Inflation 3.3% -- merged thread

[Hyperduck Quack Quack]

BBC News website latest.

[ngn]

!

[FreeTrader]

Pressure on Merv with the VAT increase coming.

http://www.statistics.gov.uk/pdfdir/cpi1210.pdf

Wages aren't coming close to matching this. Living standards are falling rapidly.

[OnlyMe]

Pressure on Merv with the VAT increase coming.

http://www.statistics.gov.uk/pdfdir/cpi1210.pdf

Wages aren't coming close to matching this. Living standards are falling rapidly.

Even people with healthy budgets only have say 10/20% buffer. Pensions and savings have already been cut, another 10/20% inflation and the economy falls apart, very rapidly. Shops with absurd running costs selling few and fewer items at increasing input costs - have to run their margins up to have any chance of paying the bills. Which is efefctively what happened to uk industry as the cost base laid the boot into any ability to compete.

The zombie debt bubble is going to burst no matter how much it is kept on life support.

[TheCountOfNowhere]

Thieving ****s

[Guest_FaFa!_*]

Pressure on Merv with the VAT increase coming.

http://www.statistics.gov.uk/pdfdir/cpi1210.pdf

Wages aren't coming close to matching this. Living standards are falling rapidly.

Absolutely. What was the ONS wage rise - 0.5%? So the nation has taken a real wage cut of around 5% this year. I'd imagine all the hyperinflationists will be along shortly, but I'd just like to point out that CPI (and I believe RPI) remain below 2008 peaks. How is the money supply looking?

[OnlyMe]

Absolutely. What was the ONS wage rise - 0.5%? So the nation has taken a real wage cut of around 5% this year. I'd imagine all the hyperinflationists will be along shortly, but I'd just like to point out that CPI (and I believe RPI) remain below 2008 peaks. How is the money supply looking?

Wait till China lets its currency float to stop US's (and other's) money pritning sending their economy into an inflationary inferno.

[Pent Up]

How long can the BOE nit act on this? It has to be Q1 2011 surely?

[FreeTrader]

In case you missed it, the Producer Price Index release yesterday showed input prices for materials and fuels purchased by manufacturing industry rose by 9% year-on-year in November (up from 8.2% in October).

http://www.statistics.gov.uk/pdfdir/ppi1210.pdf

[exiges]

Silver lining for those with RPI+1% NS&I investments.. no wonder they pulled them.

Edited December 14, 2010 by exiges

[WageslaveX14]

Absolutely. What was the ONS wage rise - 0.5%? So the nation has taken a real wage cut of around 5% this year. I'd imagine all the hyperinflationists will be along shortly, but I'd just like to point out that CPI (and I believe RPI) remain below 2008 peaks. How is the money supply looking?

That may well be the case, but at least real interest rates weren't negative in 2008, and we hadn't had a tripling of monetary base. I think we need to be careful with the use of the term 'hyperinflation'. To me inflation at 15-20% is a very realistic possibility, which will wipe out debts and savings in a very short period of time.

To me, that's hyperinflation - we won't get Zimbabwe style inflation, but cuting the value of your savings in half in 2-3 years is bad enough for me.

[Guest_FaFa!_*]

Wait till China lets its currency float to stop US's (and other's) money pritning sending their economy into an inflationary inferno.

How will that effect the UK's CPI exactly?

[non frog]

....Living standards are falling rapidly.

They have to. That is the solution to the dilemma. We have 40 years borrowing and lies to pay back. Ergo 40 years of a falling standard of living. Get used to it.

[Kyoto]

Is the sort of thing that usually drives up interest rates?

There doesn't appear to be much downside to running these low rates for so long at the moment.

Edited December 14, 2010 by Kyoto

[DungBeetle]

How long can the BOE nit act on this? It has to be Q1 2011 surely?

Inflation is the safest way out for us, the BoE know it, the Government know it. They just DON'T want to tell us (because then the con will be revealed). No Interest rate increases until after the next election IMHO.

[Van]

The case for the "token interest rate rise" in Jan/Feb is too strong to ignore.

[FreeTrader]

They have to. That is the solution to the dilemma. We have 40 years borrowing and lies to pay back. Ergo 40 years of a falling standard of living. Get used to it.

We already are – most of us were making this argument well before you turned up.

The question is whether Joe Soap will get used to it so pragmatically.

[MrFlibble]

The case for the "token interest rate rise" in Jan/Feb is too strong to ignore.

Possible, followed by another 21 months of 'hold.'

[LivingWithTheInlaws]

Where's that fan chart thingy?

[Riedquat]

We already are – most of us were making this argument well before you turned up.

The question is whether Joe Soap will get used to it so pragmatically.

Well, yes, but what have we borrowed from the future in reality? Money isn't real. We obviously had the capacity and resources to produce all the junk we had, so where precisely has there been a problem other in the stupidly complex and utterly artificial means we have and trying to keep track of it? We'll have been using resources that could've been used in the future but we'll be doing that anyway no matter what, just at a different rate.

[richc]

How will that effect the UK's CPI exactly?

China has been massively subsidizing exports over the past 10 years by keeping their currency undervalued. At some point, China will stop adding to their accumulated horde of rapidly devaluing dollars, China's currency will strengthen, and the cost in the West of exported Chinese goods suddenly becomes much more expensive.

The Bank of England has exactly zero understanding of risk. Yeah, sure, inflation at 3.5% is "manageable" but they've completely obliterated their credibility over the past couple of years. The median looks fine at the moment, but they've pushed all the risks out to the tails of the distribution. If inflation were to go higher due to some external shock, there'd be no way for the BoE to bring prices under control without massively raising interest rates back into the 10%-20% range. If (when) there's an external shock, the Bank is either going to have to bankrupt the country or allow inflation to run uncontrolled and become embedded into a long term wage-price spiral.

[richc]

Where's that fan chart thingy?

The fan charts have no basis in reality -- nothing but propaganda.

Where's the increase in student fees that should appear in the fan charts in Q4 2012? Nowhere to be seen -- even though it will increase CPI by about 1%. Clearly just another future price increase that has been filed under the expected-to-be-unexpected category so therefore receives a zero-weighting in the forecast.

[Guest_FaFa!_*]

China has been massively subsidizing exports over the past 10 years by keeping their currency undervalued. At some point, China will stop adding to their accumulated horde of rapidly devaluing dollars, China's currency will strengthen, and the cost in the West of exported Chinese goods suddenly becomes much more expensive.

That's one argument - another would be that when China does do this, it will lead to a Chinese economic slowdown, Western companies will move their production bases elsewhere, at which point the price of commodities jumps off a cliff and Merv looks like Nostradamus.

[Michael]

but if inflation is almost 5% with no sign of it going down anytime soon why aren't the bond markets punishing the BofE for printing money???

Yields on Uk government debt are negative in real terms....

As a previous poster suggested the hidden agenda of the BofE is to inflate away both government and private sector debt////////////////

General inflation of 5 or 6% for 8 or 9 years would halve the real value of this debt mountain and is the EASIEST way out of the mess we're in....

Expect salaries and prices to go up 80% in the next 8 or 9 years

Edited December 14, 2010 by Michael

[Realistbear]

U.K. Inflation Rate Unexpectedly Increases to 3.3%

Following Mr. Bean's wisdom on this subject yesterday (inflation can cause prices to rise) it is a wonder why this news is "unexpected."

Here is a possible reason: bubbles deflate and deflation is the norm. The reason why our prices are going the other way is that we are still feeding the beast. When the food (easy credit) runs out we and the banksters can all expect what comes naturally from a deflating bubble.

Edited December 14, 2010 by Realistbear