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Doesn't Commute Anymore

Here Comes The Inflationary Pressures In The Uk ........

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Inflation is starting to bite in the UK and food inflation, that most unavoidable form, is now 4.6 percent. That's noticable for everyone when doing the weekly shop, buying the lunchtime sandwich or even impulse-purchasing a cheeky chocolate bar during breaktime ("how much for a creme egg?").

I've heard endless moans about low savings rates, and high petrol prices, both here and in the outside world. These moans are easily dismissed by the government and the press - after all savers should be spending to rescue the economy, shouldn't we, and drivers are environmentally insensitive, aren't they?

But hearing pensioners and familiies say they can't afford decent food anymore is a bit too much, and lighter fuel for the press. Note that Egypt's riots are partly motivated by 17% food inflation - http://www.cnbc.com/id/41317235/Egypt_Unrest_Was_Sparked_by_Food_Inflation

http://uk.reuters.com/article/2011/02/09/uk-shop-price-idUKTRE71801L20110209

Food price inflation rose to 4.6 percent in January compared to a year ago, its highest since June 2009. The BRC noted the cost of many agricultural commodities had risen sharply since last year, with corn up 92 percent and wheat up 80 percent.

"Rising commodity prices continue to push up food inflation, now to its highest for a year and a half," said BRC Director General Stephen Robertson.

Mike Watkins, senior manager at research firm Nielsen, which compiles the index for the BRC, said food stores were offering a record amount of promotional discounts to attract shoppers who are keeping a closer eye on their spending.

"Faced with a squeeze on disposable income this year, we can expect shoppers to manage their household budgets tightly during 2011," he said.

PS. It's not the prospect of an interest rate rise that I think will primarily damage future house prices here, it's the damaging long term effect on consumer confidence, a point made well on another thread here earlier in the week. Nobody's going to want to buy big ticket items, like houses, in this climate.

Edited by Diet Cola Addict

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cr.gif

Look, CRB commodities index (oil, metals, grains etc) has broken out! Bad news, if the breakout is valid, prices could double and this is a new floor of a new trading range. It happened before in 2004. Hold onto to those baked beans!

Edited by Money Spinner

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http://www.bloomberg.com/news/2011-02-09/u-k-food-price-inflation-soars-as-boe-begins-policy-meeting.html

Food-Price Inflation Soars as Bank of England Begins Rate-Setting Meeting

U.K. food inflation accelerated to the fastest pace in 19 months in January, pointing to strengthening price pressures in the economy as Bank of England policy makers meet to set interest rates.

Food prices rose an annual 4.6 percent, up from 4 percent the previous month and the most since June 2009, the British Retail Consortium said in an e-mailed statement today in London, citing a survey by Nielsen. Overall shop prices increased 2.5 percent from a year earlier.

Non-food prices rose 0.1 percent on the month, which the BRC said indicates retailers absorbed the government’s increase in value-added tax in January. Still, the impact of the levy on consumers may only have been postponed as rising commodity costs push stores to raise prices. That would add to inflation, which has been above the Bank of England’s target for 13 months.

“Retailers generally took the hit on behalf of customers,” said BRC Director General Stephen Robertson, referring to the tax increase. “But with a range of other cost pressures also squeezing margins, retailers will struggle to go on absorbing it.”

The Monetary Policy Committee will probably hold the benchmark interest rate at a record low 0.5 percent after its meeting tomorrow, a Bloomberg News survey shows. Still, minutes of its Jan. 13 decision showed “most” members noted that medium-term risks had “probably shifted upwards.”

Inflation for non-food items accelerated to 1.3 percent in January from 1.1 percent in December, the BRC said. On the month, overall shop prices rose 0.6 percent, led by a 1.6 percent surge in food prices, the BRC said.

“Pressure on vital food commodities have come on the back of continued strong demand from emerging economies and poor harvests from major exporting countries,” the BRC said. That is “working its way through the supply chain to wholesalers and is now beginning to materialize in shop prices.”

Despite the fact the MPC have noted "medium-term risks had “probably shifted upwards.”, it looks like it is pretty certain that they will continue to be "vigilent", and not rise rates tommorrow. :rolleyes:

Just how high will inflation need to go before they consider an interest rate rise?

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PS. It's not the prospect of an interest rate rise that I think will primarily damage future house prices here, it's the damaging long term effect on consumer confidence, a point made well on another thread here earlier in the week. Nobody's going to want to buy big ticket items, like houses, in this climate.

It's true that inflation is squeezing household budgets just as much as an IR hike would do for those with a mortgage. Will high inflation in itself encourage people to downsize, push them over the edge into repossession etc though? People can attribute the extra mortgage costs from an IR hike directly to the size of their loan and it's clear where the pain is coming from. Inflation seems much less discriminate - those who over borrowed and those who are renting trying to build a deposit are hit equally. No doubt where my loyalties lie - get IR up, get me some decent reward on my savings and force the hand of those who overextended themselves or lied about their income to buy a property. I'm dreaming though...

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6 full size Flakes for £1 in my newsagents. Or a mix of other choc goodies 6 for £1. Shop around or cut out the chocolate. Some of the asking price are just asking and can be beaten elsewhere. Pack your own lunch. We're eating better than ever at around the same price. Eat less. Wrap up. Fuel a bit different but hurts those more who've chosen to put themselves in situations requiring long commutes. In some areas more such people might think of selling up to move. Business impacts of higher fuel costs another strain on costs with people less able to pay higher prices.

I'm done with hearing pensioners complain. A rich one recently wouldn't even entertain my reasoning for them not requiring a free local bus and train pass. Younger people have more to be pissed about with the market requiring them to find much money for buying their first home. Cheaper houses please and partly that requires some pain.

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http://www.bloomberg.com/news/2011-02-09/u-k-food-price-inflation-soars-as-boe-begins-policy-meeting.html

Despite the fact the MPC have noted "medium-term risks had “probably shifted upwards.”, it looks like it is pretty certain that they will continue to be "vigilent", and not rise rates tommorrow. :rolleyes:

Just how high will inflation need to go before they consider an interest rate rise?

I think it's all about food inflation in the months ahead , actually. This is why it is so smart to be self-sustainable as a country for food.

Forget the memory stick- and plasma TV-infested RPI/CPI figures.

Higher food costs =

less spending elsewhere by the public =

decline in consumer-based economy =

decline in employment, job security and wages =

decline in house prices.

This cycle does not depend on the BoE increasing interest rates.

Edited by Diet Cola Addict

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6 full size Flakes for £1 in my newsagents. Or a mix of other choc goodies 6 for £1. Shop around or cut out the chocolate. Some of the asking price are just asking and can be beaten elsewhere. Pack your own lunch. We're eating better than ever at around the same price. Eat less. Wrap up. Fuel a bit different but hurts those more who've chosen to put themselves in situations requiring long commutes. In some areas more such people might think of selling up to move. Business impacts of higher fuel costs another strain on costs with people less able to pay higher prices.

I'm done with hearing pensioners complain. A rich one recently wouldn't even entertain my reasoning for them not requiring a free local bus and train pass. Younger people have more to be pissed about with the market requiring them to find much money for buying their first home. Cheaper houses please and partly that requires some pain.

There will always be price differences.

How many flakes could you have got at the best deal a year ago?? 8? 12?

You clearly have no concept about increasing costs, and your post makes you look a fool.

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6 full size Flakes for £1 in my newsagents.

But are they really full size flakes.

I have seen this a few times. I was in Tesco last year and they had a big display for 6 packs of flakes for a £1 and I put a packet in my basket.... but being a good HPCer I went and compared them to indvidual flakes and the ones in the packets were a good quarter if not a third smaller...

I have seen the same with these flake packs in other supermarkets.

Be careful out there flake lovers. Personally, I am more a ripple man.

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There will always be price differences.

How many flakes could you have got at the best deal a year ago?? 8? 12?

You clearly have no concept about increasing costs, and your post makes you look a fool.

Time is an issue, for most, as well these days. With a staff freeze at my place, I'm doing the previous guy's workload as well now. Sound familiar?

And I can't shop around, as I don't have the time anymore. Plus it's never meat, pasta, tins, bread, fruit (i.e. the essentials) that are on special*, its the impluse stuff.

* I'm not that healthy really, but making the point that food inflation is indeed most unavoidable form. Even the well off, who 'do Waitrose and not LIdl', notice it. Remember the parma ham topic from a year back ?

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http://www.bloomberg.com/news/2011-02-09/u-k-food-price-inflation-soars-as-boe-begins-policy-meeting.html

Despite the fact the MPC have noted "medium-term risks had “probably shifted upwards.”, it looks like it is pretty certain that they will continue to be "vigilent", and not rise rates tommorrow. :rolleyes:

Just how high will inflation need to go before they consider an interest rate rise?

Why do you think increasing the cost of borrowing or increasing the return on savings, will reduce the costs of commodities? I can't see how increasing the UK base rate will have any meaningful affect on the prices of imported raw materials, when the US is flooding the world with cheap dollars*.

"It will strengthen the pound, reducing import costs" I hear them say - really? I disagree. Even if it worked, it would go against current attempts to make Sterling more competitive, thus would not help us to rebalance our economy towards more exports. Hiking borrowing rates up for struggling businesses is hardly going to lead to the growth required to pay the higher yield depositors desire, at least not in the near term.

* Which is arguably responding to China printing to peg their Renminbi against the dollar, creating many of the trade imbalances we see today.

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The UK throws away 1/3 of the average weekly shop...

Millipedes don't have 1,000 legs.

Neither statement has any relevance to whether food prices are increasing or not.

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Millipedes don't have 1,000 legs.

Neither statement has any relevance to whether food prices are increasing or not.

but are they inceasing?

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Millipedes don't have 1,000 legs.

Neither statement has any relevance to whether food prices are increasing or not.

If you currently throw 1/3 of your food purchases away uneaten, then you currently waste a lot more money on that than the amount food is going up by.

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If you currently throw 1/3 of your food purchases away uneaten, then you currently waste a lot more money on that than the amount food is going up by.

so it's related to your household efficiency, not to rising food prices.

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If you currently throw 1/3 of your food purchases away uneaten, then you currently waste a lot more money on that than the amount food is going up by.

But are the FTBers/ squeezed households / distressed sellers the ones wasting 1/3rd of their fridge ? I doubt that - I reckon the tax-targetted middle classes/young professionals are pretty food efficient already and doing close to the best they can in the time available here.

At a guess, I have no figures, it's probably those at the top and bottom of the payscales who waste the most food. And those aren't the key players in the housing market at the moment, or in the years ahead.

Edited by Diet Cola Addict

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But are they really full size flakes.

I have seen this a few times. I was in Tesco last year and they had a big display for 6 packs of flakes for a £1 and I put a packet in my basket.... but being a good HPCer I went and compared them to indvidual flakes and the ones in the packets were a good quarter if not a third smaller...

They did say multipack on the wrappers so maybe just ever so slightly smaller. They were being sold seperately from a basket full of choc treats where you could select a choice of six. Just been to that newsagents and they no longer has such a good deal on. Manager said to look out for deals on Thursdays. Best I got was 3 Caramels for £1 and they are a compact version of Caramel size I remember. Big block of Daily Milk for £1.35 at the newsagents but can still get it £1 from other stores. Ripples have always been a premium chocolate, same as creme eggs.

If shop is asking 80p for a creme egg people don't have to buy them or feel hard done by. Plenty of items which have gone up in price I won't be buying. Many others and services which are falling in price.

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Anyone got figures for how much crisps have gone up in the last 25 years in the UK?

Memory tells me that as a youngster the price of a bag of crisps in the pub was a tiny fraction of the price of the beer, can't remember exact figures.

Now it's between a third and two-thirds of the price of a pint.

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cr.gif

Look, CRB commodities index (oil, metals, grains etc) has broken out! Bad news, if the breakout is valid, prices could double and this is a new floor of a new trading range. It happened before in 2004. Hold onto to those baked beans!

Agree with your TA, confirmation of a breakout spells big trouble i expect that confirmation to occur.

Because of course its not just food is it everyone? Its all commodities (except natural gas). So its not the value of commodities that is rising but the value of the Dollar that is falling.

Oh where are all the deflationistas these days!

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Food is expensive and this is only going to get worse. My guess as good as any other is food prices will double in the next 10years relative to earnings. I've reduced my weekly food shop by half to £80 (2adults, 1toddler and 1bump). This country will go half way to being a third world country before we manage to rescue ourselves. 40% of all income on food/energy is reasonable for Egypt and historically it was a lot worse here. This will only be manageable when HPC comes and lending returns to 3-4xincomes.

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Anyone got figures for how much crisps have gone up in the last 25 years in the UK?

Memory tells me that as a youngster the price of a bag of crisps in the pub was a tiny fraction of the price of the beer, can't remember exact figures.

Now it's between a third and two-thirds of the price of a pint.

I once crushed a bag of crisps, all I got was a few crumbs in the corner not enough to be the size of a regular potato.

I know they were about 30g then 28g then 25g .....have seen even smaller in multi packs, light as a feather more plastic than nourishment.

In the pubs they tend to either have posh types or larger bags....still charge about 50p to 90p depending. ;)

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Agree with your TA, confirmation of a breakout spells big trouble i expect that confirmation to occur.

Because of course its not just food is it everyone? Its all commodities (except natural gas). So its not the value of commodities that is rising but the value of the Dollar that is falling.

Oh where are all the deflationistas these days!

The deflationistas are currently suffering the pain of cognative dissonance.

this kid just woke up to the inflation.

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  • 312 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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