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UK inflation... where will it go within 12 months? I suspect 6-8%


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We have... 

> HPI running out of control, which will loop-feed into inflation

> Excess savings among the middle classes, an ongoing trend 

> Companies building up huge levels of savings as they cut back on R&D

> An economic boom in SE Asia due to its competency in dealing with Covid

> Money supply going off the scale

> Endless (and off the scale, again) stimulus... from QE to giving people cheques for nothing

> Incredible levels of gov subsidised loans being churned out to business... often with minimal evaluation/risk testing

> Emergency IRs acting as another level of stimulus

> Structural shifts within the world economy, on so many levels

> A gear change in tech and digitisation. 

> Furlough enabling people to receive income from one job and earn from another... ditto limited support for self employed. 

It is endless. This is all hitting us right at the same time. Most of the economic analysis re: inflation will examine perhaps 1,2,3 of the above. And the above is just a taste... 

I've never known anything like this in my lifetime. All bets are off. 

Edited by gruffydd
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The figures will be massaged down or 'looked through' as usual.  Wage inflation, unlike in previous eras will not take off as workers have little pricing power, hence interest rates will probably not be increased. 

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23 minutes ago, gruffydd said:

We have... 

> HPI running out of control, which will loop-feed into inflation

> Excess savings among the middle classes, an ongoing trend 

> Companies building up huge levels of savings as they cut back on R&D

> An economic boom in SE Asia due to its competency in dealing with Covid

> Money supply going off the scale

> Endless (and off the scale, again) stimulus... from QE to giving people cheques for nothing

> Incredible levels of gov subsidised loans being churned out to business... often with minimal evaluation/risk testing

> Emergency IRs acting as another level of stimulus

> Structural shifts within the world economy, on so many levels

> A gear shift in tech and digitisation. 

It is endless. This is all hitting us right at the same time. Most of the economic analysis re: inflation will examine perhaps 1,2,3 of the above. And the above is just a taste... 

I've never known anything like this in my lifetime. All bets are off. 

 

It's got a 1970s stagflationary vibe except the UK is already rundown and falling to pieces even while the tide is building offshore.

Shorting sterling into extinction is probably your best bet.

 

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My bet is they will put their hand up and admit to 5% inflation but the real increase will be much higher.  The best way to judge inflation is the size of Mars bars, if these reduce in size you know inflation is up. 

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16 minutes ago, satsuma said:

My bet is they will put their hand up and admit to 5% inflation but the real increase will be much higher.  The best way to judge inflation is the size of Mars bars, if these reduce in size you know inflation is up. 

If they get any smaller the only thing you'll be buying is the wrapper.

Cinema ticket prices is a useful metric.

https://www.statista.com/statistics/285783/cinema-ticket-prices-average-annual-price-in-the-united-kingdom-uk/

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14 minutes ago, Locke said:

They started charging a fiver for any screening, any day, any time near me.

So...deflation?

Not if they go out of business. But hey, make the most of it.

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I am starting to hire now for the 17th mostly entry level and seasonal positions.

So far not many jobs advertised by competitors but also not as many applicants as last summer.

When you add brexit, a lot of folk still on furlough, covid anxiety, delivery and supermarket boom together I believe that in touristic areas especially you are going to have wage inflation .... followed by the crunch later in the year after the season finishes.

Given the precarious state of many businesses and rates/covid loan repayments starting whilst also having a full order book for the summer as tourists have less options abroad will mean a shift to higher temp rates to avoid long term commitments.... lest another variant wave lockdown this winter.

 

 

Edited by Fromage Frais
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There are a lot of companies out there increasing prices to cover their losses....while millions are worse off and millions more supported by Furlough and CBILs.  

We wont know what's happening till that madness stops.

Then the people who pushed up their prices will have to take the loss themselves.

One thing for sure...the tories are out of control and somethings going to collapse.

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9 hours ago, gruffydd said:

We have... 

> HPI running out of control, which will loop-feed into inflation

> Excess savings among the middle classes, an ongoing trend 

> Companies building up huge levels of savings as they cut back on R&D

> An economic boom in SE Asia due to its competency in dealing with Covid

> Money supply going off the scale

> Endless (and off the scale, again) stimulus... from QE to giving people cheques for nothing

> Incredible levels of gov subsidised loans being churned out to business... often with minimal evaluation/risk testing

> Emergency IRs acting as another level of stimulus

> Structural shifts within the world economy, on so many levels

> A gear shift in tech and digitisation. 

It is endless. This is all hitting us right at the same time. Most of the economic analysis re: inflation will examine perhaps 1,2,3 of the above. And the above is just a taste... 

I've never known anything like this in my lifetime. All bets are off. 

All that reads like the wealthier classes will need a bubble to help rid them of their money.

Cutting stamp duty was Sunak spinning up the decks and a property mini bubble it will be.

I wise man would now be planning taxes or actions to get things moving fatten them up and the .48% property tax of council tax revaluation......unlikely  

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2 minutes ago, TheCountOfNowhere said:

There are a lot of companies out there increasing prices to cover their losses....while millions are worse off and millions more supported by Furlough and CBILs.  

We wont know what's happening till that madness stops.

Then the people who pushed up their prices will have to take the loss themselves.

One thing for sure...the tories are out of control and somethings going to collapse.

I have a over 100k CBILS loan.

When I took it I did not know what was going to happen and I thought it prudent to take everything on offer.

Payments restart soon and its 2000 a month maybe I repay it sooner as I have a debt aversion but its 2.x over base.

So my debt free business was closed by government mandate and then pushed to get a loan which fair enough is a decent rate still should be profitable for the bank assuming they are getting the money at next to nothing plus a personal guarantee.

Furlough is not a money maker as it goes to the employees even they get it that somehow I am coining it though in reality I am paying a contribution .  In my industry it meant keeping 20+ people on 80% as opposed to letting most of them go.  In terms of cost a few months was fine but in hindsight and given that many logically have got other jobs or want to go on holiday right away after being locked up for months it would have been more financially prudent to let everyone under x years service go.  For example 20%+ of furloughed employees will need to be replaced before opening entirely understandable I would have got another job after a few months also to get double money.

For me I have been 100% closed when mandated the situation my be more cloudy for companies that have been able to open during lockdowns.

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2 hours ago, satsuma said:

My bet is they will put their hand up and admit to 5% inflation but the real increase will be much higher.  The best way to judge inflation is the size of Mars bars, if these reduce in size you know inflation is up. 

So ******ing true, Mars bars are the key.

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27 minutes ago, Fromage Frais said:

I have a over 100k CBILS loan.

When I took it I did not know what was going to happen and I thought it prudent to take everything on offer.

Payments restart soon and its 2000 a month maybe I repay it sooner as I have a debt aversion but its 2.x over base.

So my debt free business was closed by government mandate and then pushed to get a loan which fair enough is a decent rate still should be profitable for the bank assuming they are getting the money at next to nothing plus a personal guarantee.

Furlough is not a money maker as it goes to the employees even they get it that somehow I am coining it though in reality I am paying a contribution .  In my industry it meant keeping 20+ people on 80% as opposed to letting most of them go.  In terms of cost a few months was fine but in hindsight and given that many logically have got other jobs or want to go on holiday right away after being locked up for months it would have been more financially prudent to let everyone under x years service go.  For example 20%+ of furloughed employees will need to be replaced before opening entirely understandable I would have got another job after a few months also to get double money.

For me I have been 100% closed when mandated the situation my be more cloudy for companies that have been able to open during lockdowns.

That's interesting FF.

What have you done with the CBILs cash, did you use it to pay the government contributions or did you bank it and can pay it back ?

Wise move was 50K in bitcoin and 50K in tesla :lol: 

Jesus, what a mess.

I am in shock at the actions of the government, they make little sense to me unless I look it from the stand point that the money  markets broke down in Nov 2019.  It was a very fortuitous/coincidental pandemic for them to get things moving and keep the plates spinning.  House prices were just about to go negative yet, here we are, up 8% in a year and the MSM are ramping like hell.

 

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9 hours ago, zugzwang said:

 

It's got a 1970s stagflationary vibe except the UK is already rundown and falling to pieces even while the tide is building offshore.

Shorting sterling into extinction is probably your best bet.

 

Essentially load up on as much low interest debt as you can get your hands on then?

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19 minutes ago, stilgar said:

Essentially load up on as much low interest debt as you can get your hands on then?

I read that in Germany's hyper inflationary collapse, they just re-based the debt when the currency collapsed making people much worse off.

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12 minutes ago, winkie said:

We have peak growth stupidity....AI won't help.;)

All this AI is not really Intelligence, it's more pattern recognition hooked together with conventional programming paradigms.

Intelligence is some way off and if it is created in the image of man kind I assume it's first action will be to buy a BTL property and do **** all work.

 

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13 minutes ago, TheCountOfNowhere said:

I read that in Germany's hyper inflationary collapse, they just re-based the debt when the currency collapsed making people much worse off.

Scrap that then. Bitcoin it is!

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3 hours ago, zugzwang said:

If they get any smaller the only thing you'll be buying is the wrapper.

Cinema ticket prices is a useful metric.

https://www.statista.com/statistics/285783/cinema-ticket-prices-average-annual-price-in-the-united-kingdom-uk/

Fish is another good example, the box is the same size but it’s got four fish fingers in rather than four fillets!!

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11 hours ago, zugzwang said:

 

It's got a 1970s stagflationary vibe except the UK is already rundown and falling to pieces even while the tide is building offshore.

Shorting sterling into extinction is probably your best bet.

 

I suspect worse than simply stagnation is this instance... because many of the inflation stimuli will work against growth in the real economy... a psychotic economy. Meanwhile, China will rise in the east... hence the panic and aggro towards China from Biden and pals. They know what comes next. 

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17 minutes ago, gruffydd said:

I suspect worse than simply stagnation is this instance... because many of the inflation stimuli will work against growth in the real economy... a psychotic economy. Meanwhile, China will rise in the east... hence the panic and aggro towards China from Biden and pals. They know what comes next. 

Finance capitalism vs industrial socialism.

https://www.nakedcapitalism.com/2021/04/michael-hudson-americas-neoliberal-financialization-policy-vs-chinas-industrial-socialism.html

Quote

The US-China confrontation is not simply a national rivalry, but a conflict of economic and social systems.

The reason why today’s world is being plunged into an economic and near-military Cold War 2.0 is to be found in the prospect of socialist control of what Western economies since classical antiquity have treated as privately owned rent-yielding assets: money and banking (along with the rules governing debt and foreclosure), land and natural resources, and infrastructure monopolies.

This contrast in whether money and credit, land and natural monopolies will be privatized and duly concentrated in the hands of a rentier oligarchy or used to promote general prosperity and growth has basically become one of finance capitalism and socialism.

 

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