Will the cost of living return to normal?

Rob_Harrold

I have been reading the mse forum for many years and always valued every persons opinion on the matters of the day.

Following the very slow slide into financial bedlam following the pandemic and the subsequent in action from elected official's (not a political post) what are peoples thoughts on the future of UK plc?

Many UK households in the UK are on a set incomes per month and the utility companies seem to pick a random number for a new direct debit each new calendar month, will the "deal" agreed by the new, new, new government in the short term fix the problems or are we kicking the can down the road for a few months?

My concern is that inflation is still not under control and the bank of England are missing in action without a plan, other than to increase the cost of living on lower- middle income UK residents and most households are now seriously having to choose between food and heat. 

I have probably missed loads of points, but this is my first post.

niktheguru

The utility companies don't pick random numbers for direct debits. They predict it depending on your usage and the accuracy of your bills. The problem is, most peoples bills are not accurate as they dont supply regular meter readings. As a result the direct debits are not accurate and then people get irate why the amount taken is too low or high. That was partly why smart meters were introduced so this problem doesn't happen, but there is a section of people resistant to change as they think the smart meters will result in doom and gloom.

[Deleted User]

I didn't realise that the Bank of England set the size of your direct debit or energy bill.

But as to whether this plan will fix any problems? No - it's an arbitrary cap which doesn't change any of the structures in the market.  All it is doing is paying for a portion of domestic energy bills out of general taxation (probably).

Lots of other things being talked about in the background that might change things in the medium term, but not this.

mumf

‘Normal’ cost of living.What is ‘normal’ ?

daveyjp

The one effect they are hoping this energy cap will make is a reduction in inflation. Suggestion is 5% lower than forecast.  

However if you ask 3 economists a question you will get 10 answers, so who knows.

Rob_Harrold

niktheguru said:

The utility companies don't pick random numbers for direct debits. They predict it depending on your usage and the accuracy of your bills. The problem is, most peoples bills are not accurate as they dont supply regular meter readings. As a result the direct debits are not accurate and then people get irate why the amount taken is too low or high. That was partly why smart meters were introduced so this problem doesn't happen, but there is a section of people resistant to change as they think the smart meters will result in doom and gloom.

I agree with the point on smart meters and have benefited with their accuracy for over 10 years which has allowed our household to know roughly how much energy we use per annum. Unfortunately consecutive energy companies still over estimate the usage and is reflected in our monthly direct debit which has increased to £254 for 2022/23. This will mean a rebate in October yet again because they only review payments twice a year and not monthly, meaning that the impact on other households will be even more severe because the data held by the provider is not actively reviewed. 

YorksLass

Our energy supplier reviews payments annually but provides a bill monthly or whenever we send a reading, which we do every month just before the DD is taken.  We do therefore know what our monthly/annual usage is.  I would agree though that, in spite of this, usage is often over-estimated to their benefit rather than ours.  You really do have to be on the ball.

As for smart meters, we are not resistant to having one but are unable to have one due to the way our property was built (cannot isolate the mains electricity supply to the property which is in a purpose built block of maisonettes).  Another reason for providing monthly readings.

As to the question of will the cost of living return to normal - well, possibly, perhaps or probably could be the answer.  The phrase "how long is a piece of string?" springs to mind.  And what is "normal" these days?  Sadly, I am not over optimistic and am expecting a very tough couple of years at least.

[Deleted User]

YorksLass said:

Our energy supplier reviews payments annually but provides a bill monthly or whenever we send a reading, which we do every month just before the DD is taken.  We do therefore know what our monthly/annual usage is.  I would agree though that, in spite of this, usage is often over-estimated to their benefit rather than ours.  You really do have to be on the ball.

As for smart meters, we are not resistant to having one but are unable to have one due to the way our property was built (cannot isolate the mains electricity supply to the property which is in a purpose built block of maisonettes).  Another reason for providing monthly readings.

As to the question of will the cost of living return to normal - well, possibly, perhaps or probably could be the answer.  The phrase "how long is a piece of string?" springs to mind.  And what is "normal" these days?  Sadly, I am not over optimistic and am expecting a very tough couple of years at least.

Cannot isolate your mains before the meter?  That sounds dangerous and contrary to regs.  Don't you have a cut-out fuse anywhere (could be in a communal area)?

xeny

It may be useful to glance at this graph. 

https://twitter.com/EdConwaySky/status/1563178572663365635/photo/1

.Is normal the period between 1957 and 1982, or is it the period between say 1992 and 2019 ?

ariarnia

things will return to normal. but that doesn't mean things will go back tot he way they were before. people quickly get used to a new normal then it becomes the normal until something else down the line changes things again. prices might not go back down so you can buy a kilo of pasta for less than 50p. but i remember back in 2009 i could buy a kilo of pasta for 18p. things will find a balance. 

jj_43

My pension reflects my long term view on UK plc, mostly invested overseas. I expect the purchasing power of our currency will decline to new lows. Our massive debt which until now was accepted by investors will start to become a problem. Our situation versus Europe, US will worsen.

Higher inflation is now the norm, only much higher interest rates will control inflation , house prices will struggle somewhat perhaps only rising in line with inflation so only 10% pa. 

Unemployment I expect to remain low, well with inflation at 10% and the cost of labour is much less, labour is getting cheaper so unemployment will remain at low levels resulting in more pressure on inflation.

still with all this each of us can get on with our life’s, get a better job, new project, education. 

There will be a lot of whinging going on which doesnt reflect the great opportunities in Great  Britain.