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is my employer being unreasonable?
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Inflation is an average figure. Companies are individual. A firm can lose half it's revenue to a competitor for eaxample.
Cannot expect union types to understand complicated things like that though.
inflation is not an average, the figure is taken from an average increase or decrease from the same range of goods and services from the same period 12 months earlier.0 -
Inflation is an average figure. Companies are individual. A firm can lose half it's revenue to a competitor for eaxample.
Cannot expect union types to understand complicated things like that though.
If you're just going to try to lower the discussion to insults then I'm out.
If you want to continue using reasoned argument then I'll continue....
Of course inflation is an average figure, and the rate of inflation in the economy takes into account the price of many diverse goods and services, some of which may increase and others decrease in any given period. However firms tend to move prices in line with others in their sector and there is therefore a herd mentality. Industry leaders will set a price level and others will follow, more or less. The energy industry is a good current example of this.
Another way on which inflation is controlled is by governments. Current government policy is to run inflation rates higher than the rate of wage increases. Interest rates are therefore low and public sector pay deals capped below inflation.
Business leaders and politicians know that inflation is not fully understood by a large proportion of people and they are therefore able to use it to control wage levels without causing too much popular unrest. E.g. Reducing wages in the public sector by imposing year after year of capped "rises" below the rate of inflation.
Anyway the point is that while few individual firms are influential enough to directly influence inflation individually, the way the economy works means that companies and government have a lot more control over wage/price/inflation levels than they would like us to believe.0 -
In what way does that explain your theory that an individual companys revenue (let alone gross profit) is directly linked to inflation?If you're just going to try to lower the discussion to insults then I'm out.
If you want to continue using reasoned argument then I'll continue....
Of course inflation is an average figure, and the rate of inflation in the economy takes into account the price of many diverse goods and services, some of which may increase and others decrease in any given period. However firms tend to move prices in line with others in their sector and there is therefore a herd mentality. Industry leaders will set a price level and others will follow, more or less. The energy industry is a good current example of this.
Another way on which inflation is controlled is by governments. Current government policy is to run inflation rates higher than the rate of wage increases. Interest rates are therefore low and public sector pay deals capped below inflation.
Business leaders and politicians know that inflation is not fully understood by a large proportion of people and they are therefore able to use it to control wage levels without causing too much popular unrest. E.g. Reducing wages in the public sector by imposing year after year of capped "rises" below the rate of inflation.
Anyway the point is that while few individual firms are influential enough to directly influence inflation individually, the way the economy works means that companies and government have a lot more control over wage/price/inflation levels than they would like us to believe.0 -
Another way on which inflation is controlled is by governments. Current government policy is to run inflation rates higher than the rate of wage increases. Interest rates are therefore low and public sector pay deals capped below inflation.
interest rates are set by the Bank of England, not the government, this is keeping interest rates low, which in turn keeps inflation unnaturally low, as the interest rates when they go back to their normal level, will send inflation way up from what it is now.0 -
In what way does that explain your theory that an individual companys revenue (let alone gross profit) is directly linked to inflation?
Imagine an economy where there is only one product on sale, say bread. There are two companies supplying bread. Company A and company B both sell bread for £1 per loaf in 2012. In 2013 company B decides to increase the price of a loaf to £1.10. Company B sees that it can raise the price of their product too but want to gain market share so increase the price of their loaf to £1.05. The rate of inflation in that economy is therefore 7.5%, which is a direct result of companies increasing the price of their product and raising the general price level in the economy.
Of course there are other factors at play in the real world, e.g. Money supply, interest rates, elasticity of demand etc. nevertheless there is a direct link between the price of goods, company revenues and inflation.0 -
interest rates are set by the Bank of England, not the government, this is keeping interest rates low, which in turn keeps inflation unnaturally low, as the interest rates when they go back to their normal level, will send inflation way up from what it is now.
The Bank of England is controlled by the government.
Logically, the bank should have raised interest rates a long time ago to curb above target inflation, however it keeps them low because the government needs to inflate away excess debt.0 -
interest rates are set by the Bank of England, not the government, this is keeping interest rates low, which in turn keeps inflation unnaturally low, as the interest rates when they go back to their normal level, will send inflation way up from what it is now.
The 'target' figure for inflation is 2%, so we aren't running at unnaturally low inflation rates.0
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