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


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Posted (edited)

Nice bit of heat on the BoE from the FT: 

 

Increase from 2.1% exceeds expectations and challenges BoE view that price surge is only temporary

Paul Dales, chief UK economist at Capital Economics, said that the rise in prices was larger than would happen if they were simply returning to normal after the pandemic. This, he said, “means that genuine price inflation is happening too”.

Edited by gruffydd
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4 minutes ago, gruffydd said:

Paul Dales, chief UK economist at Capital Economics, said that the rise in prices was larger than would happen if they were simply returning to normal after the pandemic. This, he said, “means that genuine price inflation is happening too”.

It is genuine inflation because we've just been through and still are going through a supply side shock. Of course prices are going to rise.

But unless something has fundamentally changed about our ability to efficiently produce and distribute goods this will be temporary (a year or so).

Edited by dugsbody
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Nuclear bombs have hit several major British cities. But the Bank of England is "looking through" the destruction.

A spokesman for the Bank said that "despite the obliteration of most centres of population and several million deaths, interest rates will remain at emergency low levels." He did however add that they "remain vigilant."

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2 hours ago, hurlerontheditch said:

its all to do with second hard cars this month...

Apparently so!

I received a 'valuation' for my 2016 Skoda Superb from one of those 'We buy any car' business's in April, of £11,108.

15 minutes ago I received an email from them, did I want a new 'valuation'? Followed their link, new 'value' is £12,898.

 

I've no understanding of the 'mechanics' for house price or car price valuations.

 

(Retyred, and currently following the Tour de France, 5+ hours a day of TV adds for stair lifts, ready made meals, life insurance, and equity release, etc. can't wait for the TdF to end and ignore daytime TV!). 

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34 minutes ago, robbingXpat said:

Apparently so!

I received a 'valuation' for my 2016 Skoda Superb from one of those 'We buy any car' business's in April, of £11,108.

15 minutes ago I received an email from them, did I want a new 'valuation'? Followed their link, new 'value' is £12,898.

 

I've no understanding of the 'mechanics' for house price or car price valuations.

 

(Retyred, and currently following the Tour de France, 5+ hours a day of TV adds for stair lifts, ready made meals, life insurance, and equity release, etc. can't wait for the TdF to end and ignore daytime TV!). 

and what about the creation for £1500 🔥

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11 hours ago, robbingXpat said:

 

I've no understanding of the 'mechanics' for house price or car price valuations.

 

Relating to cars it’s all supply and demand.

 

Demand is up as less people want or need to use public transport eg why stump up for an annual rail pass when I’m only in the office 1/2/3 days per week. Plus more people moving out of cities to rural locations where a car is a necessity.

 

Supply is down as used cars start out as new cars. New car sales have been severely depressed for about 18 months due to COVID, lockdown and more recently processor chip shortfalls.

 

Bit of a perfect storm really.

Edited by Odysseus
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On 13/07/2021 at 18:31, 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. 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).

More than that, UK HPI basically developed under Labour.

When the Tories got in, some naively hoped that they might make good on their previous condemnation of low IR/high HPI and introduce some radical monetary and fiscal policies but of course they just continued the boosting HPI and pushing cheap credit that was so popular with the electorate.

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35 minutes ago, simon99 said:

Markets have already shrugged off the US inflation figures after the FED comments. Testing all time highs again, total madness. 

If you understand that raising rates to any meaningful extent is not an option, it's totally rational to bet that the Fed will keep magicking money up.

People should have realised by now that the 'debt' side of fiat money 'credit' no longer has any meaning.  Nor do things like price discovery or other notions of traditional economics that assume the money supply has some sort of stability and that fiat money somehow reflects work/value.

None of the credit/debt being frantically spewed out by CBs/Govts is ever going to be repaid in any meaningful form other than at best printed money (mostly electronic balance sheet form) that is going to be worth considerably less than the real-terms value that it holds right now.

If you hold some credit in fiat cash at this stage, you can either use it to buy what you want or you can pick something to speculate on and hope that it holds its value or maybe even takes off with other speculators piling in and you outperform the sinking value of money.

Roll the dice folks, sanity is not going to return any time soon.

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19 hours ago, gruffydd said:

"Bank of England official says monetary policy could be tightened sooner"

Yet they're already seriously behind the curve... I won't hold my breath! 

https://www.ft.com/content/92e87e48-1618-4283-b247-52dcf70dde45

Bank of England warns it could step in to curb rising inflation

https://www.theguardian.com/business/2021/jul/15/bank-of-england-inflation-monetary-policy-committee-uk-stimulus

Bank of England ‘addicted’ to creating money, say peers

BoE must be more transparent and justify use of quantitative easing, says Lords report

https://www.theguardian.com/business/2021/jul/16/bank-of-england-creating-money-lords-quantitative-easing

Edited by Saving For a Space Ship
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14 hours ago, Saving For a Space Ship said:

Bank of England warns it could step in to curb rising inflation

https://www.theguardian.com/business/2021/jul/15/bank-of-england-inflation-monetary-policy-committee-uk-stimulus

Bank of England ‘addicted’ to creating money, say peers

BoE must be more transparent and justify use of quantitative easing, says Lords report

https://www.theguardian.com/business/2021/jul/16/bank-of-england-creating-money-lords-quantitative-easing

about time - the Bank of England will be feeling the heat... serious heat over QE!

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Out of curiosity I just rekeyed the log cabin order we placed in May & received last week.

We paid £6241. Price now  £8,443.89

Ay Caramba! 😲

35% in 2 months.

2016 Suzuki GSXR750s with 10k miles have asking prices £1000+ higher than the 2017 I bought 2.5 years ago with 3k miles.  Hang on, more money for a five year old bike than an as new 18 month old bike was a few years ago..?

I see a bad moon rising..

 

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4 hours ago, hotblack42 said:

Out of curiosity I just rekeyed the log cabin order we placed in May & received last week.

We paid £6241. Price now  £8,443.89

Ay Caramba! 😲

35% in 2 months.

2016 Suzuki GSXR750s with 10k miles have asking prices £1000+ higher than the 2017 I bought 2.5 years ago with 3k miles.  Hang on, more money for a five year old bike than an as new 18 month old bike was a few years ago..?

I see a bad moon rising..

 

Been seeing this as well.. 2006 ZX6R £500-£1000 more than I paid in 2018, pity, the Big Bang R1 I was going to buy has also gone up by a similar amount 🙄.. Ah well.. I’ll just re-tile the house instead at least I’ll make more money on that.

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On 14/07/2021 at 07:58, zugzwang said:

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

Well, yes you are right, technically, as a definition hyperinflation needs to be over 50% or over 100% over a 3-year period

But inflation rate did go above 25% for a period in the UK and over 29% in the US in the 1970s which was well on the way there.

 

June 2021 US official inflation figure 5.4% and UK figure was 2.5% CPI

Although there are massive inflation pressures in the US I would guess at a relatively small rise to 5.6% to 5.8% but because we are playing catch up and because of the inflation we will see from today till the end of the month we will get a figure of 2.9% to 3.3% in July (shock for the BOE but maybe not for many others)

If there is no sudden shutdown, August will see inflation in top gear in the UK and we could easily see a rise of over 1% in just one month! This, in my opinion, is where the BOE will have to get to maximum serious vigilance and even make a number of statements and press releases educating us on how vigilant they have to be and how they will have extra-long vigilance meetings late into the night to sort it all out. They will probably make some lame excuse that the increases were all down to higher beer and restaurant prices or possibly even oil prices but it will get more difficult to keep fobbing off figures each month.

Covid will be blamed for all the inflation and as it could not be foreseen the BOE will be blameless albeit a bit naive and stupid. They would have served their purpose

Please feel free to ridicule me in 6 weeks’ time or so if I am (totally) wrong.

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2 minutes ago, Flat Bear said:

Well, yes you are right, technically, as a definition hyperinflation needs to be over 50% or over 100% over a 3-year period

But inflation rate did go above 25% for a period in the UK and over 29% in the US in the 1970s which was well on the way there.

Hyperinflation = 50% per month for several months.

We could certainly see annual inflation in the 4-5% range toward the end of this year. The Bank will look through it, I suspect. As it did in 2011.

 

 

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