Inflation

RyanHello

Mortgages rates going up, Energy bills going up, cost of food going up.

Forget inflation, we are entering a depression. 

Albermarle

RyanHello said:

Mortgages rates going up, Energy bills going up, cost of food going up.

Forget inflation, we are entering a depression. 

If we are ( and we might be) it would be under unusual circumstances.

Low unemployment rate and many companies desperate to employ more staff, and prepared to  pay more to get/keep them. Not usually the case in a depression....

talexuser

Talk of inflation being temporary just reminds me of all the talk of interest rates rising soon every couple of months from 2009 till now.

Nebulous2

masonic said:

Nebulous2 said:

masonic said:

The author is also unlikely to see the response as they have since deleted their forum account. There is nothing that can be done to interest rates that will make the price of fuel, energy, food etc come down, or reduce demand for them. The recent circumstances have created an opportunity to somewhat tighten economic policy so that there is somewhere to go when there is next pain in the economy. Part of an ever repeating cycle.

Demand will drop as prices rise.... Economists talk about 'demand destruction' when the price of something goes up, or supply is limited.

There are signs of that happening for fuel already, as people are driving less. The media is also full of stories about people who cannot afford to heat their houses, or to heat their food, though how much that is yet feeding through into reduced consumption I don't know. 

It will however - as people simply wont be prepared or able to carry the increased costs. 

I'd be interested in any data that goes beyond anecdotes to show how much less food, fuel, and energy is being used. One of the problems with the current situation is the people who are really struggling now, were only just managing before, and so they were already operating on a low budget. I'm certainly not disputing that if demand comes down, prices would come down, but things are going to need to get really ugly for that to happen. If someone has the financial capability to pay double, or triple for their supermarket shop or tank of petrol, then it is very likely they will begrudgingly do so, especially those who are high earners and high spenders anyway. When a sufficient number of people get priced out of eating 3 meals a day, then there will be blood on the streets. Rationing would be needed before it got to that point.

It's difficult to know what has happened until some time later, as data takes a while to collect and collate. 

Significant numbers of people have no or very little disposable income. If the price of everything goes up they have to make choices about cutting back, or pay for expenditure with debt, which isn't sustainable. 

Here's a BBC take on a report from the ONS. Worried households cut back on energy and food - BBC News

Here's the ONS report. Public opinions and social trends, Great Britain - Office for National Statistics

40% of people reported cutting back on non-essential journeys in their vehicle for example. 

How that feeds through to actual usage I don't know, but I can't see any reason why demand wouldn't decrease.

As you've said that feeds through to significant pain for a lot of some people to the point they can't eat as much as they previously did. I suspect many MSE readers are not typical in that respect, but even if better-off people increase use of leftovers and manage not to waste as much food as before that will have a modest impact on demand.

The reasons for price increases and supply problems are deep-rooted and demand would have to reduce by a painful amount to impact inflation in a meaningful way. 

RG2015

Does anyone believe that the events of this week will affect inflation?

I am not thinking of anything specific, but any planned government initiatives may now be a bit subdued.  

Linton

RG2015 said:

Does any believe that the events of this week will affect inflation?

No-one will ever know whether this week's events, whichever ones you happen to choose, will affect inflation.  We can't compare inflation with and without.

Just accept the future is unpredictable.

RG2015

Linton said:

RG2015 said:

Does any believe that the events of this week will affect inflation?

No-one will we ever know whether this week's events, whichever ones you happen to choose, will affect inflation.  We can't compare inflation with and without.

Just accept the future is unopredictable.

I have just added a thought to my earlier post.

Yes, the future is unpredictable, but the PM and former Chancellor of the Exchequer had previously planned to announce a series of measures which may not now happen.

Linton

RG2015 said:

Linton said:

RG2015 said:

Does any believe that the events of this week will affect inflation?

No-one will we ever know whether this week's events, whichever ones you happen to choose, will affect inflation.  We can't compare inflation with and without.

Just accept the future is unpredictable.

I have just added a thought to my earlier post.

Yes, the future is unpredictable, but the PM and former Chancellor of the Exchequer had previously planned to announce a series of measures which may not now happen.

We will never know what effect those would have had on inflation either.

RG2015

Linton said:

RG2015 said:

Linton said:

RG2015 said:

Does any believe that the events of this week will affect inflation?

No-one will we ever know whether this week's events, whichever ones you happen to choose, will affect inflation.  We can't compare inflation with and without.

Just accept the future is unpredictable.

I have just added a thought to my earlier post.

Yes, the future is unpredictable, but the PM and former Chancellor of the Exchequer had previously planned to announce a series of measures which may not now happen.

We will never know what effect those would have had on inflation either.

Interesting comments.

I may need to reconsider how I react to things outside of my control.

As it stands though, I am happy that the Bank of England has a very specific brief regarding inflation.

kaMelo

RG2015 said:

Linton said:

RG2015 said:

Linton said:

RG2015 said:

Does any believe that the events of this week will affect inflation?

No-one will we ever know whether this week's events, whichever ones you happen to choose, will affect inflation.  We can't compare inflation with and without.

Just accept the future is unpredictable.

I have just added a thought to my earlier post.

Yes, the future is unpredictable, but the PM and former Chancellor of the Exchequer had previously planned to announce a series of measures which may not now happen.

We will never know what effect those would have had on inflation either.

Interesting comments.

I may need to reconsider how I react to things outside of my control.

As it stands though, I am happy that the Bank of England has a very specific brief regarding inflation.

It does, yet it has failed to keep to that brief for over 10 years.