Inflation falls less than expected in blow to hopes for summer rate cuts

[scottbeard]

48 minutes ago, The Angry Capitalist said:

Prices are still going up guys.

Just less than last year.

Do any of you think prices are going to come down to pre covid levels assuming we even get under 2%?

No, but then neither will wages go down to pre-covid levels either.  That doesn't really matter.

[The Angry Capitalist]

2 minutes ago, scottbeard said:

No, but then neither will wages go down to pre-covid levels either.  That doesn't really matter.

It does for those that don't get wage rises in proportion.

For those people it will matter.

[70PC]

"The annual growth for regular earnings (excluding bonuses) was 6.0% in December 2023 to February 2024. Annual growth in employees’ average total earnings (including bonuses) was 5.6% in December 2023 to February 2024."

https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/bulletins/averageweeklyearningsingreatbritain/april2024#:~:text=changes for users.-,In real terms (adjusted for inflation using the Consumer Prices,%2C when it was 3.1%.

[Aidan Ap Word]

48 minutes ago, Stewy said:

[2% inflation]'s not the BoE's target.

They'll be savaging rates/QEasing before that point. 

When did they change their mandate/their mandate get changed for them?

I remember circa 2006/2007 when there was talk about BoE not needing to pay heed to thier 2% target and politicians started getting worried for their jobs.

[Stewy]

1 minute ago, Aidan Ap Word said:

When did they change their mandate/their mandate get changed for them?

I remember circa 2006/2007 when there was talk about BoE not needing to pay heed to thier 2% target and politicians started getting worried for their jobs.

"Do any of you think prices are going to come down to pre covid levels assuming we even get under 2%?" was what I quoted.

That's not the BoE's target I said. 

Don't be a d*ck @Aidan Ap Word and distort conversations. 

[hughjass]

£3.75 for 80 teabags thats crazy. 

[cdd]

2 hours ago, Quid Game said:

By the same argument how can you say he’s wrong? You’re saying don’t expect much in the way off rate cuts this year but we’ll only know on Jan 1st 2025. And then there’s the question of what is your definition of imminent? People have been saying a property / economic collapse is imminent for the last 20 years in some cases. They got a bit of a reprieve in 2008 of course, but there’s no denying the majority of posters here have been repeatedly wrong. You see delusion. I see life as normal. Houses near me are selling  fine, my social circle continues its nights out, holidays, new cars and so on.

 

I guess it depends on your own personal circumstance as to what you see? Maybe you see delusion and desperation. I see dinner parties and the good life. 

He said rates would be cut at the meeting late last year and in the February meeting. He was wrong.

The expected seven rate cuts at the start of this year was delusional. I've posted about that for months. The odds that I got that right have been increasing for some time. The odds that Stewy will be wrong again are constantly shifting against him.

Edited April 17 by cdd

[Aidan Ap Word]

55 minutes ago, Stewy said:

"Do any of you think prices are going to come down to pre covid levels assuming we even get under 2%?" was what I quoted.

That's not the BoE's target I said. 

Don't be a d*ck @Aidan Ap Word and distort conversations. 

OK, what exactly did you mean wrt "target" here:

... because Angry Capitalist means the BoE inflation target of 2%.

The BoE doesn't have a target (in terms of it's organisational mandate) for what interest rates are - it has a target for inflation - the 2% that Angry Capitalist means.

And "They'll be savaging rates/QEasing before that point" ... whcih 'point' did you mean exactly?

If being precise in what I say makes me an example of male genitalia then so be it.

[Stewy]

1 minute ago, Aidan Ap Word said:

OK, what exactly did you mean wrt "target" here:

... because Angry Capitalist means the BoE inflation target of 2%.

The BoE doesn't have a target (in terms of it's organisational mandate) for what interest rates are - it has a target for inflation - the 2% that Angry Capitalist means.

And "They'll be savaging rates/QEasing before that point" ... whcih 'point' did you mean exactly?

If being precise in what I say makes me an example of male genitalia then so be it.

Getting prices down to pre-Covid levels.

That's not the BoE's target. 

[Maghull Mike]

Consumers face the prospect of permanently higher interest rates amid geopolitical tensions and “slower globalisation”, a Bank of England official has warned.

Megan Greene, an external member of the Monetary Policy Committee, said the last mile of slowing down the pace of inflation would be the hardest as she spoke during an event hosted by the IIF in Washington.

It comes after inflation fell less than expected to 3.2pc in March, prompting money market traders to predict that the Bank of England will only cut interest rates once this year, compared to forecasts of five cuts at the start of 2024.

Policymakers have raised interest rates to 16-year highs of 5.25pc to quell demand in the economy as inflation spiked to a 41-year peak of 11.1pc in October 2022.

Higher interest rates have forced up the cost of mortgages for thousands of home owners and made borrowing harder for consumers.

Ms Greene warned the world could be returning to a period of greater “volatility and uncertainty,” which could push prices higher.

She said: “It could mean…when the dust settles…actually rates will need to be a bit higher than we thought before.”

Ms Greene said uncertainty about the economy had led to businesses holding back investment.

“The more I go around and talk to people, particularly around the UK…we hear about volatility and volatility is causing people to just stay on the sidelines.

“If you actually look at historical context [volatility] isn’t actually that high so I think it’s mostly just this concern that there’s certainly, that causes companies, individuals to deploy capital differently.”

Ms Greene also described the jobs market as “one of the biggest puzzles that we’re grappling with” in the UK and more widely. 

“The labour market is so tight,” she said, adding that its implications for higher productivity were so far unknown. 

“For example, if it’s a result of just freakishly strong labour demand then that can raise productivity growth. If it’s just a reflection of labour hoarding because firms were traumatised by having to rehire and recruit after the economy opened up that actually saps productivity.”

[Sackboii]

6 minutes ago, Stewy said:

Getting prices down to pre-Covid levels.

That's not the BoE's target. 

The Federal Reserve is aiming to achieve price stability, which means keeping inflation near 2%. The BoE's target is more accommodative, aiming for price growth below 2% to stimulate economic growth.

The Fed's target is based on a broader definition of price stability, which includes the prices of housing, transportation, and other goods and services. The Fed's target for inflation is designed to be more stable and sustainable than the BoE's target.

[Dames]

1 hour ago, hughjass said:

£3.75 for 80 teabags thats crazy. 

It's our one luxury.

 

D 👍

[TheResponsibleHouseBuyer]

1 hour ago, hughjass said:

£3.75 for 80 teabags thats crazy. 

yorkshire gold?

[Stewy]

30 minutes ago, Sackboii said:

The Federal Reserve is aiming to achieve price stability, which means keeping inflation near 2%. The BoE's target is more accommodative, aiming for price growth below 2% to stimulate economic growth.

The Fed's target is based on a broader definition of price stability, which includes the prices of housing, transportation, and other goods and services. The Fed's target for inflation is designed to be more stable and sustainable than the BoE's target.

I could definitely support a "price path" target where undershooting or overshooting is remedied at the next juncture. .

[Sackboii]

5 minutes ago, Stewy said:

I could definitely support a "price path" target where undershooting or overshooting is remedied at the next juncture.

Indeed, there are various price path algorithms that can be used to determine the optimal price path. These algorithms include stochastic algorithms, such as Monte Carlo simulations, and deterministic algorithms, such as linear programming.

In addition to price path constraints, one could create other constraints, such as minimum price constraints, maximum price constraints, and price path constraints. Once the price path is defined, one can validate it to ensure that it meets the desired requirements. This validation can include checking that the price path follows the expected price path, that the price path is valid for the given constraints, and that the price path meets the minimum requirements.

By considering these, one can create a price path target that effectively readdresses under-shoot or overshoot at the next juncture. ✔️

[Dreamcasting]

2 hours ago, The Angry Capitalist said:

It does for those that don't get wage rises in proportion.

For those people it will matter.

There's a significant number of people who haven't received a pay raise in proportion despite the headline figures.

Looking ahead, many companies are struggling with higher interest rates which is ultimately going to lead to mass layoffs. @Stewy may actually be right in his inflation calls, but it will only be because of a dire economic position.

[Fromage Frais]

7 hours ago, Sackboii said:

My calculations for a 0.6% MoM come out at a nudge over 8% annualised.

This is not looking like there are any rate cuts any time soon. MSM already saying September at the earliest, and only if the FED does so..

How much should our rates be under the Taylor rule with that in mind.

Our current rates may well be to low 

[Sackboii]

12 minutes ago, Fromage Frais said:

How much should our rates be under the Taylor rule with that in mind.

Our current rates may well be to low 

After a few quick and dirty calculations it would appear about where we are now - range of 4.85% to 5.45%. Depends on input values used of course, but as a snapshot of 'now', we're about bang on as far as I see it.

Don't think there'll be any rate cuts soon though...

[Will!]

Megan Greene for Governor of the Bank of England!

Telegraph: World returning to ‘volatility and uncertainty,’ warns Bank of England policymaker (turn off JavaScript to read)

[winkie]

2 hours ago, TheResponsibleHouseBuyer said:

yorkshire gold?

I find can easily make two strong cups of tea with those tea bags, more tea in a bag.....some bags are like dust....we need to do a tea bag survey, both on content, quality and the bag itself.....some bags are made of plastic! they do not compost or break down at all......more plastic being ingested? 

Can see it, content of tea bag shrinkflation.

Edited April 17 by winkie

[Housepricecrash91]

9 hours ago, Sackboii said:

NMW, State Pension, bennies, council tax, mobile, broadband, tv packages and possibly a few others kicked in this month too, although won’t be in inflation figures until the next release at the earliest.

Yeah, I don't see how inflation falls in the foreseeable... A lot of core bills are going up, pretty much everyone is on the take at the moment. I just got a notification from the council that parking permits are going up by 10% this year. 

[Stewy]

Just now, Housepricecrash91 said:

Yeah, I don't see how inflation falls in the foreseeable... A lot of core bills are going up, pretty much everyone is on the take at the moment. I just got a notification from the council that parking permits are going up by 10% this year. 

Are you saying the next data release will show a higher inflation? 

Doubt you'd put money on it... 🙂

[winkie]

5 minutes ago, Housepricecrash91 said:

Yeah, I don't see how inflation falls in the foreseeable... A lot of core bills are going up, pretty much everyone is on the take at the moment. I just got a notification from the council that parking permits are going up by 10% this year. 

Food inflation coming our way because of Brexit......what we voted for!!!!

Edited April 17 by winkie

[winkie]

18 minutes ago, Stewy said:

Are you saying the next data release will show a higher inflation? 

Doubt you'd put money on it... 🙂

The only reason inflation would go down is if more of us spent less, stopped eating and drinking out, no takeaways, no visit to the cinema or shopping centres......turning the heating down, sharing bath water, no days out, stop train journeys, stop buying branded goods, buy second hand, shopping in charity shops, sharing tools and books, stop streaming services, listen to CDs and vinyl.......don't upgrade phone or cars..... camping holidays....no new kitchens or bathrooms, stop borrowing money.....I could go on, that would cause inflation to fall.......is that the kind of deflation you want?.

[Stewy]

2 minutes ago, winkie said:

The only reason inflation would go down is if more of us spent less, stopped eating and drinking out, no takeaways, no visit to the cinema or shopping centres......turning the heating down, sharing bath water, no days out, stop train journeys, stop buying branded goods, buy second hand, shopping in charity shops, sharing tools and books, stop streaming services, listen to CDs and vinyl.......don't upgrade phone or cars..... camping holidays....no new kitchens or bathrooms, stop borrowing money.....I could go on, that would cause inflation to fall.......is that the kind of deflation you want?.

There is also cost-push deflation (ie, from energy, wheat...).

It's not all about the demand-side.