Real Inflation 9.5 %

ultra10

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/06/13/cmcostofliving113.xml

I know it depends on your income etc, but does anyone really believe this 3.3% figure !! You can virtually smell the BxxxxxxT !!!

WTF?_2

ultra10 wrote: »

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/06/13/cmcostofliving113.xml

I know it depends on your income etc, but does anyone really believe this 3.3% figure !! You can virtually smell the BxxxxxxT !!!

You're clearly not buying enough flatscreen TVs and mp3 players.

Step up your purchasing of electronic gizmos and cut out fripperies like food and energy and you too can lower your personal inflation rate.

lostinrates

Well, this seems more realistic.

We pay low rent (DH in lodging me with parents) and low cotribution to bills, our highest expenditure are petrol/transport, food (still minimal) stoarge and and animals. Horse feed is VAT, yet has still shot up. Petrol and trains we all know about. Groceries are really noticable.

Sir_Humphrey

lostinrates wrote: »

Well, this seems more realistic.

We pay low rent (DH in lodging me with parents) and low cotribution to bills, our highest expenditure are petrol/transport, food (still minimal) stoarge and and animals. Horse feed is VAT, yet has still shot up. Petrol and trains we all know about. Groceries are really noticable.

Whilst I agree that the CPI is a bit of a joke (it was never designed to be a cost of living index anyway, but simply a monetary policy tool), I do not see inflation as high as 9.5%. Not everyone has a mortgage and not everyone uses a car or flies several times a year. Higher food costs hit the poor hardest as they use a greater proportion of income on food.

The guy in the article who reckons that fuel duty cuts would be a good idea does not know much about economics either. Cutting fuel duty would increase demand for petrol, pushing up it's market value, negating the effect of the cut. In effect, it would be a tax break for oil companies (fuel has inelastic supply).

Paul Krugman explains this better here:

http://krugman.blogs.nytimes.com/2008/04/29/gas-tax-follies/

dannyboycey

Sir_Humphrey wrote: »

Not everyone has a mortgage and not everyone uses a car or flies several times a year.

Fuel prices affect everyone. As the UK no longer manufactures anything, we rely on fuel to import all our goods. Oil is used in the manufacturing process of.... well.... everything!

PasturesNew

I never bought the things in the basket. I still don't.
My money has always gone on the basic bills and cost of getting to work.

If you have the following scenario
Income: £1000

Then:
£450 - Rent/mortgage
£100 - Council tax
£100 - Food
£100 - Petrol to get to work/car cost
£100 - Water/electricity/gas

You have £150 left over to live on

So if these rise to:

£450 - Rent/mortgage
£110 - Council tax
£120 - Food
£130 - Petrol to get to work/car cost
£110 - Water/electricity/gas

You have £80 left to live on

Live = haircuts, dental treatment, TV licence, internet, phone, mobile phone, prescriptions, clothes, footwear, Xmas, birthdays, fix/replace household items, learning/education, social life/hobbies, holidays. All quite important things in the grander scheme of things.

That is gobbling up 50% of your disposable income. If you'd had a mortgage and it had increased by just £50/month then somebody could simply be priced out of their home based on the bills, not any actual debt.

A friend of mine had to sell his house as the bills kept going up and he couldn't afford the basics any more.

I was struggling in my house for the same reasons and was one of my major drivers to sell it.

Hard working singles can find they can borrow responsibly, yet STILL "lose" their home because of the cost of the basics. I'd imagine there are a lot of single people who have had to sell up for this reason alone and not because they'd over-stretched or borrowed.

obsessed_saver

Sir_Humphrey wrote: »

The guy in the article who reckons that fuel duty cuts would be a good idea does not know much about economics either. Cutting fuel duty would increase demand for petrol, pushing up it's market value, negating the effect of the cut. In effect, it would be a tax break for oil companies (fuel has inelastic supply).

That's fine.

But I beg the government to use the money they collect in fuel duty to put in the infrastructure (and subsidise) alternative fuels. Example: hydrogen filling stations for cars like the first production hydrogen fuel cell car from Honda:

http://news.bbc.co.uk/1/hi/business/7456141.stm

Well, they are not doing anything of the sort for "green" technologies are they? They are just taking the money and paying for their second kitchens.

Technologies like this are not viable for private companies, and the government has to take the long view and invest in the infrastructure and offer subsidies.

WTF?_2

Yes - it's all swings and roundabouts.

Reducing interest rates sounds like a great panacea for the indebted but the resulting inflation squeezes them just as much as higher costs of debt servicing would. Oh, and screws those of us who have been prudent and balanced out books/saved money.

Then, once inflation gets out of control the economy is shafted. Industrial unrest, unpredictability in prices and exchange rates making it impossible to plan ahead. And of course businesses still go to the wall, domino style even though economic stimulation was the reason given to justify the rate cuts.

Not to worry though, as it gets the banks out of a pickle. They get billions from the central banks which they can plough into asset bubbles, helping them recapitalise at the expense of everyone else. What a great line of work to be in. Unlimited scope for enriching yourself on the upside, bailed out from facing ruin at the expense of the public on the downside trend.

lostinrates

Sir_Humphrey wrote: »

Whilst I agree that the CPI is a bit of a joke (it was never designed to be a cost of living index anyway, but simply a monetary policy tool), I do not see inflation as high as 9.5%. Not everyone has a mortgage and not everyone uses a car or flies several times a year. Higher food costs hit the poor hardest as they use a greater proportion of income on food.

The guy in the article who reckons that fuel duty cuts would be a good idea does not know much about economics either. Cutting fuel duty would increase demand for petrol, pushing up it's market value, negating the effect of the cut. In effect, it would be a tax break for oil companies (fuel has inelastic supply).

Paul Krugman explains this better here:

http://krugman.blogs.nytimes.com/2008/04/29/gas-tax-follies/

Thanks for link.

I'm not sure I am for a fuel duty cut either (undecided), but even so, it DOES effect us negatively, and we are financially ok! Trains where I am to both London and the closer major commute cities are expensive more expensive than fuel and parking often, expecially now all th local train station charge for parking. I'm PRO- increased use of public transport, love it, think that with all its faults its great, but its not going to happen here in extreme rurality, because it woul be unsustainable and unenvirenmentally friendly to run it in a frequency that was practical! There is something really odd about fuel duty and this county though. although a tax cut might be seen as a duty cut for all companies, with vaidity I think, the fact that other means of fuel have not been mainstreamed might also have to do with how much duty the government takes from fuel....so it cuts both ways I think. As for trains


As for flights, don't more people fly now than ever before? isn't that why we need these horrid airport expansions? I don't know I'm asking. Incidently DH does fly very often for work, we don't pay, but his clients do, either directly or in a roundabout way, which means the consumer does eventually. So that one person taking sveral flights a yearcosts all of us a lttle on the price of goods or services.

Sir_Humphrey

dannyboycey wrote: »

Fuel prices affect everyone. As the UK no longer manufactures anything, we rely on fuel to import all our goods. Oil is used in the manufacturing process of.... well.... everything!

Absolutely true, but anyone who does not drive will be less affected, which was my point.

Also, other prices rises caused by oil are not necessarily passed on to customers.

PasturesNew

I am going to Cornwall shortly and I looked up the cost to do so. For petrol alone the car was cheapest of all - and when I get to Cornwall, knowing where I will want to go I'd have not been able to get out/see people on public transport. And that's with just one of me in the car too.

Using the car it's not only cheaper but I can decide when I go (no deadlines/timetables to keep to), I can carry whatever I want there (and back as I might bring things back with me). I can visit my friend 20 miles away for dinner without it turning into a 1.5 hour bus journey there, asking to stay the night at hers (putting her out) then having to do the 1.5 hour return bus journey the next morning. I can take my parents out to a shop. I am free.

On public transport I'd be sat surrounded by complete strangers, probably beside a fat man or an adult holding a sticky pawed, squealing baby/toddler and it would be the journey from hell. Not to mention people on mobile phones, I'd have the overwhelming urge to rip those out of their hands, chuck them out of the window and scream in their faces "JUST !!!!!!"