Rate predictions 2022, 2023

ABFG

Prism said:

ABFG said:

solidpro said:

ABFG said:

Inflation will only come down significantly when energy prices reduce significantly 

How can they come down when the £ has lost nearly 20% of it's energy spending power over the last 7 years of government ineptitude? 2016 £1=$1.50. Today £1 = $1.20. Do you see this ever getting better?

Nothing to do with Ukraine. Everything comes back to one simple suggestion: Don't vote Tory.

Indeed - the loss of value in the pound hurts imports, gas being a key one. But that is only a part of the energy cost inflation.

better energy policy over the last few years could have completely obviated the problem.

Although it appears that we buy most of our gas from Norway and other areas of Europe, and pound has barely moved against the Euro and Krone. Unlike oil, gas does not have a global price or currency.

I didn’t know that about the gas, thank you.

To be honest that reinforces my main point - inflation mostly caused by the energy market can only be properly solved by ‘fixing’ the energy issues, as opposed to financial tinkering. By that I mean while short term policy may tinker to help people and try to tame inflation, the only proper solution is more energy we have better control over.

Nebulous2

sevenhills said:

The cost of products as they leave factory gates climbed by 17.1 per cent in the year to July 2022 – the highest the rate has been since August 1977 – and up from 16.4 per cent in the 12-months to June 2022, the Office for National Statistics revealed today.
How can there be such a large difference between CPI inflation and factory gate prices, CPI does not include housing costs.

Several things I can think of: - 

There's a lag. Retailers have stock bought at lower levels and do not need to put prices up so much. 

Factory gate prices are only part of the equation. As diesel reduces and the driver shortage has eased, the cost of getting goods to the consumer has reduced.

Retailers are trimming margins, as they worry the public won't stomach rises of that nature. 

CPI includes items that aren't manufactured, such as services, (and fuel, which has gone down) and these haven't gone up as much as manufactured goods. 

Albermarle

Nebulous2 said:

sevenhills said:

The cost of products as they leave factory gates climbed by 17.1 per cent in the year to July 2022 – the highest the rate has been since August 1977 – and up from 16.4 per cent in the 12-months to June 2022, the Office for National Statistics revealed today.
How can there be such a large difference between CPI inflation and factory gate prices, CPI does not include housing costs.

Several things I can think of: - 

There's a lag. Retailers have stock bought at lower levels and do not need to put prices up so much. 

Factory gate prices are only part of the equation. As diesel reduces and the driver shortage has eased, the cost of getting goods to the consumer has reduced.

Retailers are trimming margins, as they worry the public won't stomach rises of that nature. 

CPI includes items that aren't manufactured, such as services, (and fuel, which has gone down) and these haven't gone up as much as manufactured goods. 

As above factory gate prices do not necessarily feed directly into general inflation, although they have an effect of course.
Also many goods are not sold directly to the public, but are just part of a wider supply chain. For example many building products will be sold direct to distributors, who may swallow some of the cost to keep/gain market share. Also many goods will be sold to other businesses and never be taken into account in inflation figures.
Probably factory gate inflation is peaking as many supply chains have loosened up eventually.

Albermarle

solidpro said:

ABFG said:

Inflation will only come down significantly when energy prices reduce significantly 

How can they come down when the £ has lost nearly 20% of it's energy spending power over the last 7 years of government ineptitude? 2016 £1=$1.50. Today £1 = $1.20. Do you see this ever getting better?

Nothing to do with Ukraine. Everything comes back to one simple suggestion: Don't vote Tory.

As has been pointed out in many similar threads, it is the Dollar that is strong, not the Pound that is weak.
In the last 12 months the £ has lost 13% against the $
The € has also lost 13% and the Yen 17% against the $ in the same 12 months .

Expotter

On the Telegraph today, Interest rates on track to double over six months:

"Financial markets expect the Bank of England to now take the base rate to 3.5pc, or even 3.75pc, in early 2023. A 0.5 percentage point increase is expected next month."

sevenhills

Albermarle said:

As above factory gate prices do not necessarily feed directly into general inflation, although they have an effect of course.

There is also producer price inflation which is also much higher than the CPI measure.

https://tradingeconomics.com/united-kingdom/producer-prices

PPI was much higher last year.
Being an ordinary person, I cannot know how to work out our inflation rate, but the RPI measure seems nearer to real prices. As it includes housing costs and excludes the top 4% of earners, it seems more relevant to myself.

poppy10_2

Expotter said:

On the Telegraph today, Interest rates on track to double over six months:

"Financial markets expect the Bank of England to now take the base rate to 3.5pc, or even 3.75pc, in early 2023. A 0.5 percentage point increase is expected next month."

And the rest. We need interest rates of 6%+ to get this under control

TonyTeacake

Expotter said:

On the Telegraph today, Interest rates on track to double over six months:

"Financial markets expect the Bank of England to now take the base rate to 3.5pc, or even 3.75pc, in early 2023. A 0.5 percentage point increase is expected next month."

This is no surprise. Interest rates should have been raised sharpish last year to combat inflation, now Bailey & Co are playing catchup and are way behind the curve. High inflation looks like it will be with us for many years to come.

Prism

poppy10_2 said:

Expotter said:

On the Telegraph today, Interest rates on track to double over six months:

"Financial markets expect the Bank of England to now take the base rate to 3.5pc, or even 3.75pc, in early 2023. A 0.5 percentage point increase is expected next month."

And the rest. We need interest rates of 6%+ to get this under control

Unlikely to happen as we have too much debt to cope with rates like that. We will just have to live with this bought of inflation until its gone.

Nebulous2

sevenhills said:

Albermarle said:

As above factory gate prices do not necessarily feed directly into general inflation, although they have an effect of course.

There is also producer price inflation which is also much higher than the CPI measure.

https://tradingeconomics.com/united-kingdom/producer-prices

PPI was much higher last year.
Being an ordinary person, I cannot know how to work out our inflation rate, but the RPI measure seems nearer to real prices. As it includes housing costs and excludes the top 4% of earners, it seems more relevant to myself.

There's a calculator on the BBC to work out your own inflation rate. I haven't tried it myself. 

https://www.bbc.co.uk/news/business-62558817