Uk - Inflation Disaster Zone - Producer Input Inflation Rises At Double Expectations

[Zzzzzzzzzzzzzzzzzzzzzzzzzz]

http://uk.reuters.com/article/idUKTRE6971AQ20101008

The Office for National Statistics said producer input prices rose 0.7 percent on the month in September, almost double analysts' expectations, and raising the annual rate to 9.5 percent from 8.7 percent in August. That was the biggest monthly rise in the annual rate since April.

The pound rose after the figures as markets speculated that stubborn inflation pressures lessened the likelihood the Bank of England would adopt any further monetary easing to shore up the economic recovery.

The central bank is convinced that high inflation is largely due to temporary factors and will fall back over the course of the next two years.

Higher cereals prices contributed to a rise in the annual rate of inflation of domestically-produced food to 9.9 percent, its highest since October 2008.

[Pent Up]

Qe off! Then it's on! Then it's off again! There must be some blazing arguments going on in the MPC should make some interesting minutes.

[Zzzzzzzzzzzzzzzzzzzzzzzzzz]

Headless chickens.

[bomberbrown]

Headless chickens.

£25.99 - Coming to a supermarket near you!

[talksalot81]

Every time I read it I cannot help but laugh at 'temporary factors'. The bank will not move to curb inflationary pressure from 'temporary factors'. However, history has demonstrated that they are more than happy to act against a 'temporary factor' when it is less inflationary than they would like. Double standards.

[Zzzzzzzzzzzzzzzzzzzzzzzzzz]

So input prices are over 9.5% and output inflation is around 4.4% - wonder what that's doing to profits

Edited October 8, 2010 by gruffydd

[moonriver]

http://uk.reuters.com/article/idUKTRE6971AQ20101008

The central bank is convinced that high inflation is largely due to temporary factors and will fall back over the course of the next two years.

I hardly think so, when, without everything else, the VAT increases have not even been introduced yet.

And I noticed, the tins of my fave baked beans, have been craftily reduced gradually from 425gms, to 400gms, now to 390gms..but of course, no price reduction.

[Zzzzzzzzzzzzzzzzzzzzzzzzzz]

I hardly think so, when, without everything else, the VAT increases have not even been introduced yet.

And I noticed, the tins of my fave baked beans, have been craftily reduced gradually from 425gms, to 400gms, now to 390gms..but of course, no price reduction.

They're completely off their rockers. Don't have a friggin clue.

[Tired of Waiting]

Qe off! Then it's on! Then it's off again! There must be some blazing arguments going on in the MPC should make some interesting minutes.

Yep.

Someone says: "If we QE we'll be fecked!"

Another replies: "If we don't QE we'll be fecked!".

Then, a quieter, sadder voice says: "You are both right..."

.

Edited October 8, 2010 by Tired of Waiting

[Pent Up]

Every time I read it I cannot help but laugh at 'temporary factors'. The bank will not move to curb inflationary pressure from 'temporary factors'. However, history has demonstrated that they are more than happy to act against a 'temporary factor' when it is less inflationary than they would like. Double standards.

The temporary VAT rise seems to be well and truly permanent. In fact we are only 3 months away from the next one now!

Don't worry though mervs magical mythical 'spare capacity' will save us all from a hyperinflationary death spiral!

[corevalue]

I hardly think so, when, without everything else, the VAT increases have not even been introduced yet.

And I noticed, the tins of my fave baked beans, have been craftily reduced gradually from 425gms, to 400gms, now to 390gms..but of course, no price reduction.

Soon, they'll be individually packed in blister-pack, 10 beans for £0.99 (including VAT at 20%).

[righttoleech]

So input prices are over 9.5% and output inflation is around 4.4% - wonder what that's doing to profits

profits should be OK......it's coming out of your wages, (if you still have a job).

[John The Pessimist]

In the last 4 weeks Sterling has slid against the euro by 5+p. This is on the back expectations of more QE.

The UK is an importer of food from the EU. This drop against the euro will drive retail inflation.

The UK is primarily an exporter of financial services and certain types of machinery (to the EU).

Sales of these items are less price point driven, than the sales of clothing and food. The drop in sterling will not confer any significant competitive advantage in the sale of these services and goods.

If anyone thinks this drop against the euro will make us more competitive, they are misguided. If they print, we are stuffed.

[General Congreve]

Yep.

Someone says: "If we QE we'll be fecked!"

Another replies: "If we don't QE we'll be fecked!".

Then, a quieter, sadder voice says: "You are both right..."

Beautiful summary, fecked all ways, unless you've got gold.

[hazymemory]

Every time I read it I cannot help but laugh at 'temporary factors'.

Yep, I wonder how many years they will let "temporary" inflation run for. Goods prices are less important to them mpc than wage inflation. So as long as there is downward pressure on salaries it doesn't matter to them that food etc. Is shooting up. We just get poorer... Only temporarily obviously

[Tired of Waiting]

Yep, I wonder how many years they will let "temporary" inflation run for. Goods prices are less important to them mpc than wage inflation. So as long as there is downward pressure on salaries it doesn't matter to them that food etc. Is shooting up. We just get poorer... Only temporarily obviously

Sorry to interrupt, but you may want to see this: in 30 minutes!

House Prices: Pulling us into a recession?

BBC 2 Live phone in today at 1pm (show starts at 12pm).

http://www.bbc.co.uk/radio2/shows/jeremy-vine/

88-91 FM | Listen live

Call: 0500 288291

Text: 88291

Email: http://www.bbc.co.uk/radio2/shows/jeremy-vine/contact/

Unfortunately I will not be in a position to call in but if we can get that message across loud and clear on the BBC (-3.6%? What -3.6%?) then it will be a good afternoons work.

I'm getting that "Radio 5 Live" feeling again. Timebandit, are you around?

[General Congreve]

I hardly think so, when, without everything else, the VAT increases have not even been introduced yet.

And I noticed, the tins of my fave baked beans, have been craftily reduced gradually from 425gms, to 400gms, now to 390gms..but of course, no price reduction.

Because I have saved my wealth in gold I can now buy 5 packs of 390g beans for the the price of 4 425g tins 18 months ago. A 250g bean gain. This deflation is punishing

[leicestersq]

http://uk.reuters.com/article/idUKTRE6971AQ20101008

The Office for National Statistics said producer input prices rose 0.7 percent on the month in September, almost double analysts' expectations, and raising the annual rate to 9.5 percent from 8.7 percent in August. That was the biggest monthly rise in the annual rate since April.

The pound rose after the figures as markets speculated that stubborn inflation pressures lessened the likelihood the Bank of England would adopt any further monetary easing to shore up the economic recovery.

The central bank is convinced that high inflation is largely due to temporary factors and will fall back over the course of the next two years.

Higher cereals prices contributed to a rise in the annual rate of inflation of domestically-produced food to 9.9 percent, its highest since October 2008.

Here it comes.

With India and China getting bigger, they are going to be buying more and more commodities and manufactures. They will want more of what the world produces.

More demand means higher prices for things. If China and India take more, particularly of the World's commodities, then that means less for the people in the UK. If you have less, prices must rise.

Ouch this is really going to hurt. We are going to have falling GDP and rising prices.

When the market gets a knowledged of what is happening, the bond market will go crazy. All those public sector wages, pensions and benefits, are index linked. But if the economy isnt growing, and tax revenues at any given rate are falling, you become less and less able to pay what is due.

Government has a big choice. It can either renege on unpayable agreements, or wait until the bond market blows up. Then it has another choice. It can renege on payments to bondholders, or fix the problem at that point, and renege on unpayable agreements. Or it can print money.

Will the BofE allow printing? It has a duty to keep inflation at 2%?

Printing will be the very worst option, because so many of the liabilities are index linked, you cannot print your way out of the problem. It is like have 9 smarties, and you have promised 5 children that they can have 3 each. No matter what you do, you cant resolve the underlying problem, except by reneging on the underlying promises.

That means cutting public sector salaries, state pensions, civil service pensions, and DWP benefits.

And if they still decide to print, they will get hyperinflation and destroy the pound. That is the very worst of all options. It means our private sector, our banks, our people, will have the huge cost of converting to a gold backed currency, one not controlled by the state. Many companies will not be able to make the transition, and more of the real productive wealth of our nation will be destroyed that way.

We desperately need to government to face up to the realities of the horrors we face if we dont recognise that our GDP is falling, tax revenues will not recover, and we have promised ourselves things that we cannot repay. Failing to deal with this will cost us much much more.

Y

[Sour Mash]

Yep, I wonder how many years they will let "temporary" inflation run for. Goods prices are less important to them mpc than wage inflation. So as long as there is downward pressure on salaries it doesn't matter to them that food etc. Is shooting up. We just get poorer... Only temporarily obviously

The ironic thing is of course that inflation of food, fuel, energy etc driven by their insane ZIRP and money printing policies makes the consumer poorer by soaking up disposable income, thus depressing retail activity ... Yet the topic of raising interest rates is not open for discussion, allegedly because it would take too much money out of people's pockets and depress the consumer economy. <bangs head against wall>

Blatant double standards. And by keeping IRs so low to encourage more borrowing, less saving and more spending (thus stoking up longer term inflation) they are enticing even more people into the debt trap, people who will be reamed once the emergency rate rises start.

Don't forget of course that ALL inflation in 2011 will be put down to the VAT rise due to come in next January, so that's another year of handwaving away inflation and refusing to raise rates.

[Zzzzzzzzzzzzzzzzzzzzzzzzzz]

You really do give up! This is not looking good.

It's incredible that the BoE lacks the understanding to acknowledge that food price inflation is possibly not temporary. They don't even get the basics. Jeeez!

You know, commodity inflation, inc food inflation could've shifted structurally to a higher level for years to come. Mainstream economists are suggesting this.

Temporary this, temporary that blah blah blah - morons!

Edited October 8, 2010 by gruffydd

[SomethingHasToGive]

Printing will be the very worst option, because so many of the liabilities are index linked, you cannot print your way out of the problem. It is like have 9 smarties, and you have promised 5 children that they can have 3 each. No matter what you do, you cant resolve the underlying problem, except by reneging on the underlying promises.

I didn't think of that. That's more than quite worrying.

We are screwed then. I thought they were going to try and inflate out of it, something I don't like the prospect of, but that only works if the bills aren't index linked.

[Sour Mash]

I didn't think of that. That's more than quite worrying.

We are screwed then. I thought they were going to try and inflate out of it, something I don't like the prospect of, but that only works if the bills aren't index linked.

Easy - The indices will be fiddled even more than they already are.

Anyone who believed that inflation has only been running at 3% or less for the last year or so needs treatment for clinical gullibility.

[Zzzzzzzzzzzzzzzzzzzzzzzzzz]

Easy - The indices will be fiddled even more than they already are.

Anyone who believed that inflation has only been running at 3% or less for the last year or so needs treatment for clinical gullibility.

Whatever they do they simply cannot escape the economic fundamentals! They're just digging and digging and digging.

Edited October 8, 2010 by gruffydd

[Spoony]

Listen to this moron on now, VI IDIOT!

[leicestersq]

Easy - The indices will be fiddled even more than they already are.

Anyone who believed that inflation has only been running at 3% or less for the last year or so needs treatment for clinical gullibility.

It is actually probably not true that figures are being fiddled. They are collected by the ONS, and that is a lot of people. They would know if they were being fiddled, and someone somewhere would go to the press if they were. You just cant ever do that with the ONS, the whole organisation would be useless in a flash.

The figures, therefore, are probably true. After all, arent the worrying figures at the start of the thread just what we wouldnt expect to see if there was a conspiracy to lie about all this inflation we are about to get?