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UK 2.2% June CPI inflation expectations - a total farce!


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"Wednesday sees the UK consumer price index released by the Office for National Statistics with expectations of a June rise of 2.2% from 2.1% in May. The May number came in well above City forecasts of 1.8% - a reminder that this week’s CPI data could contain some shocks."

More like 2.3-2.7% minimum but hey, let the charade continue. We are being taken for fools. 

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1 hour ago, gruffydd said:

"Wednesday sees the UK consumer price index released by the Office for National Statistics with expectations of a June rise of 2.2% from 2.1% in May. The May number came in well above City forecasts of 1.8% - a reminder that this week’s CPI data could contain some shocks."

More like 2.3-2.7% minimum but hey, let the charade continue. We are being taken for fools. 

Yep you said it GD! 

 

 

 

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19 hours ago, gruffydd said:

"Wednesday sees the UK consumer price index released by the Office for National Statistics with expectations of a June rise of 2.2% from 2.1% in May. The May number came in well above City forecasts of 1.8% - a reminder that this week’s CPI data could contain some shocks."

More like 2.3-2.7% minimum but hey, let the charade continue. We are being taken for fools. 

Yes

It is very difficult to give a too precise figure for any particular month. My prediction  guess was between 2.4 to 2.6% a few weeks ago.

In coming to this conclusion, I had taken into account the probable massaging of figures but if you underestimate one month this has to be compensated the following or the one after that.

Generally, it seems businesses have seen very high inflation from every angle but it has not yet trickled down to consumer prices to any real extent.

I will have a guess at 2.5% on the nose for a relatively small increase. The BOE could live with this quite easily and continue to pass it off as transitory, passing any decisions into future months.

It would be good to see other predictions and their accuracy.

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1 hour ago, simon99 said:

It wouldn't matter if inflation was 5%+ , rates are going nowhere any time soon. It would just be temporary inflation if it went up.

Correct, it's been 5% (on official figures) before and was over 2% for many, many months.  No response from the BoE.

 

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2 hours ago, Sour Mash said:

Correct, it's been 5% (on official figures) before and was over 2% for many, many months.  No response from the BoE.

 

Shock surge in US inflation heightens rate rise fears

Bets surge on earlier than expected action by the Federal Reserve as inflation hits 13-year high of 5.4pc in June

ByTom Rees13 July 2021 • 4:08pm

A shock jump in US inflation to its highest level in 13 years stoked fears of price pressures boiling over, turning up the heat on the Federal Reserve’s rate-setters.

Fears of the world’s biggest economy overheating were fuelled by the consumer price index (CPI) unexpectedly jumping from 5pc to 5.4pc in June - the largest rise since 2008.

Forecasters had expected the cost of living gauge to cool slightly to 4.9pc but price pressures continued to build, casting more doubt on the Fed’s view that high inflation will be temporary. 

Prices rose 0.9pc compared to May, while core CPI - which strips out more volatile food and energy costs - leapt to 4.5pc year-on-year, the highest since 1991. 

US inflation has surged this year as the economy reopens and supply constraints hit

 

The US are 6 months to 9 months ahead of us. Is it even possible the the Fed could raise rates without a response from the BOE?

No it is not really a possibility and the BOE will have no choice but to respond. This is where we could see the Euro begin to fail.

It will all play out over the next 12 months or so.

 

 
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9 minutes ago, Flat Bear said:

Shock surge in US inflation heightens rate rise fears

Bets surge on earlier than expected action by the Federal Reserve as inflation hits 13-year high of 5.4pc in June

ByTom Rees13 July 2021 • 4:08pm

A shock jump in US inflation to its highest level in 13 years stoked fears of price pressures boiling over, turning up the heat on the Federal Reserve’s rate-setters.

Fears of the world’s biggest economy overheating were fuelled by the consumer price index (CPI) unexpectedly jumping from 5pc to 5.4pc in June - the largest rise since 2008.

Forecasters had expected the cost of living gauge to cool slightly to 4.9pc but price pressures continued to build, casting more doubt on the Fed’s view that high inflation will be temporary. 

Prices rose 0.9pc compared to May, while core CPI - which strips out more volatile food and energy costs - leapt to 4.5pc year-on-year, the highest since 1991. 

US inflation has surged this year as the economy reopens and supply constraints hit

 

The US are 6 months to 9 months ahead of us. Is it even possible the the Fed could raise rates without a response from the BOE?

No it is not really a possibility and the BOE will have no choice but to respond. This is where we could see the Euro begin to fail.

It will all play out over the next 12 months or so.

 

 

We've seen all this before, there will be absolute minimum possible action to tackle inflation. Maybe one or two rate rises months apart , at best. When I joined HPC over 20 years ago I massively underestimated the lengths government and BoE will go to to keep rates down and house prices up (including Labour - for all the youngsters who have only known Tory government and think Labour are the answer).

Edited by simon99
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2 minutes ago, simon99 said:

We've seen all this before, there will be absolute minimum possible action to tackle inflation. Maybe one or two rate rises months apart , at best. 

I understand the caution, but the facts are the biggest economy in the world is overheating and inflation is already at a 13 year high and it will go higher.

Yes, the central banks will do everything they can to keep borrowing to a minimum but unfortunately for them global economics and markets have wills of their own, political interference cannot control the markets, long term.

Why would they think it is only temporary? there is no reason to think this. Most people either side of the pond now believe prices will continue to go up. Business has already seen this, and it has already started to impact many "consumers".

Events, things we think might happen, things that we have no idea will happen, will change things going forward and central banks are powerless and in precarious positions.

After saying all that I do agree with you and think they will leave rate rises till as late as they possibly can which ironically will make the situation worse.

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I've been watching this for 20+ years. Seen it all before, there is no reason to believe it is any different this time, other than the central banks have dug themselves an even deeper debt hole so are even less likely to raise rates than ever before, despite rates being insanely low. They will use every excuse possible not to raise rates.

Edited by simon99
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7 minutes ago, simon99 said:

I've been watching this for 20+ years. Seen it all before, there is no reason to believe it is any different this time, other than the central banks have dug themselves an even deeper debt hole so are even less likely to raise rates than ever before, despite rates being insanely low.

Yes I take your point. I have been on the forum about the same time as you lurking from around 2002ish. 

If you recall I predicted the last small correction to the month and foresaw the collapse of the banks. I hopefully managed to persuade many icesave customers to get their money out before the collapse.

I did not see the political take over of the markets however and still am bewildered as to how they managed to take interest rates down to zero and pump so much money into the system without any consequences at all? So you are correct on this count. BUT is it possible this is the time these actions finally do have consequences? The problem with the world economy is that is not controllable and the central banks could well suddenly realize they are not Gods but just a lot of very naughty boys.

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36 minutes ago, simon99 said:

I've been watching this for 20+ years. Seen it all before, there is no reason to believe it is any different this time, other than the central banks have dug themselves an even deeper debt hole so are even less likely to raise rates than ever before, despite rates being insanely low. They will use every excuse possible not to raise rates.

They will have to raise rates. Look further beyond 20 years to the 70's for some perspective.


IF they dont act we will get hyper inflation.  I fully expect this 

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3 hours ago, Warlord said:

Hyper inflation is not a palatable choice so they will have to raise rates and defend the £ 

A loaf of bread doubling in price every few days would not be popular 

Hello Warlord

Simon99 makes some very valid points, and he could well be correct in his final analysis and the “powers that be” might once again find a way to move the goalposts and not play the game properly. Why not?

It is important to me that threads do not become echo-chambers where we only hear what we want to hear. I would like to think I am here to learn something.

It is very important that we ask the right questions if we are to get any real answers.

Inflation

I agree with your assessment on inflation as well as your lack of confidence in the major western currencies. I think it is quite frightening as this could put the western world in a very bad place, where none of us want to be. The central banks have certainly been playing for keeps without any safety net and if things do go wrong the fallout will affect everyone everywhere. That is very much what simon99 was saying as they won’t give up and will keep rates low as the consequences are just too bad to contemplate and their lives actually do depend on it.

 

OK, so inflation (CPI) does go to around 8.5% to 9.5% by the end of 2022. I think this is quite plausible? and the Fed will have already run worst case scenarios and looked at what they could do.

 

So, what are they likely to do in this event?

It is likely, as simon99 says, that they will try to keep the base rate as low as possible longer than we can imagine. The big US banks that have been growing very quickly over the last 18months on the back of QE and the pandemic could well be left out to dry and a second, and bigger, banking crisis would be the result. This would give the “powers that be” the excuse they need and has every inflationary period in history has ended with a slump. This could well be the biggest depression in history, where risk aversion is the new mantra, and could well be looked back in hindsight 150 years from now as a totally insane period.

This is only one of thousands of scenarios and anything can happen. We must be very careful what we wish for.

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13 hours ago, Flat Bear said:

Shock surge in US inflation heightens rate rise fears

Bets surge on earlier than expected action by the Federal Reserve as inflation hits 13-year high of 5.4pc in June

ByTom Rees13 July 2021 • 4:08pm

A shock jump in US inflation to its highest level in 13 years stoked fears of price pressures boiling over, turning up the heat on the Federal Reserve’s rate-setters.

Fears of the world’s biggest economy overheating were fuelled by the consumer price index (CPI) unexpectedly jumping from 5pc to 5.4pc in June - the largest rise since 2008.

Forecasters had expected the cost of living gauge to cool slightly to 4.9pc but price pressures continued to build, casting more doubt on the Fed’s view that high inflation will be temporary. 

Prices rose 0.9pc compared to May, while core CPI - which strips out more volatile food and energy costs - leapt to 4.5pc year-on-year, the highest since 1991. 

US inflation has surged this year as the economy reopens and supply constraints hit

 

The US are 6 months to 9 months ahead of us. Is it even possible the the Fed could raise rates without a response from the BOE?

No it is not really a possibility and the BOE will have no choice but to respond. This is where we could see the Euro begin to fail.

It will all play out over the next 12 months or so.

 

 

There's that word again - "unexpectedly". B*****ks - inflation of costs, without matching wage inflation is their plan all along.

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12 hours ago, Warlord said:

They will have to raise rates. Look further beyond 20 years to the 70's for some perspective.


IF they dont act we will get hyper inflation.  I fully expect this 

We didn't get a hyperinflation in the 1970s.

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They have no choice to say stuff is transistory; because admitting it is structural then puts pressure on to do something about it and it is hard to resist wage increases.

By design their description is vague: temporary over what time period? They can kick that particular can down the road for a couple of years while hoping everything sorts itself out.

I would be doing exactly the same if I were them, even if the brown stuff hits the fan and the country turns on the Cons, they will leave a bad mess for Labour in 2024, and the actions they need to take will render them unpopular for a while.

Inflation is no bad thing for some people. The trick is trying to get the people that it is no good for to accept it. And that isn't too difficult really..... most people only judge their house price relative to cash, so as long as that is protected there won't be dissent. 

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Posted (edited)
7 minutes ago, PeanutButter said:

Who was it here that noted used car prices going up? 

UK inflation jumps to 2.5% as secondhand car and food prices rise

https://www.theguardian.com/business/2021/jul/14/uk-inflation-jumps-as-secondhand-car-and-food-prices-rise

Every analyst I knew thought it would be at this level... so where did the financial commentators get their garbage about 2.2%? 

"More like 2.3-2.7% minimum but hey, let the charade continue. We are being taken for fools." Who created these fake expectations? 

Edited by gruffydd
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