CPI hits 4.4pct

HAMISH_MCTAVISH

lisyloo wrote: »

I feel that rates should go up for the sake of the general economy .

Why? When raising rates would cripple the general economy?

DervProf

HAMISH_MCTAVISH wrote: »

Product cost of petrol or component cost of raw crude?

That's what I was thinking. The cost of the crude is different to the cost of the petrol/diesel without tax, markup etc.

posh*spice

LEO-3 wrote: »

£80 to fill up a family car is beyond a joke as is £3.40 for a box of rice crispies:mad:

£3.40 for a box of rice crispies :eek: where do you shop - Harrods?


Maybe that's is what they cost. I pay £2 for Kellogs Crunchy Nut cornflakes....

Kohoutek

lisyloo wrote: »

You have also overlooked the demand side of the issue.
It it keeps getting more expensive then I will leave my car at home and cycle to work and not buy any petrol.

The UK motorist isn't a large enough oil consumer for the behaviour of you and other similar people to make a significant difference on crude oil prices.

Motorists in India or China will happily buy the petrol instead at today's prices.

HAMISH_MCTAVISH

DervProf wrote: »

That's what I was thinking. The cost of the crude is different to the cost of the petrol/diesel without tax, markup etc.

Correct.

The cost of crude is AFAIK a tiny component cost of petrol at the pump.

Refining, transportation, retailing, profits for all of the above segments, and then tax/duty are the vast majority of the cost.

lisyloo

So why do you think you know more than the worthies on the rate setting committee?

I don't think that.
I have simply come to discuss my point of view so that it can be challenged and hopefully I can learn from other people about things that I either didn't know or hadn't considered and hence improve my outlook.
I am not suggesting I know any better than anyone else merely discussing my current POV and hoping to learn.

Why? When raising rates would cripple the general economy?

Inflation is going to become a real issue with strikes and potential civil unrest.
I don't believe rates of 0.75% will cripple the economy.
There is clearly a series of trade-offs here and I believe that the indebted (of which I'm one) need to start paying their way.
Currently households and savers are being sqeueezed and if it continues then it will become a real problem. If those squeezed housholds restrict spending then it will cripple the economy too.
I fully appreciate it's a series of trade-offs, but if you don't control inflation then that will cripple the economy.

mbga9pgf

Thing is, $100 a barrel is rediculously cheap when you consider what you can acheive with that commodity.

HAMISH_MCTAVISH

lisyloo wrote: »

Inflation is going to become a real issue with strikes and potential civil unrest.

No it isn't... Inflation will fall significantly once the tax rises roll out of the equation in Jan 2012.

CPI-CT, which excludes the recent VAT rise, is at 2.7%.

I don't believe rates of 0.75% will cripple the economy.

Nor will they make the slightest difference to inflation.

Perhaps you can explain...

1. How much you think inflation will fall with a 0.5% rise in the base rates.

and

2. How much spending power will be removed from the economy during a fragile recovery by a 0.5% rise in base rates?

There is clearly a series of trade-offs here and I believe that the indebted (of which I'm one) need to start paying their way.

Why? Do you think the savers expecting safe guaranteed returns of above inflation were sitting around in 2007 saying, "There is clearly a series of trade-offs here and I believe that the indebted deserve a break".. ?

Currently households and savers are being sqeueezed and if it continues then it will become a real problem. If those squeezed housholds restrict spending then it will cripple the economy too.

Raising rates will increase household inflation.... RPI will rise dramatically and quickly, because it includes housing costs.

Those squeezed households will get more squeezed, not less.

I fully appreciate it's a series of trade-offs, but if you don't control inflation then that will cripple the economy.

Again, please explain how raising rates will address inflation primarily caused by tax rises and imported energy costs.

Graham_Devon

Well I for one am glad the BOE continue to monitor it.

All this other talk about interest rates not making a difference. Makes you wonder why they increased interest rates in response to commodity prices rising before the recession started.

It's all about mortgage payments. Let's not beat around the bush for the 114th time.

DervProf

Graham_Devon wrote: »

It's all about mortgage payments. Let's not beat around the bush for the 114th time.

I thought it was the 117th time.

Whatever. Repeat after me..... "Raising interest rates is a bad thing. It has nothing to do with making life less easy for those who have taken on a lot of debt (there aren't many of those anyway, are there ?), it's all about the wider economy. Businesses won't borrow if rates are higher (businesses are complaining that banks aren't lending anyway). Rising interest rates won't do anything (or much) to curb inflation."

This begs the question, if higher interest rates are so bad for the economy, why were they ever much above 0.5% ? And was it often said by the BoE that their main task was to keep inflation at around 2%, and they would use interest rates to control inflation ? While they were "targeting" inflation, pre 2007, debt was rising at a high rate, as were house prices, yet the BoE kept saying that it was their job to control inflation, and that house prices were not in their remit. I'm not saying that they are now targeting house prices, but what happened to targeting inflation ? Isn't it rather convenient that the BoE's strategy of setting interest rates seems to benefit rising, or maintaining property prices ?