Inflation Inflation Inflation

Gray_colt

Well there we have it 4% inflation and the mpc knew about this last week so no raise on the horizon! Good for tracker mortgages very bad for savers. Think this next 3 years are going to be tough for savers as the band of englands remit has changed dramaticly. 4% is the new 2% :money:

VT82

Uh-oh spaghettio.

Groundhog day was last week wasn't it?

VT82

My opinion is to suck it in and try and make the best of the low rate environment.

Accept the fact that banks don't have an obligation to provide inflation beating returns, that if you want these, you will have to take extra risk, and that life is generally more enjoyable if you look on the bright side than if you spend your life moaning and looking on enviously at those that have it better than you.

Gray_colt

An articulate reply! :P i totally agree re being positive.:money:

pauljoecoe

Raising the base rate would achieve nothing except make all of us with mortgages worse off. The inflationary pressures are not down to overspending therefore cannot be cured by putting us off spending by hitting us in our pockets.

masonic

It's only 4% for the Government. It's 5.1% for the rest of the country.

DavidHayton

masonic wrote: »

It's only 4% for the Government. It's 5.1% for the rest of the country.

I agree with you 100%. RPI is still the RPI, and it is now 5.1%.
David

anselld

The main reason "4% is the new 2%" is that a large proportion of inflation is down to VAT increase.

CPIY, the inflation measure excluding taxes is at 2.4% ... http://timetric.com/index/uk_cpiy_index_level/

In the short term BoE can do very little to counter the effect of Government raising indirect taxes.

le_loup

Excuse my ignorance.
If "inflation" is a measure of change, it would have gone down in January had VAT not been increased, as last January's effect dropped out. Now, because we have had a further increase in VAT, "inflation" goes up! Isn't that saying that inflation is an absolute measure rather than a measure of change.
Economists, statisticians, anybody?

edinburgher

plus ça change, plus c'est la même chose!

Supposedly the markets (for that read the financial wizards who helped get us all into the current mess) are pricing in a rise by May. Due to the all-pervading belief in said markets chances are the BoE will capitulate and oblige with a quarter point rise... Was reading some anaylsis yesterday that suggested a rise in May followed by small rises for the next four quarters. Not great, but better than a poke in the eye.

Still, it's all academic, as the bulk of us will probably still lose money on our cash savings. For me personally it means I save less cash and invest more, seems the only thing to do unless I want to sit around moaning about reducing purchasing power. Then again, I'm not on a fixed income and still work.

Hen_Step

I moved most of my cash that was not doing anything into shares, starting last September. I am no expert, but have made £4,000 since then, and currently have £14k in AIM shares (£4K is my profit put back in).
Yes high risk, but at least I am having a bit of fun along the way.
Also, the money in these shares is 4.3% of my portfolio.