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Inflation To Hit 5% After Engergy Rises

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http://business.timesonline.co.uk/tol/busi...icle4439481.ece

Energy price rises are set to push inflation up by nearly 1 per cent to a 16-year high of 5 per cent, far above the Bank of England’s 2 per cent target, economists have forecast.

The Bank gave warning in May that the CPI measure of inflation could rise to more than 4 per cent this year before falling again. But economists including George Buckley, chief UK economist at Deutsche Bank, said that inflation could rise by an additional 0.9 percentage points if other energy companies follow the lead of British Gas and EDF Energy by introducing large price increases this month. This would drive CPI inflation up to 5 per cent as early as next month, said Philip Shaw, UK economist at Investec.

Mervyn King, the Bank’s Governor, has said repeatedly that the uncertainty about timing and size of energy price increases over the summer was a critical issue for the rate-setting Monetary Policy Committee (MPC).

In the Bank’s last inflation forecast, published in May, it said that higher energy prices were likely to force up inflation, but economists said that the recent energy price rises have been higher than than the Bank expected.

However, most City economists continue to believe that, having anticipated this factor, the Bank will keep base rates on hold, unless there are signs that the short-term jump is stoking further price pressures.

There was little sign that this was the case from pay data published yesterday. Wage settlements in the three months to June averaged 3.5 per cent, down from 3.6 per cent in the three months to May, figures from Incomes Data Services show, signalling that the higher cost of living has not been reflected in higher pay packets.

The MPC fears that higher wage bills would cause firms to increase their prices, further fuelling inflation.

However, a number of economists feel that the higher peak for inflation means that any short-term move in interest rates is now more likely to be an increase than a cut. Vicky Redwood, of Capital Economics, said: “If the committee were seriously minded to raise rates, now would be the time to do it.

Last week with the bad news over the economy economists where predicting a cut, now inflation is going to go up they are now predicting a rise.

It looks like the BoE has lost control Mystic Merv should resign for failing to do his duty.

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http://business.timesonline.co.uk/tol/busi...icle4439481.ece

Last week with the bad news over the economy economists where predicting a cut, now inflation is going to go up they are now predicting a rise.

It looks like the BoE has lost control Mystic Merv should resign for failing to do his duty.

Looks like energy will be taken or reweighted in the basket of goods eh? ,

I wonder what is in the CPI basket of goods tbh, edible plasma TVs or something... :huh:

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Looks like energy will be taken or reweighted in the basket of goods eh? ,

I wonder what is in the CPI basket of goods tbh, edible plasma TVs or something... :huh:

edible plasma tvs need to be shipped from china using oil, and our industrious chinese comrades are now demanding more oil for there work. This inflation is now leaking into everything and starting to pick up speed..

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http://business.timesonline.co.uk/tol/busi...icle4439481.ece

Last week with the bad news over the economy economists where predicting a cut, now inflation is going to go up they are now predicting a rise.

It looks like the BoE has lost control Mystic Merv should resign for failing to do his duty.

They lost it about 3 years ago.

They say they base IR decisions on how things will look in 1-2 years time, not the current climate. This of course is rubbish or more specifically only demonstrates they don't know their ar*e from their elbow*

If they continue to peddle that rubbish then they should all be sacked and a new lot put in place because it means they have got it very wrong in the past (we all knew that). While the 2% inflation target might have been throw to the dogs, that wasn't the case when they took their decisions a year or so ago to do b8gger all and sit on their hands.

http://www.bankofengland.co.uk/monetarypol...etter070417.pdf

Basically that letter can be summarized thus...

"Dear Gordon, We are no better at predicting future inflation or the causes of that inflation than a bunch of chimps drawing numbers out of a hat. Love and Kisses Merv"

We should have taken the medicine back in 2005 rather than delay the spread to it's current critical proportions.

* I'm not suggesting they should make IR changes to fix short term problems, simply that they can't use that as a shield to avoid making the right decisions.

Edited by gilf

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edible plasma tvs need to be shipped from china using oil, and our industrious chinese comrades are now demanding more oil for there work. This inflation is now leaking into everything and starting to pick up speed..

time to remove plasma tvs then , end of the year air will be given a 100% weighting in the CPI basket....

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time to remove plasma tvs then , end of the year air will be given a 100% weighting in the CPI basket....

replace the CPI basket with the constant '2'...

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Don't forget this increase will be offset by falling road fuel prices.

Shame that the cut there is negated by a factor of 6 by the recent energy rises. 10% interest rates here we come.

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If only there was something you could buy that didnt depreciate and wasnt affected by inflation.

I'll get my coat

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Shame that the cut there is negated by a factor of 6 by the recent energy rises. 10% interest rates here we come.

Only if all suppliers had raised prices in July, only two did (including the biggest supplier). The rest of the increase will be phased into inflation rates over the following months.

I would be all in favour of 10% interest rates but my point is that the ONS will use every trick available to continue to show inflation lower than it actually is. For example, increasing the share of petrol spending at the expense of gas bills in the index.

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I would be all in favour of 10% interest rates but my point is that the ONS will use every trick available to continue to show inflation lower than it actually is. For example, increasing the share of petrol spending at the expense of gas bills in the index.

10% interest rates!!!!! What are you trying to do bring down the entire banking system!!!! You crazy fool. Too much money has been lent out for 10% interest rates the banks have undermined monetary policy. Interest rates at 5% are why too high for our indebted economy.

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replace the CPI basket with the constant '2'...

This method is too limited. I propose a new CPI formula -

1. Think of a number

2. Double it.

3. Divide by the original number. This is your CPI

Edited by RajD

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10% interest rates!!!!! What are you trying to do bring down the entire banking system!!!! You crazy fool. Too much money has been lent out for 10% interest rates the banks have undermined monetary policy. Interest rates at 5% are why too high for our indebted economy.

The banking system is doing a pretty good job of collapsing with 5% base rates. Low rates have been the problem. Rates should have been much higher at this stage of the economic cycle.

IMO, now we will have an extended period of credit deflation and the biggest recession of the post war period as a result.

Also higher rates are in my personal interest. ;)

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In all seriousness, the government has to do something to encourage people to save.

Unfortunately they are looking to achieve the opposite with their spend, spend, spend policy to save the economy. It wouldn't be quite so bad if what we bought was British but most of it ain't.

I don't see interest rates being raised anytime soon - apart from those for Student Loans :(

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The banking system is doing a pretty good job of collapsing with 5% base rates. Low rates have been the problem. Rates should have been much higher at this stage of the economic cycle.

IMO, now we will have an extended period of credit deflation and the biggest recession of the post war period as a result.

Also higher rates are in my personal interest. ;)

How can they possible be in your interest? Even if you have huge savings the banks would be bust meaning you would lose your money, unless of course you have gold or other commodities? Or maybe your sadist and enjoy a bit of s&m? :P

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How can they possible be in your interest? Even if you have huge savings the banks would be bust meaning you would lose your money, unless of course you have gold or other commodities? Or maybe your sadist and enjoy a bit of s&m? :P

Don't worry, NuLab will nationalise them. Instant 100% protection. :P

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why do we even bother to quote this govt inflation figure.

EVERYBODY now knows the real on the street inflation is more than double the govt figure.

its amazing. everybody knows its a wrong figure, yet everybody wants to pretend it really is the real figure.

its something about uk banking ethos i simply dont get. its part of their very steep downfall.

see applegarth for more details.

turns out these 'banking executives' have not a clue. they just get rewarded for selling bank products in bulk.

marketing men.

seems they are financially dumb as a bag of rocks. well they must be.

they have lost billions and billions. and THATS a fact.

so dont doubt it when you think, well they cant be that dumb surely and hold a position like that.

well - they are. the bank executives are not the financial gurus we thought they were.

they are cheap salespeople. corporate sales people.

look at the money they have lost.

didnt they see ANY of this coming ?

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  • 399 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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