CPI hits 4.4pct

Thrugelmir

HAMISH_MCTAVISH wrote: »

Product cost of petrol or component cost of raw crude?

Product cost of petrol.

ruggedtoast

Interest rates are not going up by any meaningful amount. Thanks to Brown the time for that has long since passed and we are left with the legacy of a devalued currency and a shedload of debt.

The reason everything costs more is, partly because of oil, and partly because we are less wealthy than we once were. Things are going to keep going up and each and every month our incomes will buy less than they did for the month before.

Better get used to it.

chucky

Graham_Devon wrote: »

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.

all of this confirms how simple and wrong your understanding of the economy is.

thanks for confirming it for the 345th time. well done :T

DervProf

wolvoman wrote: »

But do you beleive savers should be shielded from such moral hazard?

Those savers who accept lower rates of return should be shielded from such moral hazard. When a saver puts £1000 into a savings account, they accept they are not going to recieve a relatively large amount of return on their money. If they want a higher rate of return they have to either tie it up for a fixed period of time, or look elsewhere (such as the stock market, property, gambling etc) for a potentially higher return, with the risk of losing some or all of their money. The individual saver saves their money in a bank, who will use that money to make money. The banks have a track record of being quite good at this. Of course, the bank will have to take risks to make a profit, but it is their job to do so. A bank will lend out money at a certain rate of interest. That rate of interest will usually be a bit higher than the rate they are offering their savers. This leaves room for the bank to make a profit, and to cover a few bad debts.

Cue posts about savers being parasites and having no right to a return, or any safety on their money. The thing is, for banks to lend, they need either money of their own, or to borrow money. If I "lend" money to a bank in the context of saving with that bank, I don't expect to earn as much money as the bank does on my money, so I therefore accept a lower interest rate in return for safety of my capital.

If the borrower can't save up for something, they have the option of borrowing for it. If they do borrow the money, they have to expect to pay for the privilige. They should also know that they have to pay that money back, and not be able to easily walk away from the debt. In the case of borrowing money for a house over a long period of time (as many people do), they should know that the interest rate they pay on their mortgage can vary (unless they get a fixed rate). Borrow a large amount at a relatively low rate, and they must accept that sometime in the future, they may be paying a higher rate. If they can't afford that rate, they should either borrow less, or accept that they may be forced to sell their assets and suffer the consequences (just as a saver looking for higher returns should accept the higher risk of losing their money).

My opinion.

Fire away !

lisyloo

But do you beleive savers should be shielded from such moral hazard?

I presonally don't.
"Speculating" in a non inflation linked product does not entitle you morally to any special status.
Capital risk, infaltion risk and shortfall risk are different types of risk.
Those that take inflation risk have to accept personal responsibility, just as everyone else does.

Those savers who accept lower rates of return should be shielded from such moral hazard

They are shielded from capital loss.
If they want inflation proofing in addition then they should take out the relevant product.

DervProf

lisyloo wrote: »

They are shielded from capital loss.
If they want inflation proofing in addition then they should take out the relevant product.

Good advice. There's plenty to choose fr.........

Oh.

chucky

DervProf wrote: »

Those savers who accept lower rates of return should be shielded from such moral hazard.

why should savers be treated any different to borrowers?

borrowers know the risks of interest rates going up and so should savers know the risks of interest rates going down.

Degenerate

gagahouse wrote: »

• The annual rate for CPI excluding indirect taxes, CPIY, is 2.8%, up from 2.4% last month.
• The annual rate for CPI at constant tax rates, CPI-CT, is 2.7%, up from 2.3% last month.

So stripping out the VAT rise, it would still be within the 1% tolerance band of the 2% target.

lisyloo

I cant imagine why anyone would disagree with you, TBH?

Well it wasn't clear exactly what was meant by "moral hazard".
Capital risk? Inflation risk? Shortfall risk?

I would have different opinions depending on exactly what it refers to.

lisyloo

So stripping out the VAT rise

Why does it make any sense to strip out a tax rise?
We are measuring the increase in the cost of goods? VAT is part of that increase?