UK Heading For Deflation?

chewmylegoff

There is no such thing as deflation these days - the correct modern terminology is "negative inflation". It's like negative profits but not quite as bad.

Loughton_Monkey

chewmylegoff wrote: »

There is no such thing as deflation these days - the correct modern terminology is "negative inflation". It's like negative profits but not quite as bad.

It's a bit like my car. It seems to be suffering from negative appreciation.

... and having had my last very large G&T for the day, about 3 hours ago, I feel I'm suffering from negative intoxication.

Southend1

I think there's a lot of pent up demand for goods and services that people haven't been able to afford in recent years. increased sales volumes as the real cost to consumers of goods falls could increase productivity which is currently low and offset the effect of lower prices on firms, meaning we all win from a period of deflation.

topcat007

what will the effect of this be on mortgage rates? Will they drop even lower in next few weeks?

Loughton_Monkey

topcat007 wrote: »

what will the effect of this be on mortgage rates? Will they drop even lower in next few weeks?

The banks continue to be under solvency pressure at the same time that their 'back-room scams' are progressively being closed down. They need all the profits they can get.

Heads down, then, for continued attrition to savings rates, and maintenance of mortgage rates - perhaps closing down low starter rates etc.

Generali

topcat007 wrote: »

what will the effect of this be on mortgage rates? Will they drop even lower in next few weeks?

Well one Danish bank is now paying customers to borrow from them.

It's not such good news for savers. At work we now pay interest to the bank on positive cash balances in Danish Krone and Swiss Francs.

The difference between negative inflation and disinflation is that negative inflation is temporary whereas deflation is less so.

topcat007

Generali wrote: »

Well one Danish bank is now paying customers to borrow from them.

It's not such good news for savers. At work we now pay interest to the bank on positive cash balances in Danish Krone and Swiss Francs.

The difference between negative inflation and disinflation is that negative inflation is temporary whereas deflation is less so.

You have blown my mind no idea this could happen!

Now the difficult decision if to take mortgage now or wait!!:rotfl:

thor

ChopperST wrote: »

Falling energy prices and food prices can only be a good thing

I just hope that my local supermarkets get the message. Despite the 'price wars' I don't see the likes of Tesco and Sainsbury being any cheaper.

globalds

Generali wrote: »

The problem is that business debts don't fall along with prices so they end up going bust and not employing you and me.

Isn't that more a problem with the business model ?

Like saving to buy a sofa or using credit ..

Any business has a choice about borrowing and it's ability to pay it's debts.

Generali

topcat007 wrote: »

You have blown my mind no idea this could happen!

Now the difficult decision if to take mortgage now or wait!!:rotfl:

It's messing with our minds at work. How do you sell a fixed income product to someone when they are guaranteed to lose money? As an asset management company are we really going to stop selling fixed income products?

People have bought a bond from Nestl! that means over the life of the bond they pay Nestl!!