Sunday, Oct 29, 2006

Wage inflation creeping up

The Telegraph: Wages everywhere are rising too fast

Across the economy, though, wages are now going up too fast. In fact, it could well be wage inflation – and in particular a nasty pay round in January – that sparks real concern about inflation more broadly. And over the coming six months that could force interest rates up to levels that cause real pain.

Posted by sold 2 rent 1 @ 03:20 PM (502 views)
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1. sold 2 rent 1 said...

In the second article here about the USA:-
"I reckon that Ben Bernanke, the Federal Reserve chairman, will soon instigate an "emergency" cut in US interest rates, lowering borrowing costs despite stubbornly high inflation."

This is the multi-million dollar question. If the Fed tries to save the economy by letting inflation rip and the dollar slip, how will the world react?

With China having 1 trillion US dollar reserves (from this weeks The Economist), will it try to switch its reserves into Euro, Yen, Sterling, Gold, Oil?

Sunday, October 29, 2006 03:40PM Report Comment

2. inbreda said...

It's almost as if the general public are demanding more money to cover the cost of living including the cost of housing.

Doesn't Joe Public realise that mortgage payments and house prices are not in the basket, and therefore have no inflationary effect on anyone, cos, like, the bank of england said so???

Sunday, October 29, 2006 05:12PM Report Comment

3. Paul said...

Gordon Brown will be appealing for calm and restraint.

Because his reputation and future career are at stake.

Sunday, October 29, 2006 05:34PM Report Comment

4. Leedel20 said...

Great news.

Sunday, October 29, 2006 06:28PM Report Comment

5. indiablue19 said...

If it's any help, the Secretary of the Treasury,USA just made a public statement that the international value and standing of the dollar matters. The first time I've heard that one since Clinton left office, the US national debt was nearly a thing of the past, and the dollar was about 1.40 to the pound. We obviously left that in the dust long ago while the dollar was being permitted to "float" read: fall apart.

I wonder if any of them think the instability they seem to fear might have something to do with printing billions in funny money of every currency and having not a crumb of metal to back it with, then ceasing to report the total in circulation?

Sunday, October 29, 2006 10:36PM Report Comment

6. paul said...

Yeah dead right india and inbreda.

The issue is that the con is coming to an end. The Bank of England stopped watching M4 money supply 3 years ago and now its coming back to bite them in the arse. Of course its fairly logical - if you start stoking the currency printing presses, the currency people hold isn't worth as much and inflation follows as sure as night follows day. Not far from the situation in the US.

Try telling Gordon Brown that though. I don't see an easy way out - either the MPC will have to abandon inflatin as a target, or the housing market will crash and burn under rocketing inflation rates. Gordon has already burned the furniture I think.

Sunday, October 29, 2006 11:38PM Report Comment

7. Steve1 said...

Very worrying indeed. It does appear we are on the last stage of the rally.

Problem is how bad will the downturn be? I for one am glad I do not owe a penny. Gordon led inflation. Most people have less disposable income and Gordon is stoking it with his never ending pick pocketing. Every year a little more for him and less for you and me. No wonder demands for more money are in the pipe line just to stand still.

Monday, October 30, 2006 01:39PM Report Comment

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