ECB raises rates to 1.5%

Radiantsoul

Generali wrote: »

The problem of a falling pound isn't really inflation as you just get a one off hit. The problem is the fall in living standards as imported products get more expensive. I was shocked by the prices in the wine aisle! Obviously most of that is imported product.

The UK is a trading nation and it needs to be able to import as well as export.

this is what is meant by rebalancing the economy though. Real wages fall and the economy is tilted towards exports and away from imports. The way out was always going to involve less consumption.

abaxas

Thrugelmir wrote: »

Though discourages expenditure on non-essentials and makes foreign travel more expensive. Which all aids the UK economy and enable the balance sheet to recover.

The issue, is the 'non essential' items are often made in the UK. And you cant stop people buying food!

RenovationMan

abaxas wrote: »

The issue, is the 'non essential' items are often made in the UK. And you cant stop people buying food!

RenovationMan

This is great news:

http://www.telegraph.co.uk/finance/newsbysector/transport/2791486/Petrol-sales-fall-20pc-as-drivers-feel-the-pinch.html

"Petrol retailers have disclosed that fuel sales dropped sharply over the past few weeks and the latest figures appear to show that demand for petrol in Britain has slumped by as much as 20 per cent over the past 12 months."

Good to see people utilising public transport more (or their legs), which will cetainly help the environment.

shortchanged_2

RenovationMan wrote: »

That maybe alright for you and me RenoMan but spare a thought for the purchasers of many of the new builds around. It can't be easy to dig for victory in a 6ft x 6ft patio.

RenovationMan

shortchanged wrote: »

That maybe alright for you and me RenoMan but spare a thought for the purchasers of many of the new builds around. It can't be easy to dig for victory in a 6ft x 6ft patio.

I guess this is why allotments have such a long waiting list. Perhaps councils should be encouraged to turn over wasteland to city gardeners?

New build owners could utilise a few patio tubs filled with potatoes. Better than nothing.

shortchanged_2

RenovationMan wrote: »

This is great news:

http://www.telegraph.co.uk/finance/newsbysector/transport/2791486/Petrol-sales-fall-20pc-as-drivers-feel-the-pinch.html

"Petrol retailers have disclosed that fuel sales dropped sharply over the past few weeks and the latest figures appear to show that demand for petrol in Britain has slumped by as much as 20 per cent over the past 12 months."

Good to see people utilising public transport more (or their legs), which will cetainly help the environment.

This is good news, however unfortunately for some, public transport isn't an option, particularly in many rural communities. These are some of the areas that are really being hit hard by high prices at the pumps.

RenovationMan

shortchanged wrote: »

This is good news, however unfortunately for some, public transport isn't an option, particularly in many rural communities. These are some of the areas that are really being hit hard by high prices at the pumps.

Mr_Mumble

Generali wrote: »

The problem of a falling pound isn't really inflation as you just get a one off hit.

But there has not been a one-off hit. Instead a continual devaluation - leading to inflation!

With British Gas increasing prices 16-18%, shop price inflation and OECD inflation at their highest since oil surged to $147 a barrel the Bank of England inflation projections look as ridiculous as ever. The question remains where is this deflation that the Bank of England promised us, not to mention your good self some 20 months ago? (sorry, cheap shot but you must admit betting on inflation and against deflation has been a lucrative trade.)

The problem is the fall in living standards as imported products get more expensive. I was shocked by the prices in the wine aisle! Obviously most of that is imported product.

The UK is a trading nation and it needs to be able to import as well as export.

I'm happy we're finally seeing the inevitable fall in living standards. The one neat thing about Sterling devaluation is it gets around the self-imposed sticky wages dilemma Keynesians go on about all the time. However, the fall in living standards via currency devaluation is indiscriminate and perverse.

The mortgagors who got us into this mess, the investment managers who enabled the catastrophe and the regulators who were so incompetent to not notice anything are the big winners. These are the folk benefiting from zero interest rate policy, quantitative easing and a huge surge in jobs to carry on being incompetent.

The big losers are those who never had a hand in the crisis. The savers who kept their money in a 'secure' British bank getting 0% real return are now getting a negative real return. The workers who're seeing their real wages decline by 3% per annum on average. The Bank of England may think they're being clever by trying to absorb the fiscal tightening with ultra-loose monetary policy but its a very dangerous game that indirectly brings about yet more moral hazard.

Agreed on the UK being a trading nation, every nation should be! What we sell is the stuff we want to get rid of so we can buy juicy imports in return.

My problem isn't the required devaluation of Sterling post-property bubble but the intentional devaluation over the past 12-18 months that will see inflation feed through for years to come.

Even, under the imho unlikely circumstances, Sterling stabilises the inflation impact will continue two-fold. First the margin squeeze everyone from Rio Tinto to Nestle has suffered when trading with the UK will unwind. Secondly we'd finally get to see the second-round effects of wage inflation - the stuff the Bank of England told us was required for an initial bout of sustained inflation!

shortchanged_2

Sorry RenoMan but I can't see what you last posted. The image will not come up on my computer.