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Bear Goggles

Inflation To 2.1%

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Interest rate cuts to come?

BBc News story

I guess this means IR rate cuts are MUCH more likely. Goodbye pound, Goodbye deposit (if it's in cash).

FTBs, time to protect deposit from a big drop in the pound?

Be afraid.

Edited by Bear Goggles

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Guest Time 2 raise Interest Rates

News blog Reuters : Inflation dips on lower petrol prices, but Oils up

$5.00 a barrel in *the last week or so also gas is up 100% m-o-m.

It's only a blip imo.

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News blog Reuters : Inflation dips on lower petrol prices, but Oils up

$5.00 a barrel in *the last week or so also gas is up 100% m-o-m.

It's only a blip imo.

Yup! Could not agree more.

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Stop, think....

We have had the most accomadative money supply/lowest rates in decades, commodity prices have gone through the roof (oil, agric, metals etc), asset prices have soared (housing, Private Equity purchases) etc

and yet...

inflation is at record lows. Why?

Because all we've done is hold off massive deflationary pressures as huge Chinese/Indian/CEE industrial and service capacity comes into play.

A slowdown in western demand for goods is taking place at the same time as ever more global capacity comes on-stream.

Scary stuff.

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I just don't understand it. I was out last night with a restaurant owner, his running costs have trebled in the last 3 years.!! High inflation on goods bought in on running the restaurant, higher lease costs, etc etc.

If people in business are struggling with higher inflationary costs and the public are struggling with higher

costs, i.e. gas, electric, food, council tax, rail fares ete etc etc just how is inflation running at 2.1%??????

Lou

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Lou,

Simply, it isn't.

Scary times, the longer this con trick continues the bigger the bust, people will simply run out of money and wonder what the hell happened.

Edited by OnlyMe

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I just don't understand it. I was out last night with a restaurant owner, his running costs have trebled in the last 3 years.!! High inflation on goods bought in on running the restaurant, higher lease costs, etc etc.

If people in business are struggling with higher inflationary costs and the public are struggling with higher

costs, i.e. gas, electric, food, council tax, rail fares ete etc etc just how is inflation running at 2.1%??????

Lou

because the costs of running a resterant dont include clothes, cars, and consumer electronics

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I just don't understand it. I was out last night with a restaurant owner, his running costs have trebled in the last 3 years.!! High inflation on goods bought in on running the restaurant, higher lease costs, etc etc.

If people in business are struggling with higher inflationary costs and the public are struggling with higher

costs, i.e. gas, electric, food, council tax, rail fares ete etc etc just how is inflation running at 2.1%??????

Lou

Easy, they exclude items (or reduce their weighting) that are rising fast and include items we don't buy very often that fall!

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Factory input prices

Yesterday we were told factory input prices had increased by 12.7% in one year. How ever do manufacturers absorb this whilst only increasing output costs by some 2%? They can only be reducing their labour cost = lower wages = deflation

Deflation is not about to happen – it’s already here This from the weekend makes an interesting read.

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Scary times. Everybody I speak to just isn't spending because they cannot afford to.!

I was at my local salon last saturday and asked if they were busy. The young girl ( around 20yrs )

said for some reason! it was very quiet and asked my why!!, not like it usually is and her friend has a shop and isn't taking as much as last year.!!! People are starting to notice something is wrong!.

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I just don't understand it. I was out last night with a restaurant owner, his running costs have trebled in the last 3 years.!! High inflation on goods bought in on running the restaurant, higher lease costs, etc etc.

If people in business are struggling with higher inflationary costs and the public are struggling with higher

costs, i.e. gas, electric, food, council tax, rail fares ete etc etc just how is inflation running at 2.1%??????

Lou

What , you mean you haven't splashed out on a hamster this year?

Dames :D

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Guest Time 2 raise Interest Rates

M.P.C. Member Charles Bean said recently inflation could rebound with *the

comment that firms "can't keep squeezing profit margins indefinitely"

I tend to agree.

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Anyone know any club or pub owners?

I've been hearing bad stories from people in the business about shocking numbers of people out for the weekend. Clubs are going under that were traditionally highly successful.

Guess the entertaintment industry is the first to suffer in the downturn.

Worrying

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So factory input costs at 12% but inflation only at 2%. Two possible outcomes:

Losses caused by weakening margins mean firms cut jobs=more people can't pay their mortgages=repos and forced sales=HPC

OR

Firms bow to the inevitable and raise prices in line with input costs=higher inflation=higher IRs=more people can't pay their mortgages=repos and forced sales=HPC

And oh yeah, oil is coming back big style as of January. It always tails of fat the end of the year as companies run down stocks to have minimum working capital for end of year tax assessments. The oil bull market is far from over.

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M.P.C. Member Charles Bean said recently inflation could rebound with *the

comment that firms "can't keep squeezing profit margins indefinitely"

I tend to agree.

I agree too, but it won't stop them lowering interest rates. The political, industry and media pressure to do so seems overwhelming.

I was talking to someone last night who said "we've got deflation" because DVD players are £15 in tescos, and then went on to complain about how high petrol prices were. :blink:

When is the penny going to drop?

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Had a wry smile on my face when reading this.

Inflation rates drop due to cheaper air fares while food, drink, and cigarettes all pushed up in price.

So that's ok, it'll make it cheaper for everyone to leave the country when we can't afford to live here any more. :ph34r:

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Easy, they exclude items (or reduce their weighting) that are rising fast and include items we don't buy very often that fall!

There's a great trick they pull with electronic goods. A cheap computer now is around say £400, same as it was a few years ago. however the one you get for that price now is much more powerful and has more software etc, so they say that's the equivalent of a computer you'd have paid £1200 for a few years ago, and computers have fallen by 66%. You can't actually get one for 66% less, but that's how the maths works.

Big bogus falls recorded this way, as well as genuine cheaper clothes from China etc, are weighted heavily to balance the rises we all know about elsewhere.

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There's a great trick they pull with electronic goods. A cheap computer now is around say £400, same as it was a few years ago. however the one you get for that price now is much more powerful and has more software etc, so they say that's the equivalent of a computer you'd have paid £1200 for a few years ago, and computers have fallen by 66%. You can't actually get one for 66% less, but that's how the maths works.

Big bogus falls recorded this way, as well as genuine cheaper clothes from China etc, are weighted heavily to balance the rises we all know about elsewhere.

I belive it's called 'hedonic adjustment'.

I think they also do substitution. i.e if the cost of beef goes up in price then it doesn't have an effect on inflation because everyone will just buy chicken instead.

I may be just talking crap though. :unsure:

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It is a mystery to me. As long as people (incl bankers and analysts) believe these CPI figures we are stuck with our rate policy. I just query the weighting of goods vs services - to my eyes services inflation has been 5-10% for many years now.

I do not know what to think now. I looked at electronic goods last week - most things are at least half the price of what they were a couple of years ago for the equivalent "thing" eg flat screens, video cameras, PCs etc and as for DVD players well they are almost free. Clothes and food I hear are dirt cheap in Tesco, ASDA etc. Even the price of jeans in GAP seems to be the same as about 5 years ago. Meanwhile the cost of a local takeaway for me has gone up by around 50% in 5 years, the cost of a plumber by god knows what, schools fees way up every year, energy bills, etc etc.

Is this a new paradigm?! Import our goods cheaply from abroad where low paid labour pushes real prices down (at least until their standards of living/inflation picks up) but face inflation for services provided from within our own country?

What is inflation anyway! I thought you could say we had inflation because the money supply had been increasing at over 10% year after year. How can all the excess money in supply now not count as "inflation" - it has diluted the value of the £ in our pocket as far as house prices are concerned.

Weird.

Edited by Tempest

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Perhaps this is what Roger Bootle had accounted for, albeit too early when he thought that the B of E would have to cut rates.

He still thought house prices would drop by 25 odd % though as affordability would be stretched in a worsening economy.

As said (well) above, if factory gate prices are up, then there will soon come a time when the businesses reduce overheads by laying off staff.

Either way, house prices go down.

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In response to Lou G's comments I am in retail (1 high st store). In the summer quarter I was 99.4% of last years same quarter. This quarter it's 76% of last winter's quarter.

Good job I only employ myself!

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London weekly bus pass is apparently going up from £11 to £13.50 (a couple of years ago it was £8)

Congestion charge is probably going up to £11 I heard.

This is all stuff people HAVE to pay every day, unlike a bloody DVD player which is a one-off luxury purchase.

I really don't understand these inflation figures!

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Guest Time 2 raise Interest Rates

I agree too, but it won't stop them lowering interest rates. The political, industry and media pressure to do so seems overwhelming.

Well, M.P.C Members David Walton and Kate Barker also said recently although

we voted for a rate cut in August this decision should not be taken as a signal of

more reductions to come

I tend to agree.

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I thought you could say we had inflation because the money supply had been increasing at over 10% year after year.

Yes. That's why they switched from monetary inflation to price inflation: it's much easier to fiddle.

Governments' goal is to be able to print money without restriction in order to buy votes: the more they can convince people that inflation is low while they're printing as fast as they can run the presses, the better. Of course then when we see, say, train tickets going up nearly 10% next year, we have to wonder if the country is being run by a gang of thieving liars.

A hundred years from now the schoolkids will be learning about how the early 21st century was the time when the Western nations deliberately destroyed their own economies by printing vast amounts of money to keep idiot politicos in power, thereby causing an explosive rise in inflation locally while exporting their jobs abroad in a vain attempt to reduce costs.

Edited by MarkG

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  • 301 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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