicontent.

Malcolm.

the_flying_pig wrote: »

That seems like a nonsense to me.

As I suspected.

the_flying_pig wrote: »

given that the price of land increases more or less one for one with the population's income

Supply and demand is more complicated than this.

the_flying_pig wrote: »

But right now even nominal wage inflation is very low. Higher consumer prices, without wage inflation, will simply mean that people have less to spend on other things, including pwoperdee.

Housing is a near essential. Interest rates being kept low. Possibibilty of further QE. MPs own property. 4 reasons why property prices will not crash.

We can agree to disagree old chap.

Generali

Jonbvn wrote: »

I'm with Gen on this. Complete boltox.

1. Click on the link to go to the article.
2. Look at the navigation bar near the top of the page to check which section it is in.

Today's Generali's Super Special Question:

Is the article in the OP under finance, economics, business or lifestyle?

Tie break:

In 25 words or less, why shouldn't lifestyle reporters use words like inflation?



PS Did you know that if you type 'Countdown clock channel 4' into Google, one of the first results is 'DirtyGirl4U.jpg a tribute to Richard Whitely'?!

Batchy

amcluesent wrote: »

>probably greater than any other 2 year period<

Hmm, I well remember my parents standard of living went down the toilet in 1977-1979 with inflation at 25% and 'wage restrained' pay increases for the public sector way, way below that. No wonder the Unions brought the country to halt in the Winter of Dsicontent.

But thats just it... Inflation WAS AT 25%
At the moment, we have inflation at just over 3% and real inflation FAR FAR higher...

Inflation is whatever the government wants it to be in reality, a little creativity with the basket of goods, etc... and bobs your uncle, your sorted.

Fact is, in times of economic uncertainty, people spend on
FOOD
FUEL
FAMILY (housing, schooling)
FEE's
F****ng Taxes...

Cause they have to...

FUN (just doesn't feature)

We have been 5F'd

JonnyBravo

Batchy wrote: »

Investments are just FAR too volotile ... but if you know what your doing im sure you can make a killing. And it will be my next pie that I get my teeth into in the future, but only when they feel more stable.

You'll not make a killing if you get in when the sheeple get in.

See your signature.

markharding557

Does the telegraph think that inflation only affects the alleged middle class?
I used the word alleged because many of the people who think they are middle class are in fact not middle class