Real Inflation 9.5 %

WTF?_2

setmefree2 wrote: »

I don't think Brits fully appreciate the link between the cheap t shirts and the expensive petrol (but maybe they are getting there). The cheap clothes etc are made in India & China where oil is subsidised and therefore oil is heavily in demand. The expensive food (in part) is due to the heavy demand for oil in the countries making the cheap T shirts (making the production of food expensive because of fertilizer & pesticide costs and making the Americans produce ethanol from corn and wheat). When the Chinese & Indians stop giving away cheap oil, what will happen then? Will oil prices & food prices fall? How much damage will have been done in the meantime to Western economies?

So anyway, you are not really getting a cheap T shirt you are paying for it through the pumps, through food and through your gas and electricity.

Indeed - the bottom line is that there's no such thing as a free lunch.

Which is worrying because the whole of the Western World has been enjoying what it saw as a free lunch for most of the last decade..... :eek:

John_Pierpoint

fc123 wrote: »

Staff in big companies or public sector positions will feel the No pay rise effect more than someone like myself who has more freedom to 'duck and dive'. .....being self employed, one is always looking for the next way to earn some decent salary.

Your customers pay cash on the nail ?
You have a unique selling point, that means demand for your services increase in a recession? Your customers have no other choice?

Tell me what it is - I need to know.

Qualified bailiff ?
(I can think of a few more but I don't want to upset you or other readers of a gentle persuasion.)

Sir_Humphrey

John_Pierpoint wrote: »

Your customers pay cash on the nail ?
Qualified bailiff ?
(I can think of a few more but I don't want to upset you or other readers of a gentle persuasion.)

Maybe he is an undertaker. Easy to "bump" up some more customers.

John_Pierpoint

Good point, could be a boom industry if we have a hard winter and the pensioners only get a CPI increase in their pensions.
Mind you their miserable executors might try to economise - leave the body to medical science?
Aim for the upper end of the market where the chancellor chips in with a 40% contribution to the festivities of the wake.

sdooley

There's a good reason house prices / mortgages aren't included in the inflation measures. The accepted wisdom is that higher interest rates reduce inflation. But if putting interest rates up increases the inflation rate because housing is a big part of the index, people will demand higher salaries to compensate, general prices will go up still further as inflationary expectations are fixed and interest rates will be further increased, further increasing inflation.

PasturesNew

sdooley wrote: »

There's a good reason house prices / mortgages aren't included in the inflation measures. The accepted wisdom is that higher interest rates reduce inflation. But if putting interest rates up increases the inflation rate because housing is a big part of the index, people will demand higher salaries to compensate, general prices will go up still further as inflationary expectations are fixed and interest rates will be further increased, further increasing inflation.

Why did I thank this.
I disagree.
But can't be bothered to type out why.

Take it as a thanks for posting something.

Pobby

Interestingly enough I had a convo with some relatives this week. I nickname them ``Moneyspendingexperts``. Three holidays a year, flash motor, the full nine yards. Even they are cutting back and are aware of all their food wastage. I later found out that the main bread winner (who is in the building trade) was ``renting`` out his guys for £1,000 a day. The rate that he is now getting is around 40% less.

Sir_Humphrey

sdooley wrote: »

There's a good reason house prices / mortgages aren't included in the inflation measures. The accepted wisdom is that higher interest rates reduce inflation. But if putting interest rates up increases the inflation rate because housing is a big part of the index, people will demand higher salaries to compensate, general prices will go up still further as inflationary expectations are fixed and interest rates will be further increased, further increasing inflation.

I have always been in two minds about this. My cynical side thinks that this is a way of "fixing" the data to maintain the illusion that the economy can be easily controlled with just one "golf club", namely IRs.

There is a second issue mainly relating to CPI, as opposed to RPIx (RPI minus mortgage rates). This is the issue of hedonics (not hedonistics to any HPC reading lurkers :rolleyes: ). In short, this makes assumptions about people substituting certains goods for other goods, so keeping the cost of living down.

An example would be: potatoes rise in price, so people buy more pasta (which in this fictional case has not risen). However, the effect of substitution in economics is controversial; in a nutshell free market types (particularly supply-siders) think lots of substitution occurs and this is appropriate. Free-market sceptics (often Keynesians) think this is often inappropriate.

Personally, I think this appropraite for certain goods such as electronics, but less so for basic food (reminds me of Marie Antoinette's quote "let them eat cake"). As our Irish cousins know, it is not always possible to substitute potatoes.

PasturesNew

My wine gums cost me no more. I win.
Eggs have gone up 25% so I now eat half as many as I used to. I win
Bread's gone up, so I bought a breadmaker and that lead me to experimenting with home made pizza bases. I win.
Baked beans cost no more. I win.
I've reduced the number of extras I put in my trolley (e.g. instead of buying a BOGOF of Rocky Bars I've picked up some SmartPrice Jaffa cakes, saving £0.75-£1.50 depending on price). I win.

Overall, so far, price changes have forced me to cut down on calories I don't need and to experiment more with cooking things for myself, which has saved me money on buying Tesco pizzas at £2.35 each.

So, so far, I win. And have felt good about it and had fun along the way.

As for the other things, I don't buy things. So no change there.

So it's just energy, which I don't use a lot of; petrol, I work from home now so saving by cooking my own pizzas (lasting 4 days) instead of slipping out to the local garage to see if they've got any reduced pies tonight. So I win all round there too.

lostinrates

today's independant has lead me to this:


http://www.statistics.gov.uk/pic/

free personal inflation calculater. Whoohooo, something fun for a rainy morning.


Edit to add.

Well that IS interesting. The graph is very revalationary. Our prudent ways have had our inflation at half the national average for a long time, but now where we spend has had MASSIVE inflation and is over the national average showing a very prounounced upwards trend.

This is an interesting tool and I'd love something like this for working out bill an expeniture on a more regular basis. Its HORRID but its made me really want to look at how I can adapt to do y best to combat the effects of inflation.