Pension chat

VNX

I know we all have differing opinions and no one has a crystal ball so it’s guess work but I’d be interested to hear those differing opinions from everyone.

from where we are now / your gut feeling where do we all feel say, one and two year fixes may top out at?

this month I think will be quite pivotal, we pretty much know a .25% rise is coming next week, for me how the MPC vote and the comments around the rise will be interesting but probably more so April’s inflation figure due at the end of May will be very important 

I can’t see fixes hitting more than 5.5% from where we are unless anything changes but that’s just my thinking 

jaypers

I think we are almost there and the next likely 0.25% BOE increase has already been priced in. Suspect 5% may be the peak. As soon as there is a sniff of future rate easing, fixed deals will drop fairly quickly. Easy Access may be a little more steady and move with any BOE rate reductions, although I bet that they are a lot faster dropping these rates than what we have seen with the increases. 

RG2015

It looks like 5% is near but 5.5% is a bit of a stretch. This however would indicate inflation staying higher for longer.

Hence a more telling metric is the margin between 1 and 2 year fixes and inflation.

The best news would be for the margin to shrink irrespective of the absolute rates.

eskbanker

[Deleted User] said:

Inflation is still double digits and not decreasing.

Four of the last five months have been lower rates than the previous month - granted it's not decreasing particularly quickly though....

t1redmonkey

I also think we are pretty much near the peak, but it's hard to know, really uncertain times. Note we actually had a higher top rate back in October last year, 5.1% on a 5 year.  I think it's possible there may be some banks offering 5.2/5.3% this time round perhaps, but that's really just a finger in the air guess.

Nebulous2

[Deleted User] said:

Inflation is still double digits and not decreasing.  Interest rates need to match inflation to bring inflation down so along way to go yet.  Public sector striking for inflation rate pay rises putting more pressure on inflation. Benefits rising with inflation.  Private sector workers who are paying for all of this are being taxed to death with fiscal drag etc.  UK economy is in a mess. I'm calling 8% interest rates for the foreseeable. 

Public sector may be asking for inflation rate pay rises, but they have been settling well below that. Private sector payrises have consistently been higher than public sector ones. 

A lot of companies are making record profits, luxury goods are selling at record levels. High inflation should cause demand destruction and there's some evidence that is happening. One of the reasons supermarkets dropped the price of milk recently was that people were stopping buying it, and value-added milk products, such as yoghurt and cheese.

Wholesale prices of food have dropped recently, but retail ones haven't, although supermarkets are now on the defensive, having to defend why food prices inflation is dropping in the EU and not here. 

We're still shaking out disruption from the pandemic. A lot of people had an enforced curb on expenditure, while continuing to earn, and it appears a lot of that saved money is still around. 

One of the metrics I'm watching,  informally, is the price of campsites. Millions of people caravan / motorhome.  The caravan club appears to have made no effort to reduce costs and has just kept raising prices. A caravan site that was £20 a night off-peak,  pre-pandemic, is now £35. Yet people have kept paying it. That is discretionary spending, and brings a lot of associated additional expenses, such as fuel to get there and additional food costs. Until we see people resisting these non-essential price rises, in addition to stopping buying cheese, then inflation will continue. 

Bobziz

I'd like to see the evidence that public sector pay rises push up inflation. Sounds like more DM and gov nonsense to me. 

I wonder to what extent if at all caravan pitch prices relate to inflation rate pension increases and a perception that some pensioners therefore have the ability to pay ? 

On interest rates,  Peter Spiller, if my interpretation is correct, seems convinced that they may be paused and then may fall a little, but will eventually need to go higher and perhaps much higher.

Freecall

Nebulous2 said:

One of the metrics I'm watching,  informally, is the price of campsites.

Ah, that old chestnut, the campsite index.

Really?  I guess that there is no chance that lower cost options of anything (in this case campsites) benefit from people needing to reduce their outgoings?

Nebulous2

Freecall said:

Nebulous2 said:

One of the metrics I'm watching,  informally, is the price of campsites.

Ah, that old chestnut, the campsite index.

Really?  I guess that there is no chance that lower cost options of anything (in this case campsites) benefit from people needing to reduce their outgoings?

This is complicated, but I'll try and keep it short. 

The caravan club or caravan and motorhome club as it is now, is the only game in town for many people. Over a million members, paying £57 a year membership fees, run as a National trust type organisation, by the great and the good. 

My impression is they've let costs get out of hand, and they've simply loaded that onto site fees. They largely blame it on electric costs, which I'm sure is part of it, but there is much more than that. There is a vocal fightback, reading the comments on their posts on Facebook is amazing, but so far the club hasn't addressed that at all. Their magazine is full of jolly hockeysticks stuff about buy the latest caravan or gadget with never a nod to cost of living. 

I'm convinced they are going to break something - people are already commenting that they've gone to private sites that were cheaper and found them better than expected. Goodwill that has been built up over decades is being tossed on the barbecue, yet substantial numbers of people seem willing to spend £40 / 50 / 60 a night for a patch of grass, the use of a toilet and an electric hookup. 

So trading down doesn't seem to be happening to the extent I expected. I'm busy with other things and am largely sitting on my hands waiting to see what happens. We will use them this year, but our usage will be dramatically reduced.  

sevenhills

Nebulous2 said:

Public sector may be asking for inflation rate pay rises, but they have been settling well below that. Private sector payrises have consistently been higher than public sector ones. 

A lot of companies are making record profits, luxury goods are selling at record levels. High inflation should cause demand destruction and there's some evidence that is happening. One of the reasons supermarkets dropped the price of milk recently was that people were stopping buying it, and value-added milk products, such as yoghurt and cheese.

Wholesale prices of food have dropped recently, but retail ones haven't, although supermarkets are now on the defensive, having to defend why food prices inflation is dropping in the EU and not here. 

We're still shaking out disruption from the pandemic. A lot of people had an enforced curb on expenditure, while continuing to earn, and it appears a lot of that saved money is still around. 

One of the metrics I'm watching,  informally, is the price of campsites. Millions of people caravan / motorhome.  The caravan club appears to have made no effort to reduce costs and has just kept raising prices. A caravan site that was £20 a night off-peak,  pre-pandemic, is now £35. Yet people have kept paying it. That is discretionary spending, and brings a lot of associated additional expenses, such as fuel to get there and additional food costs. Until we see people resisting these non-essential price rises, in addition to stopping buying cheese, then inflation will continue. 

Public sector pay is increasing by 5% and private sector pay by 7%
With CPI at 10% and RPI at 14% everyone is getting poorer, but pensioners with their inflation matching increase are still spending, many seem to still be spending because jobs are plentiful and optimism is holding.
Inflation must drop to the level of pay rises, very soon. Interest rates could have one more increase, but there will be at least one decrease in interest rates before the next election.

RG2015

sevenhills said:

Nebulous2 said:

Public sector may be asking for inflation rate pay rises, but they have been settling well below that. Private sector payrises have consistently been higher than public sector ones. 

A lot of companies are making record profits, luxury goods are selling at record levels. High inflation should cause demand destruction and there's some evidence that is happening. One of the reasons supermarkets dropped the price of milk recently was that people were stopping buying it, and value-added milk products, such as yoghurt and cheese.

Wholesale prices of food have dropped recently, but retail ones haven't, although supermarkets are now on the defensive, having to defend why food prices inflation is dropping in the EU and not here. 

We're still shaking out disruption from the pandemic. A lot of people had an enforced curb on expenditure, while continuing to earn, and it appears a lot of that saved money is still around. 

One of the metrics I'm watching,  informally, is the price of campsites. Millions of people caravan / motorhome.  The caravan club appears to have made no effort to reduce costs and has just kept raising prices. A caravan site that was £20 a night off-peak,  pre-pandemic, is now £35. Yet people have kept paying it. That is discretionary spending, and brings a lot of associated additional expenses, such as fuel to get there and additional food costs. Until we see people resisting these non-essential price rises, in addition to stopping buying cheese, then inflation will continue. 

Public sector pay is increasing by 5% and private sector pay by 7%
With CPI at 10% and RPI at 14% everyone is getting poorer, but pensioners with their inflation matching increase are still spending, many seem to still be spending because jobs are plentiful and optimism is holding.
Inflation must drop to the level of pay rises, very soon. Interest rates could have one more increase, but there will be at least one decrease in interest rates before the next election.

The basic state pension is £10,600 after last month’s inflation matching increase. If this was their only income I suggest that many pensioners would still be struggling.

The increase would likely be more than swallowed up by increases in energy and food costs. Many would still not be spending on more than the essentials.