Inflation higher than expected yet again

subjecttocontract

It's being reported by the meedya as 4.6%........that means some of my cash savings are not being eroded by inflation any more.

dealyboy

@subjecttocontract said:

It's being reported by the meedya as 4.6%........that means some of my cash savings are not being eroded by inflation any more.

4.6% is CPI inflation against a basket of purchases, it is just a statistical measure that is highly unlikely to reflect an individual's cost inflation.

In fact at today's announcement food inflation was determined to be at 30%. Edit: According to the ONS food inflation has been 30% since October 2021. This suggests poorer households are unlikely to see their savings holding their value, that is if they had any.

Edit: Sorry for the incorrect statement.

coastline

US FED rates are 5.5% and yesterday inflation figures 3.2% and 4% . Targets are met for now.

F-5hTzJWkAEgSs5 (839×587) (twimg.com)

This brings the long term FED v INFLATION back into line where rates are just above inflation ( red above blue).

FYDN7BzVUAAsgbc (1200×503) (twimg.com)

UK has similar news today with the inflation figure of 4.6% which is lower than base rate of 5.25%. Brings the UK into line again after more than a decade. Can't see many more rate rises now apart from another burst of inflation.

Thumbs_Up

The Tories will keep the triple lock state pension ....for now, but you won’t get your 8.5% rise as predicted a month ago.  

EthicsGradient

dealyboy said:

@subjecttocontract said:

It's being reported by the meedya as 4.6%........that means some of my cash savings are not being eroded by inflation any more.

4.6% is CPI inflation against a basket of purchases, it is just a statistical measure that is highly unlikely to reflect an individual's cost inflation.

In fact at today's announcement food inflation was determined to be at 30%. This suggests poorer households are unlikely to see their savings holding their value, that is if they had any.

I don't know where you got "30%" from - it's 10.1%:

Prices of food and non-alcoholic beverages rose by 10.1% in the year to October 2023 according to the latest Consumer Prices Index including owner occupiers’ housing costs (CPIH).
This was down from 12.2% in September and a recent high of 19.2% in March 2023, which was the highest annual rate seen for over 45 years.
https://www.ons.gov.uk/economy/inflationandpriceindices/articles/costoflivinginsights/food

MattMattMattUK

Far more worrying than food inflation being at 10.1% is that core inflation is still at 5.7%, it represents a serious issue for the economy that cannot be tackled by increasing interest rates, nor is there any easy way for the government to influence it and core inflation feeds into CPI as well as damaging the economy. 

boingy

So Rishi can claim to have hit one of his targets and the opposition can claim it was the BoE wot dun it rather than the Govt. I wonder what the next interest rate review will do.

EthicsGradient

MattMattMattUK said:

Far more worrying than food inflation being at 10.1% is that core inflation is still at 5.7%, it represents a serious issue for the economy that cannot be tackled by increasing interest rates, nor is there any easy way for the government to influence it and core inflation feeds into CPI as well as damaging the economy. 

But core inflation is what higher interest rates are designed to tackle - they slow down investment and discretionary spending (it's the non-discretionary spending, on things like food and fuel, that aren't affected by interest rates). You'd also expect wage rises, which are a significant part of core inflation, to lag the increases in food and fuel - the latter go up, and in response, salaries go up - and in response to that, firms put up their overall prices.

Expotter

MattMattMattUK said:

Far more worrying than food inflation being at 10.1% is that core inflation is still at 5.7%, it represents a serious issue for the economy that cannot be tackled by increasing interest rates, nor is there any easy way for the government to influence it and core inflation feeds into CPI as well as damaging the economy. 

And CPI for services (large part of UK economy) is still 6.6%, so the headline figure might look positive but there's a lot hiding behind it.

Table 3: CPI annual and monthly inflation rates by division, UK
October 2022, September 2023, and October 2023

	CPI 12-month rate		CPI 1-month rate
	Sep 2023	Oct 2023	Oct 2022	Oct 2023
CPI All items	6.7	4.6	2.0	0.0
Food and non-alcoholic beverages	12.1	10.1	2.0	0.1
Alcohol and tobacco	11.2	11.0	0.0	-0.2
Clothing and footwear	6.9	6.2	1.6	0.9
Housing and household services	6.9	-3.5	8.7	-1.9
Furniture and household goods	3.7	3.1	0.6	0.0
Health	8.2	8.0	0.4	0.2
Transport	0.7	0.5	0.0	-0.2
Communication	8.1	8.1	0.7	0.7
Recreation and culture	6.0	6.4	0.4	0.7
Education	4.1	4.5	2.3	2.6
Restaurants and hotels	8.6	7.5	1.0	0.0
Miscellaneous goods and services	5.3	5.1	0.5	0.3
All goods	6.2	2.9	2.9	-0.3
All services	6.9	6.6	0.7	0.4
CPI exc food, energy, alcohol and tobacco (core CPI)	6.1	5.7	0.7	0.3

Source: Consumer price inflation from the Office for National Statistics

MattMattMattUK

EthicsGradient said:

MattMattMattUK said:

Far more worrying than food inflation being at 10.1% is that core inflation is still at 5.7%, it represents a serious issue for the economy that cannot be tackled by increasing interest rates, nor is there any easy way for the government to influence it and core inflation feeds into CPI as well as damaging the economy. 

But core inflation is what higher interest rates are designed to tackle - they slow down investment and discretionary spending (it's the non-discretionary spending, on things like food and fuel, that aren't affected by interest rates). You'd also expect wage rises, which are a significant part of core inflation, to lag the increases in food and fuel - the latter go up, and in response, salaries go up - and in response to that, firms put up their overall prices.

Core inflation is being caused by input costs on materials and rises in the cost of imported goods and services, so the government cannot do much about that and discretionary spending is already well down. Interest rate rises have probably already gone too far as they have a significant lag between change and full impact, the BoE should have gone earlier and gone faster, but stopped at 4.5-5%, instead what we had was a slow trickle of rises that will not have had 80% of their impact worked through remortgages until 2027. Whilst we are not in a technical recession we are also experiencing low growth and from a business perspective this current market feels far worse than 2007-2008 did.