Inflation will rise faster than expected

ILW

wotsthat wrote: »

Years of low inflation and he's losing sleep about the difference between inflation of what? 2% and 2.5%?

Not sure he was dealing with the pressure very well by the sounds of it. Perhaps he was deluding himself by thinking he could fine tune inflation.

That is an error of 25%. Would you consider it of no matter if you were underpaid by 25%?

Graham_Devon

wotsthat wrote: »

Years of low inflation and he's losing sleep about the difference between inflation of what? 2% and 2.5%?

Not sure he was dealing with the pressure very well by the sounds of it. Perhaps he was deluding himself by thinking he could fine tune inflation.

This has been going on for years though.

It's led to real terms pay cuts of 15-20% for many hundreds of thousands of workers.

Let's put it this way, we've had 4 years (give or take) of over target inflation.

Now, let's put it into a real life scenario. A litre of petrol costs 35p more than it did 4 years ago. For anyone going though 2 tanks a month, based on a 55 litre tank, you are looking at a cost increase of £38.50 a month, or £462 a year.

Yet many hundreds of thousands are on the same money they were four years ago. If they are lucky, they may have seen a 2-5% rise.

That extra £463 a year is petrol alone, based on around doing 10k a year. Now add food. Add energy (£360 higher than 4 years ago) and you might....just might start getting an idea of the problems this inflation brings.

You keep looking at the figure in isoltation and making out it's not really of any significance. I'd suggest you look at how those figures truly effect real people up and down the country day in day out. It's the only way to make sense or the problem others are explaining to you.

wotsthat

ILW wrote: »

That is an error of 25%. Would you consider it of no matter if you were underpaid by 25%?

I'd consider an error of 25% in my pay a very serious matter. I'd be less bothered about getting a 2% pay rise vs. 2.5% was available.

When we're talking about the difference between 2% and 2.5% inflation - neither here nor there. I'm amazed that anyone thinks inflation can be controlled within such tight parameters.

Graham_Devon

wotsthat wrote: »

I'd consider an error of 25% in my pay a very serious matter. I'd be less bothered about getting a 2% pay rise vs. 2.5% was available.

When we're talking about the difference between 2% and 2.5% inflation - neither here nor there. I'm amazed that anyone thinks inflation can be controlled within such tight parameters.

We're not. You are.

You state a month is isolation is noise. But then go and create your whole argument based on that noise.

wotsthat

Graham_Devon wrote: »

You keep looking at the figure in isoltation and making out it's not really of any significance. I'd suggest you look at how those figures truly effect real people up and down the country day in day out. It's the only way to make sense or the problem others are explaining to you.

I'm saying that inflation of 2% is low and so is inflation of 2.5%. Merv's 'errors' aren't as significant as the fact that we live in an inflationary economy - you'd be able to report that many people weren't keeping up with inflation even if the target was met.

It's a recession - earnings get squeezed. I understand the implications - you may as well say you've just discovered that rain makes you wet.

wotsthat

Graham_Devon wrote: »

We're not. You are.

You state a month is isolation is noise. But then go and create your whole argument based on that noise.

2% is the target. 2.5% is a number plucked from thin air to make a point.

What's the average difference between inflation and the target since Merv's been in charge? We could work out the cost of the differences.

PaulF81

wotsthat wrote: »

2% is the target. 2.5% is a number plucked from thin air to make a point.

What's the average difference between inflation and the target since Merv's been in charge? We could work out the cost of the differences.

A gnats cockle in the grand scheme?

John_Pierpoint

72 / 2 = 36
72 / 2.5 = 28.8
Assuming that you don't get any pay rise for a generation (or if the rise gets taxed away by a government that needs to spend half the country's wealth), would you like to be twice a poor as you are now in 36 years time or celebrate the halving of your standard of living in 29 years time?

wotsthat

John_Pierpoint wrote: »

72 / 2 = 36
72 / 2.5 = 28.8
Assuming that you don't get any pay rise for a generation, would you like to be twice a poor as you are now in 36 years time or celebrate the halving of your standard of living in 29 years time?

Neither thanks.

Historically wage increases are correlated with inflation. I very much doubt that "it's different this time" and spending power is going to reduce over decades.

There's already some evidence from the ONS that real household incomes are increasing.

http://www.bbc.co.uk/news/business-19946775

Average UK household income rose by £69 from April to June when the effects of inflation are stripped out, official statistics show.

Average real income in the second quarter of the year stood at £4,510 per household after tax, the Office for National Statistics (ONS) said.

This was up 1.6% from the previous quarter, and 2.8% higher including inflation.

That's less than the same period in 2009 but an 18-month high.

paso11

ILW wrote: »

A bit of a daft argument. If there are part that cannot be controlled, then you aim to tackle the parts you can influence to compensate. This brings the overall figure to where it should be. Businesses have to do it all the time.

Can we stop treating central bankers as god who can manipulate the economy as they want to.

12 men and women sitting in a room each month cannot control an economy (although they tried to in Soviet Russia no doubt)