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Why aren't interest rates going up?
Comments
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Do you know of a similar graph to show actual standard rates rather than BoE rate?
It is amazing how the times have changes - my first mortgage was at 15% interest, if I remember right!
I think the issue is that as they do now - many banks had many accounts with many different / interest rates. So no one chart is going to show this dynamic accurately or handle the fact longer term access limitations meant better rates.
Here are some more charts though - http://www.economicshelp.org/blog/5720/economics/inflation-stats-and-graphs/I am just thinking out loud - nothing I say should be relied upon!
I do however reserve the right to be correct by accident.0 -
In the past as soon as inflation started rising, so did interest rates.
Savers have had such a bad time for years now, surely they will have to start increasing base rate soon, won't they?It is 2% measured by the CPI rate. That doesn't mean it applies to every single item or that different measures of inflation aren't different numbers. If your dual fuel bill has gone up 20% then you need to look at alternative suppliers as I'm not aware of ones that have gone up so much. My insurance is less than last year and other items dropping. I need to get a new mower. Cheapest one is now just over £100 compared to £200 last time I bought so not everything is going up.
I am currently on the lowest duel fuel deal for my useage it's 20% higher than what I was paying last year.
You obviously over paid if the cheapest mower last time was £200 but now you can buy one for £100 or more likely totally different mowers,so a totally useless comparison.
The CPI rate is manufactured BS and everyone living in the real world knows it.0 -
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So maybe and don't think so.moneyfoolish wrote: »Which is exactly why CPI was invented in the first place. No doubt when they think that is getting to high, they'll invent yet another xPI to produce an even lower rate!
The CPI is based on a basket of goods. Those goods are designed to reflect generic life and adjusted over time OR as you believe it is a fix, are adjusted to suit the subterfuge you claim.
Interesting to read what is in and out - https://www.ons.gov.uk/economy/inflationandpriceindices/articles/consumerpriceinflationbasketofgoodsandservices/2016
The clear truth for any individual is that the basket may not reflect their life.
Someone who is middle aged and lives in a small town where they work has likely got lower transport costs with little commuting (vs a London worker) or travel to buy shopping (vs a remote villager) and may not be paying for any children's education or much by way of healthcare costs, as yet, aside via taxes. They may not smoke or drink or may do both heavily.
So if the basket cannot be right for everyone and if certain elements are seeing rapid price rises...that may skew things. CPI may therefore feel wrong for you.
But as Linton says - you need to compare your data for your spending to make any judgement if CPI is under or over what YPI (Your Price Index) is doing. The price of a lawn mower is not going to give you a fair view any more than not consistently securing the best energy deal.
Metrobus? Facts please...I am just thinking out loud - nothing I say should be relied upon!
I do however reserve the right to be correct by accident.0 -
ThinkingOutLoud wrote: »So maybe and don't think so.
The CPI is based on a basket of goods. Those goods are designed to reflect generic life and adjusted over time OR as you believe it is a fix, are adjusted to suit the subterfuge you claim.
Interesting to read what is in and out - https://www.ons.gov.uk/economy/inflationandpriceindices/articles/consumerpriceinflationbasketofgoodsandservices/2016
The clear truth for any individual is that the basket may not reflect their life.
Someone who is middle aged and lives in a small town where they work has likely got lower transport costs with little commuting (vs a London worker) or travel to buy shopping (vs a remote villager) and may not be paying for any children's education or much by way of healthcare costs, as yet, aside via taxes. They may not smoke or drink or may do both heavily.
So if the basket cannot be right for everyone and if certain elements are seeing rapid price rises...they may not be affected per the average. Its may feel wrong for you.
But as Linton says - you need to compare your data for your spending to make any judgement if CPI is under or over what YPI (Your Price Index) is doing. The price of a lawn mower is not going to give you a fair view any more than not consistently securing the best energy deal.
Metrobus? Facts please...
That all sounds very logical but I'm sure it's FALSE NEWS and "they" just make the numbers up to suit themselves.0 -
I have been trumped! :-)That all sounds very logical but I'm sure it's FALSE NEWS and "they" just make the numbers up to suit themselves.
Seriously the CPI is "just facts folks" - whether you want the facts or disagree with the method to get to the facts is a different thing.
Have you seen the Swedish CPI since last night?I am just thinking out loud - nothing I say should be relied upon!
I do however reserve the right to be correct by accident.0 -
The CPI rate is manufactured BS and everyone living in the real world knows it.
The problem is that CPI is not supposed to represent the rate of inflation that any specific individual is going to experience themselves in their day to day consumer spending. It is an average figure so potentially there are literally zero people who have had that exact published figure for, say, the last 60 months over five years, and then 20 million households who will say it didn't reflect their figures because they were higher or lower.
Some people will find their life getting cheaper because they used to spend £250 a year on the depreciation of their £1250 high end television which they change every five years, and now they only need to spend £750 to replace it which would work out at £150 a year instead, for something bigger and with a better picture and more features.
Other people won't buy Smart Televisions, but would spend the £250 a year putting a fiver of fuel in their car each week and now it's gone up to £300.
Some buy imported broccoli from Spain over the winter months and recently got a price rise from the crop shortage. Others live off packets of overpriced microwave rice and find they still cost the same as they did a decade ago.
Pensioners are less likely to be paying mortgage interest or childminder costs but more likely to pay for electricity if they're home all day surfing MSE instead of being at work. Some of the poorest people have key expenses such as accommodation costs paid for them and some costs are covered for OAPs by the rest of us, e.g. TV licence, bus pass etc.
You are never going to find one rate to reflect everyone's position. The point is just to get some measure of what has happened to the average cost of what people are spending their money on.
The maths in CPI is fundamentally "better" than the maths in RPI, which is why Europe and the US use the averaging method that we use in our CPI and that the EU and OECD tell us to publish for better international comparability. RPI's formula is a bit quick and dirty really, it was just thought up to help demonstrate change in prices in the post-war era to give some sense of real cost of living. After other countries came up with and refined a better way of doing it, we eventually moved our method to that new "best practice" way of doing it too.0 -
That was exactly my point. CPI and other inflation measures are based on a basket of goods. Some items might go up, others go down and it's the overall movement that matters as well as whether you buy those goods or not.ThinkingOutLoud wrote: »But as Linton says - you need to compare your data for your spending to make any judgement if CPI is under or over what YPI (Your Price Index) is doing. The price of a lawn mower is not going to give you a fair view any more than not consistently securing the best energy deal.
...Remember the saying: if it looks too good to be true it almost certainly is.0 -
We agree - I could have used his examples of prices going up - but our same point made. :-)That was exactly my point. CPI and other inflation measures are based on a basket of goods. Some items might go up, others go down and it's the overall movement that matters as well as whether you buy those goods or not.I am just thinking out loud - nothing I say should be relied upon!
I do however reserve the right to be correct by accident.0
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