September CPI hits 5.2% - figures to set rises in benefits

WestonDave

JonnyBravo wrote: »

I think the fact the article uses the word "allowance" implies it to be the tax free allowance rather than the threshold for higher rate tax. My guess is that could even be frozen! :eek:

They need to be a bit careful on that because its the higher rate threshold that knocks people off child benefit in 18 months time. Its already controversial because it looks at the higher earner not the family, so they will be wary of dragging more people into losing CB by not indexing the threshold.

Realmoney_2

This is the highest the CPI has ever been, how long before base rate has to go up to meet it. They are both only going one way and it is not down.

Realmoney_2

There are now more people in the cart than pulling it. As the GFC worsens more people lose their jobs and stop pulling they end up in the cart.

StevieJ

WestonDave wrote: »

Will be interesting to see if another part of the BBC report proves to be true - namely that various tax allowances (they state income tax, CGT and IHT) will also rise with inflation. That would give a basic rate tax payer £75 back next year and a higher rate tax payer potentially £850 back (if they change the 40% banding by 5% as well). Not sure we can afford this as a nation but it might be necessary to allow at least some of it to offset the "benefits rising" picture.

I am not sure the income tax is relevant as they have a plan to raise it to £10k anyway.

StevieJ

Realmoney wrote: »

This is the highest the CPI has ever been, how long before base rate has to go up to meet it. They are both only going one way and it is not down.

Are you sure about that?

Ernst and Young says the government should be looking to use targeted monetary and fiscal measures to support growth, as well as the latest injection of £75bn of further quantitative easing (QE).
It thinks further action should include cutting interest rates to 0.25% from their current record low of 0.5%, and a cut in stamp duty for first-time buyers.

http://www.bbc.co.uk/news/business-15326778

pqrdef

Graham_Devon wrote: »

No they haven't. Don't be so bloody daft!

Yes they have, except it's 5.6% actually. It won't become apparent until wages catch up with prices, which of course they will. They always do.

Holding down wages is just artificially fiddling the figures. Because the pressure just builds up until the dam bursts. Gideon should have a look at the history of the early 70s, because at present we seem condemned to repeat it.

With the wage-price inflation we're likely to see by 2015, people can forget about their mortgages. They just won't understand why they bothered overpaying.

pqrdef

Realmoney wrote: »

This is the highest the CPI has ever been, how long before base rate has to go up to meet it. They are both only going one way and it is not down.

How times have changed. The pundits aren't even bothering to talk about how soon Merv will be forced to raise Bank Bate.

If we'd seen these figures 3 months ago, everybody would have said that an immediate rate rise was unavoidable. Now, it's doubtful if a rate rise will get even one vote at the next MPC meeting.

The rock and the hard place get ever closer. More and more this looks like a bad time to be squeezing the life out of the economy with spending cuts. The only card left up Gideon's sleeve is that he could, if he wanted to, get the credit card out and borrow some cheap money.

hallmark

pqrdef wrote: »

How times have changed. The pundits aren't even bothering to talk about how soon Merv will be forced to raise Bank Bate.

If we'd seen these figures 3 months ago, everybody would have said that an immediate rate rise was unavoidable.

That's because even as recently as 3 months ago a lot of people were under the assumption that Mervyn King would at least try to do his job at some point.

It's become very clear since then that he couldn't care less what inflation is. And that Osborne is more than happy for the 2% target to be missed & let debt be slowly inflated away.

The whole "2%" target has become a joke & the Govt should just dispense with it now IMO. If they're not going to make any attempt whatsoever to meet a target then it's not a target

Graham_Devon

hallmark wrote: »

That's because even as recently as 3 months ago a lot of people were under the assumption that Mervyn King would at least try to do his job at some point.

It's become very clear since then that he couldn't care less what inflation is. And that Osborne is more than happy for the 2% target to be missed & let debt be slowly inflated away.

The whole "2%" target has become a joke & the Govt should just dispense with it now IMO. If they're not going to make any attempt whatsoever to meet a target then it's not a target

Indeed.

Theres no point in suggesting they should put up rates, when Merv has been on TV stating that inflation is merely a none issue for them.

They have done the opposite and increased QE. Rates won't be moving for a good while now.

No point in saying the same thing over and over. I expected them to raise rates due to inflation. Seems they don't really care about inflation or how it effects anyone.

Mr_Mumble

pqrdef wrote: »

Well, duh, because if benefits don't keep up with CPI, they'll soon decline to the point where they aren't enough to live on, which kind of defeats the whole object.

Most benefits are not paid out to those on the breadline. Take the biggest slab of the benefit bill: the state pension. There are an awful lot of rich baby boomer pensioners on gold-plated pensions who're getting the 5.2% rise. Genuinely poor pensioners are not impacted by the state pension because they receive the guaranteed pension credit. If you're worried about real poverty then perhaps hike the pension credit by 5.2% but not the state pension.