Inflation up or down

sevenhills

RPI inflation = Dec 2023 - 5.2% down from the previous month's figure of 5.3%

It was interesting that the Red Sea diversion will add 0.7% to UK inflation, which has not yet come into the figures just released.

https://www.ons.gov.uk/economy/inflationandpriceindices

pecunianonolet

Londonlisa12 said:

The vote was 6 to 3 to hold the rate last time, so now that CPI is rising again it only takes 2 of the 6 to see common sense and we will have another rise.But they won’t because Bailey just like Carney is in the pockets of the banks and determined to kill sterling and use inflation to get rid of debt,whilst making everyone with anything poorer in real terms.

An increase now would be silly. Rate changes take some time to filter through to the economy before they take effect. Other factors also play a role, in particular among many others wage growth and the labour market and both are softening. An uptick in December figures isn't too unusual and an increase now would be inappropriate. 

About the property market I don't even want to get on to but recommend this article. 

The key issue is, most central banks, especially BOE and ECB underestimated inflationary risks and raised rates too little too late. The BOE in particular underestimated so they were behind the curve and were put in a place to raise rates continuously to get ahead of it. Further raises, consider the time to filter through, could lead to below 2% inflation or worst case to deflation by mid to end of the year. Deflation is far worse than moderate inflation.  

Let's not forget, a lot of market movements are influenced by expectation of macroeconomic developments, (wars, elections, trade, etc.) which influence behaviour. E.g. anticipated rate cuts get priced into the market, consumers may delay purchases, consumers put more money in savings, etc. 

As I sad so many times before, monetary policy is not the holly grail, it can only work with good fiscal policy. We have seen very little of the latter, in contrary, we have seen many very damaging moves such as the mini budget. 

Furthermore, and even if this is a dividing topic nobody wants to discuss anymore, but Brexit and even further back the reactions to the financial crisis play an important part of the state of the country and economy of today. To simply blame everything on a pandemic and a war is the far more easy and, frankly, sellable argument. 

In regards to Sterling diving, this is in many ways a Brexit related issue. The UK generally imports more than it exports running a trade deficit, and trade with the EU single market accounts for a very large portion of it. Cutting yourself off the largest free trade zone in the world and imposing bureaucracy and cost to industries doesn't make any sense economically. There are plenty of studies out there to argue that Brexit cost our economy around 4% of GDP, that's around £100bn every year. 

The government puts all efforts on growth e.g. lower taxation by putting "cheap" money into peoples and companies hands to invest and spend. At the same time the BOE has to raise interest rates to slow down the economy, slow down investments, soften the labour market to get inflation under control. An astonishing oxymoron, isn't it?

https://commonslibrary.parliament.uk/research-briefings/sn02815/

https://www.ft.com/video/91b8a350-5817-4b40-a5ea-c62ec832aa9c

My strong anticipation, rates are held as they are at the MPC meeting on 1st Feb. 

pecunianonolet

sevenhills said:

RPI inflation = Dec 2023 - 5.3% down from the previous month's figure of 5.2%

It was interesting that the Red Sea diversion will add 0.7% to UK inflation, which has not yet come into the figures just released.

https://www.ons.gov.uk/economy/inflationandpriceindices

We have to tell our clients that sea freight prices have already gone up, containers are in the wrong places, delivery times extended by an additional 2-3 weeks. 

The Ever Given blockage took ca 6 days, the supply disruption which followed took around 1 year to get back to normal.  

sevenhills

pecunianonolet said:

sevenhills said:

RPI inflation = Dec 2023 - 5.3% down from the previous month's figure of 5.2%

It was interesting that the Red Sea diversion will add 0.7% to UK inflation, which has not yet come into the figures just released.

https://www.ons.gov.uk/economy/inflationandpriceindices

We have to tell our clients that sea freight prices have already gone up, containers are in the wrong places, delivery times extended by an additional 2-3 weeks. 

The Ever Given blockage took ca 6 days, the supply disruption which followed took around 1 year to get back to normal.  

Scarcity does cause higher prices, the 0.7% extra inflation figure may be the extra costs of transporting goods from the other side of the world.

pecunianonolet

sevenhills said:

pecunianonolet said:

sevenhills said:

RPI inflation = Dec 2023 - 5.3% down from the previous month's figure of 5.2%

It was interesting that the Red Sea diversion will add 0.7% to UK inflation, which has not yet come into the figures just released.

https://www.ons.gov.uk/economy/inflationandpriceindices

We have to tell our clients that sea freight prices have already gone up, containers are in the wrong places, delivery times extended by an additional 2-3 weeks. 

The Ever Given blockage took ca 6 days, the supply disruption which followed took around 1 year to get back to normal.  

Scarcity does cause higher prices, the 0.7% extra inflation figure may be the extra costs of transporting goods from the other side of the world.

Yes, but those increased transport cost is in part absorbed by cheaper manufacturing in the far east, especially China. Lower global demand means many factories in China run well below capacity limit, extended closure periods for Chinese New Year (CNY), workforce reductions, etc. 

DoublePolaroid

Frequentlyhere said:

I'm just amazed anyone is still buying cigarettes in the UK at £12 a pack. 

My go-to tactic for trying to get people to quit is not to first talk about the assorted health benefits, but to do a calculation for them. £12/day ~ £85/wk ~ £350/pcm ~>£4k/year. “How many holidays could you go on for that?”

Most people tell me to stop before I even get to the end of my spiel. They’ve already done the maths.

That’s addiction for you. 

Krakkkers

One of my friends at work once said he could quit smoking any time he likes as he had done it many times before.

Bobajobbob

I find this website and data more accurate and a good forward indicator for official inflation data.

Independent, economic & financial data in real time on-chain (truflation.com)

Swipe

£12 a pack? I see Malboro Golds are £15 in the Tesco website 

LHW99

Had a friend many many years ago with a 20-a-day habit. Frequently had to borrow to make up the rent money.

But if she wanted some new clothes, would give up smoking for the week and then spend what she saved.