Inflation in a recession?

MFW_10Yrs_3

hallmark wrote: »

I think you're missing the point. What you're doing is cutting/avoiding spending. That's not the same as controlling inflation.

If something doubles in price it's 100% inflation whether or not you buy less of it or not.

I don't think you understand. I was talking about personal inflation, not inflation that affects this country. If sugar doubles in price then it's 100% inflation. If you don't buy sugar then you are not impacted by that inflation, so it's 0% inflation on that item.

If you buy items using comparison sites to get the best deals and cashback sites to then get money back then you are buying heavily discounted products. Your personal inflation is then much less than comparable consumers. Most people just can't be bothered though.

MFW_10Yrs_3

hillcats wrote: »

How come you have never altered your valuation from 450k which would affect your equity figures also when it is suggested that most homes have actually lost value?

Because the Loan to Value (LTV) of the mortgage I am overpaying is based on the purchase price of my house. When I remortgage I will get a new valuation and will have a new figure to work towards.

I don't know what my house is currently worth and so unless I want to pay for a valuation on a month by month basis, I only have the purchase price to go on.

Graham_Devon

MFW_10Yrs wrote: »

If you buy items using comparison sites to get the best deals and cashback sites to then get money back then you are buying heavily discounted products. Your personal inflation is then much less than comparable consumers. Most people just can't be bothered though.

Most people need milk. Sugar. Food. Drink. Petrol. Diesel. Electric. Gas. Financial Services.

Can you explain how I can escape, or buy these with a lower inflation than everyone else experiences?

You are simply talking about buying cheaper items or using deals to buy. Regardless of the deal used, the price of the product will have gone up.

I can get £60 cashback on my £350 policy this year. So you appear to be suggesting i have beaten inflation as I get £60 back.

BUT, last year I could also get £60 back. But my policy was £320.

Inflation has seen the product rise in cost £30. I've escaped nothing by doing deals. I'm simply getting the item with cashback.

Trouble is, most of the stuff I need, has all increased no matter how or where I buy it from. Diesel, Electric, Food. You are talking about cutting costs. Not avoiding inflation.

DervProf

Graham_Devon wrote: »

Trouble is, most of the stuff I need, has all increased no matter how or where I buy it from. Diesel, Electric, Food. You are talking about cutting costs. Not avoiding inflation.

Dare I mention* that large LED TV that you haven't bought yet ? If you buy one now, that'll bring your personal rate of inflation down a notch or two.


* Yes, I dare.

MFW_10Yrs_3

Graham_Devon wrote: »

No need for the personal stuff.

The majority of the nation cannot escape inflation. Inflation will be added whatever you buy. You can cut costs, by simply not buying something. But that's not escaping inflation. That's merely not buying something.

Your train analogy still does not hold up. You will still need to buy a train ticket at the end of this year, at the new 8%+ price. You haven't escaped inflation, just delayed it slightly, as your 2010 ticket would have been higher than 2009 prices.

Cutting costs reduces your inflation, you can't get away from this Graham. If you lived in a zero-bill passiv haus and worked from home you would not be hit by heating costs, electricity costs or communting costs. A huge amount of the imported inflation hitting this country would not hit you.

The train analogy you are using is someone who has the same income at the end of the year as he does at the start, so I agree that he is just deferring the inflation for 12 months. However I have had an inflationary payrise so my pay has factored in the rises in inflation but my personal finances have not been hit. I therefore have a net increase in my income that can be saved up, making next year's season ticket that little bit cheaper.

Graham_Devon

Well I'm not going to argue it.

If I lived in that world, you may well be correct. But 99.9% of the nation do not live in that world.

DervProf

You could argue that increasing your income and "shopping around" can help to reduce your personal rate of inflation, but there is only so much you can do. I could increase my income by 100%, but that doesn't stop the things that I buy going up in price. Yes, I might not feel the price increase, but the inflation is still real.

The fact is that the "basics" - fuel, food and clothes have generally been increasing in price over the past 2 or 3 years. Even the most basic and cheapest foods have gone up in price, so most people will have noticed their £ going a little less further.

geneer

MFW_10Yrs wrote: »

I don't think you understand. I was talking about personal inflation

erm..did you miss this bit....

Graham_Devon wrote: »

No need for the personal stuff.

geneer

DervProf wrote: »

You could argue that increasing your income and "shopping around" can help to reduce your personal rate of inflation, but there is only so much you can do.

Have to agree with Devon on this.
You could have shopped around last year too. And the year before.
Meaning in reality you're no better off.

MFW_10Yrs_3

Graham_Devon wrote: »

Well I'm not going to argue it.

If I lived in that world, you may well be correct. But 99.9% of the nation do not live in that world.

I'm really struggling to understand your concept of 'that world'. There are loads of people on MSE, in fact the majority, live in the same world as me - i.e. choosing to reduce their costs while maintaining their standard of living. That's all inflation is for ordinary people, an increase in the cost of maintaining your standard of living.

I appreciate what geneer was saying when he stated that if people were already using the cashback sites, price comparison sites, etc. then they would not be further forward, but let's be honest here, how many people (even Martin) really do all they can to be moneysavers ie 'squeeze until the pips squeek'?

What I mean is, until they are really up against it, most people will only go so far in their cost cutting. Personally I know that if I want a bit of I.T. kit then it's far cheaper to shop online, but if I want the convenience of having it immediately then I'll buy it on the high street despite the higher cost. If my finances were tighter then my restraint and discipline would be too and I would shop online and wait for a few days.

Another example. I travel a lot with my job and we have the option of booking hotels through a central agency or booking them ourselves. If we go through the agency then the hotel bill is paid directly via a cost centre and we check out with no bill. If we book it ourselves then we pay on checkout and claim the money back via expenses. I always book thru the central agency because its a lot less hassle. A pal of mine always books his hotels himself becauze he has a cash-back credit card and he books the rooms via quidco (a cashback site). Over the course of the year he makes a few hundred quid in return for the extra effort in doing his expenses. I know I really should follow my mate's example but I really can't be bothered with the expenses system. However, if I really needed the extra cash then I would.