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Rpi 4.7% cpi 3.3%

2

Comments

  • Graham_Devon
    Graham_Devon Posts: 58,560 Forumite
    Part of the Furniture 10,000 Posts Combo Breaker
    Generali wrote: »
    The targeted measure of inflation is rising at 3.3% pa but the more general one you are correct to say is 4.7%pa.

    It is hard to think of a policy that would reduce inflation and not reduce pay rises. After all, inflation is really just companies putting their prices up. If companies can't put their prices up it's hard to see where the money for pay rises would come from.

    If the BoE were to put the squeeze on the economy by increasing interest rates, the chances are unemployment would increase. That would effectively increase the supply of labour and decrease its demand thus reducing the price of labour (wages) further. It would probably cut inflation (which is pretty low although above target) but would mean job losses and lower wages too most likely.

    Equally, however, rising costs of living, is a decrease in wages.

    If, as you say, putting interest rates up = a decrease in wages, but also a decrease in inflation, is that not the same as leaving inflation to rise?

    It's the same situation either way, a decrease in income.
  • lemonjelly
    lemonjelly Posts: 8,014 Forumite
    1,000 Posts Combo Breaker Mortgage-free Glee!
    Generali wrote: »
    The targeted measure of inflation is rising at 3.3% pa but the more general one you are correct to say is 4.7%pa.

    It is hard to think of a policy that would reduce inflation and not reduce pay rises. After all, inflation is really just companies putting their prices up. If companies can't put their prices up it's hard to see where the money for pay rises would come from.

    If the BoE were to put the squeeze on the economy by increasing interest rates, the chances are unemployment would increase. That would effectively increase the supply of labour and decrease its demand thus reducing the price of labour (wages) further. It would probably cut inflation (which is pretty low although above target) but would mean job losses and lower wages too most likely.

    Some may also argue that unemployment is due to increase anyway Generali.;)
    It's getting harder & harder to keep the government in the manner to which they have become accustomed.
  • phil_b_2
    phil_b_2 Posts: 995 Forumite
    abaxas wrote: »
    So with pay going up at about 2% and 'inflation' at 4.7. People's purchasing power is going down by 2.7% a year.

    Doesnt it depend on what the persons wage is and how much they generally spend on stuff?

    e.g.

    total outgoings on bills and stuff - £6,000
    increase of 4.7% - £282

    total income after tax - £15,000
    increase of 2% - £300

    spending power increase of £18.

    I'm probably getting something wrong. I dont spend a lot of time thinking about these things.
  • lemonjelly
    lemonjelly Posts: 8,014 Forumite
    1,000 Posts Combo Breaker Mortgage-free Glee!
    Spending power?

    Are you eric pickles in diguise?

    What are the odds on spending power not being the same as government funding?
    It's getting harder & harder to keep the government in the manner to which they have become accustomed.
  • StevieJ
    StevieJ Posts: 20,174 Forumite
    Part of the Furniture 10,000 Posts Combo Breaker
    chucknorris wrote: »
    Just as well I am earning a whopping 1.8% to 2.7% after tax on my various savings (losings) accounts then. I can stomach it though as I am a net borrower on trackers.

    You should have gone to [STRIKE]specsavers[/STRIKE] NS&I tax free index linked :)
    'Just think for a moment what a prospect that is. A single market without barriers visible or invisible giving you direct and unhindered access to the purchasing power of over 300 million of the worlds wealthiest and most prosperous people' Margaret Thatcher
  • Generali
    Generali Posts: 36,411 Forumite
    10,000 Posts Combo Breaker
    lemonjelly wrote: »
    Some may also argue that unemployment is due to increase anyway Generali.;)

    They might very well. Others think the private sector will pick up a chunk of the public sector workers being laid off.
  • chucknorris
    chucknorris Posts: 10,795 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    StevieJ wrote: »
    You should have gone to [STRIKE]specsavers[/STRIKE] NS&I tax free index linked :)

    I know and you should have told me before they stopped issuing them (I know Martin did to be fair, but I think my cash was tied up)

    I'm not sure if I had the chance as most of my money was tied up in fixed rate bonds originally earning between 6.5 and 7.2%. But when they started maturing there was only 4.5% - 5% available, now it's even worse, but I know I can't have it both ways (low trackers and a decent savings rate)
    Chuck Norris can kill two stones with one birdThe only time Chuck Norris was wrong was when he thought he had made a mistakeChuck Norris puts the "laughter" in "manslaughter".I've started running again, after several injuries had forced me to stop
  • shortchanged_2
    shortchanged_2 Posts: 5,546 Forumite
    angrypirate wrote: »
    Dear Ozzy.
    Same s*!t different day.
    Yours
    Merv
    PS - i got Cameron in the secret santa but im stumped for ideas - got any suggestions?

    A non scientific calculator and a hut in the Himalayas.
    Why are we here?......................because we are not all there.
  • shortchanged_2
    shortchanged_2 Posts: 5,546 Forumite
    phil_b wrote: »
    Doesnt it depend on what the persons wage is and how much they generally spend on stuff?

    e.g.

    total outgoings on bills and stuff - £6,000
    increase of 4.7% - £282

    total income after tax - £15,000
    increase of 2% - £300

    spending power increase of £18.

    I'm probably getting something wrong. I dont spend a lot of time thinking about these things.

    Problems is Phil_b most public sector workers are facing a pay freeze so there is no pay rise in sight for them.
    Why are we here?......................because we are not all there.
  • Really2
    Really2 Posts: 12,397 Forumite
    10,000 Posts Combo Breaker
    angrypirate wrote: »
    PS - i got Cameron in the secret santa but im stumped for ideas - got any suggestions?

    The QE2 (Wink Wink)
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