Hyperinflation coming soon?
Discussion
Your a bit late to the party arn't you! We've had the hyper inflation and now most comodities have fallen significantly in addition the crops globally this year have been bountifull so food prices will dive.
Oil down from $147/barrel to sub $65/barrel
Scrap metal has lost well over 75% of its value
Crops have been exceptionally good
Pound has devalued a hell of a lot so importing some goods will be expensive (which forces people to buy British which is a good thing or to buy goods from countries where their currencies have dropped more relative to ours).
House Prices have fallen 13% in a year
Council tax rise in Apr08 was under 2% in my locality
used & new cars have plumeted due to stupid new VED rules & zero demand = causing deflation/why buy today when you can buy the same tomorrow for less.
Electrical suppliers have zero/low demand so they are giving massive discounts = deflation.
Any business associated with house improvements have stunning deals due to zero demand.
Only things which now need to come down is gas & electric - which they will do.
Clearly a Holiday to the USA will now vs Dec07 will now be 40% more expensive so big inflation there & likewise in the Eurozone a 25% reduction in £ strength = much more expensive to go on holiday.
All this means is more people will holiday in the UK as its will be far cheaper & this in turn will boost the UK economy/Uk tourist economy.
Oil down from $147/barrel to sub $65/barrel
Scrap metal has lost well over 75% of its value
Crops have been exceptionally good
Pound has devalued a hell of a lot so importing some goods will be expensive (which forces people to buy British which is a good thing or to buy goods from countries where their currencies have dropped more relative to ours).
House Prices have fallen 13% in a year
Council tax rise in Apr08 was under 2% in my locality
used & new cars have plumeted due to stupid new VED rules & zero demand = causing deflation/why buy today when you can buy the same tomorrow for less.
Electrical suppliers have zero/low demand so they are giving massive discounts = deflation.
Any business associated with house improvements have stunning deals due to zero demand.
Only things which now need to come down is gas & electric - which they will do.
Clearly a Holiday to the USA will now vs Dec07 will now be 40% more expensive so big inflation there & likewise in the Eurozone a 25% reduction in £ strength = much more expensive to go on holiday.
All this means is more people will holiday in the UK as its will be far cheaper & this in turn will boost the UK economy/Uk tourist economy.
You expect 20-40% price rises next year for food to be the norm... oh my how worng you are.
We dont buy that much produce from the USA its mainly the Eurozone. Secondly the comodities have plumeted thats far far far more than the fall of the £ against the Euro & $. So we will & are seeing big price reductions.
Lets talk about bread a loaf of good bread from the Supermarket is £1.09 a year or so ago that loaf was £0.69 - are you expecting that loaf to increase to £1.308 - £1.526
Or looking at a 4 pinter of milk its £1.53 today but a year + it was barely over £1 maybe £1.05. Do you expect that 4 pinter to increase to £1.836-£2.142?
Or putting it another way are you suggesting that the average weekly shopping of say £80pw is going to increase to £96 - £112? Get real - that would slaughter the UK and if it would do that to a 1st world G7 country then you can work out what would happen to 2nd world countries. Totally behind the curve IMHO.
We dont buy that much produce from the USA its mainly the Eurozone. Secondly the comodities have plumeted thats far far far more than the fall of the £ against the Euro & $. So we will & are seeing big price reductions.
Lets talk about bread a loaf of good bread from the Supermarket is £1.09 a year or so ago that loaf was £0.69 - are you expecting that loaf to increase to £1.308 - £1.526
Or looking at a 4 pinter of milk its £1.53 today but a year + it was barely over £1 maybe £1.05. Do you expect that 4 pinter to increase to £1.836-£2.142?
Or putting it another way are you suggesting that the average weekly shopping of say £80pw is going to increase to £96 - £112? Get real - that would slaughter the UK and if it would do that to a 1st world G7 country then you can work out what would happen to 2nd world countries. Totally behind the curve IMHO.
But your talking about a specific product/sector. Were having hyper deflation in car prices that doesnt mean that the whole economy is in hyperdeflation does it.
I know our suppliers prices have cooled a hell of a lot and will be passing on cuts in the coming months. Our picking & dispatch costs have dropped significantly (mind you only cost around £0.07/case of goods) but the meat cost is plumeting and forecast to drop significantly - why... because the cost of feeding the animal etc has significantly decreased.
On your products timber - well dispatch will certainly have dropped, but last year there was a mass shortage of 6x6 garden fences due to a global scarcity of such wood. That really drove the prices of those products up it happened just at the time of the storms in the UK so people had to make do with bodged up old ones until they could actually get any stock in stores to replace them with.
I'd expect your timer cost will not vary that much given its from sustainable forests otherwise with the big crackdowns on the braziling bowl that would create a supply issue.
If your talking about pots/building materials then demand in the UK is flat dead so hyperinflation in a market segment which is stone dead is going to do nothing to re energise it & as so few products will be sold it will have no impact on UK inflation. You need the big ticket items i.e. loaf of bread, milk, news paper, ipod, ltr fuel, gas electric etc - i.e. things you have to buy (ignore the ipod & newspaper) you dont need any wooden or building materials/items.
I know our suppliers prices have cooled a hell of a lot and will be passing on cuts in the coming months. Our picking & dispatch costs have dropped significantly (mind you only cost around £0.07/case of goods) but the meat cost is plumeting and forecast to drop significantly - why... because the cost of feeding the animal etc has significantly decreased.
On your products timber - well dispatch will certainly have dropped, but last year there was a mass shortage of 6x6 garden fences due to a global scarcity of such wood. That really drove the prices of those products up it happened just at the time of the storms in the UK so people had to make do with bodged up old ones until they could actually get any stock in stores to replace them with.
I'd expect your timer cost will not vary that much given its from sustainable forests otherwise with the big crackdowns on the braziling bowl that would create a supply issue.
If your talking about pots/building materials then demand in the UK is flat dead so hyperinflation in a market segment which is stone dead is going to do nothing to re energise it & as so few products will be sold it will have no impact on UK inflation. You need the big ticket items i.e. loaf of bread, milk, news paper, ipod, ltr fuel, gas electric etc - i.e. things you have to buy (ignore the ipod & newspaper) you dont need any wooden or building materials/items.
haworthlloyd1 said:
dont think so mate - deflation more likely!
but yes for you guys who import then due to the pound on its knees then things will get dearer.
things like metal prices, oil, paper, commodities have dropped a lot recently though.
Don't think hyperinflation is a prob!!
It's allright the hyperinflaton in some things, is going to offset hyperdeflation in evrything else. Were it any other way Gordo wouldn't be able to say that you've never had it so good!but yes for you guys who import then due to the pound on its knees then things will get dearer.
things like metal prices, oil, paper, commodities have dropped a lot recently though.
Don't think hyperinflation is a prob!!
Did anyone read/see John Majors attack on G Brown? Finally saying what all the tory leaders should have been saying for years.
Brown bangs on about 10+ years of unrivelled growth... (well 5 of those were under the last 5 years of the tory party & the torys left the Govt in huge surplus in a very very good position), Im guessing it might take 3 terms of Tory Govt to sort out this mess and finally clear the debts we've all built up on the never never.
Brown bangs on about 10+ years of unrivelled growth... (well 5 of those were under the last 5 years of the tory party & the torys left the Govt in huge surplus in a very very good position), Im guessing it might take 3 terms of Tory Govt to sort out this mess and finally clear the debts we've all built up on the never never.
What is your definition of inflation?
Mine would not be short term spikes in commodity prices caused by overheated demand/ short term supply issues/ speculation, all of which have been the case recently. It would be a surplus of money supply over productivity. So I would argue that we have been having significant inflation for years and that has been concealed by cheap imported products and the fact that house prices have been excluded from the 'official' inflation figures.
So while in the short term prices are falling and we apparently have deflation that is a consequence of similar specific issues. The Government's solution, and possibly almost all they can do other than watch the entire country go bust, is throw immense amounts of money at the problem. 'Drop it from Helicopters' was the last phrase I heard. We are not productive in the UK, lets not kid ourselves. Some inflation would 'soften the landing', but the real solution is to improve productivity, which is politically unacceptable.
The result must be an inflationary whiplash as we come out of recession, and I would say it could be severe. Now maybe its a high risk strategy, but if you borrow money now to repay in say five years time, at low interest rates, assuming that you can get someone to lend it to you, I guess that you could be paying it back using old washers.
Mine would not be short term spikes in commodity prices caused by overheated demand/ short term supply issues/ speculation, all of which have been the case recently. It would be a surplus of money supply over productivity. So I would argue that we have been having significant inflation for years and that has been concealed by cheap imported products and the fact that house prices have been excluded from the 'official' inflation figures.
So while in the short term prices are falling and we apparently have deflation that is a consequence of similar specific issues. The Government's solution, and possibly almost all they can do other than watch the entire country go bust, is throw immense amounts of money at the problem. 'Drop it from Helicopters' was the last phrase I heard. We are not productive in the UK, lets not kid ourselves. Some inflation would 'soften the landing', but the real solution is to improve productivity, which is politically unacceptable.
The result must be an inflationary whiplash as we come out of recession, and I would say it could be severe. Now maybe its a high risk strategy, but if you borrow money now to repay in say five years time, at low interest rates, assuming that you can get someone to lend it to you, I guess that you could be paying it back using old washers.
Edited by cardigankid on Friday 14th November 18:03
cardigankid said:
What is your definition of inflation?
Mine would not be short term spikes in commodity prices caused by overheated demand/ short term supply issues/ speculation, all of which have been the case recently. It would be a surplus of money supply over productivity. So I would argue that we have been having significant inflation for years and that has been concealed by cheap imported products and the fact that house prices have been excluded from the 'official' inflation figures.
So while in the short term prices are falling and we apparently have deflation that is a consequence of similar specific issues. The Government's solution, and possibly almost all they can do other than watch the entire country go bust, is throw immense amounts of money at the problem. 'Drop it from Helicopters' was the last phrase I heard. We are not productive in the UK, lets not kid ourselves. Some inflation would 'soften the landing', but the real solution is to improve productivity, which is politically unacceptable.
The result must be an inflationary whiplash as we come out of recession, and I would say it could be severe.
All the additional tax we will have to pay will dampen any inflation after the recession. The pound will also strengthen a bit afterwards too, also dampening inflation.Mine would not be short term spikes in commodity prices caused by overheated demand/ short term supply issues/ speculation, all of which have been the case recently. It would be a surplus of money supply over productivity. So I would argue that we have been having significant inflation for years and that has been concealed by cheap imported products and the fact that house prices have been excluded from the 'official' inflation figures.
So while in the short term prices are falling and we apparently have deflation that is a consequence of similar specific issues. The Government's solution, and possibly almost all they can do other than watch the entire country go bust, is throw immense amounts of money at the problem. 'Drop it from Helicopters' was the last phrase I heard. We are not productive in the UK, lets not kid ourselves. Some inflation would 'soften the landing', but the real solution is to improve productivity, which is politically unacceptable.
The result must be an inflationary whiplash as we come out of recession, and I would say it could be severe.
Provisional figures for September indicate that M4 rose by £26.0 billion, seasonally adjusted; above the average flow for the previous six months of £17.7 billion. The twelve-month growth rate rose to 12.2% from 11.5% in August.
M4 lending increased by £30.6 billion or 1.3%, seasonally adjusted, in September. The twelve-month growth rate rose to 12.6% from 12.3% in August.
M4 lending excluding the effects of securitisations etc and loan transfers increased by £35.5 billion, seasonally adjusted, in September. The twelve-month growth rate rose to 14.2% from 14.1% in August.
M4 lending increased by £30.6 billion or 1.3%, seasonally adjusted, in September. The twelve-month growth rate rose to 12.6% from 12.3% in August.
M4 lending excluding the effects of securitisations etc and loan transfers increased by £35.5 billion, seasonally adjusted, in September. The twelve-month growth rate rose to 14.2% from 14.1% in August.
My issue is that, having been exposed as the Emperor's New Toilet Paper, what is going to cause the value of the pound to strengthen?
PS Fittster old buddy. Could you say that again slowly in English. I'm trying to grasp what you mean.
PS Fittster old buddy. Could you say that again slowly in English. I'm trying to grasp what you mean.
Edited by cardigankid on Friday 14th November 18:11
pioneer said:
Welshbeef said:
You expect 20-40% price rises next year for food to be the norm... oh my how worng you are.
We dont buy that much produce from the USA its mainly the Eurozone. Secondly the comodities have plumeted thats far far far more than the fall of the £ against the Euro & $. So we will & are seeing big price reductions.
Lets talk about bread a loaf of good bread from the Supermarket is £1.09 a year or so ago that loaf was £0.69 - are you expecting that loaf to increase to £1.308 - £1.526
Or looking at a 4 pinter of milk its £1.53 today but a year + it was barely over £1 maybe £1.05. Do you expect that 4 pinter to increase to £1.836-£2.142?
Or putting it another way are you suggesting that the average weekly shopping of say £80pw is going to increase to £96 - £112? Get real - that would slaughter the UK and if it would do that to a 1st world G7 country then you can work out what would happen to 2nd world countries. Totally behind the curve IMHO.
I'm not talking about food and I'm not saying overall inflation will be 20-40%. I am saying that the products we retail (DIY,Garden and Homewares) pretty much all quotes we are getting for next year the goods have increased by anywhere from 10-30% and then when you factor the exchange rate some items we import will be around 40% more. I know what I'm talking about I sell £7m quids worth a year!We dont buy that much produce from the USA its mainly the Eurozone. Secondly the comodities have plumeted thats far far far more than the fall of the £ against the Euro & $. So we will & are seeing big price reductions.
Lets talk about bread a loaf of good bread from the Supermarket is £1.09 a year or so ago that loaf was £0.69 - are you expecting that loaf to increase to £1.308 - £1.526
Or looking at a 4 pinter of milk its £1.53 today but a year + it was barely over £1 maybe £1.05. Do you expect that 4 pinter to increase to £1.836-£2.142?
Or putting it another way are you suggesting that the average weekly shopping of say £80pw is going to increase to £96 - £112? Get real - that would slaughter the UK and if it would do that to a 1st world G7 country then you can work out what would happen to 2nd world countries. Totally behind the curve IMHO.
cardigankid said:
My issue is that, having been exposed as the Emperor's New Toilet Paper, what is going to cause the value of the pound to strengthen?
PS Fittster old buddy. Could you say that again slowly in English. I'm trying to grasp what you mean.
Oh, it's just a cut and paste. Basically the amount of money floating about keeps increasing and there are lots of dull books and theories that suggest it has to find a home somewhere which drives up prices giving you inflation.PS Fittster old buddy. Could you say that again slowly in English. I'm trying to grasp what you mean.
Edited by cardigankid on Friday 14th November 18:11
For an exterme example look at Zimbabwe, the more money that is printed the higher prices go.
On the other hand
Edited by Fittster on Friday 14th November 18:29
I can't see what is going to make the pound strengthen against the dollar or the euro specifically. What do we produce here exactly? Oh yes, invisible exports. Damn all else. Look at everything round about you, it comes from abroad, from the BMW's and Mercs that the police use, to the fruit and meat in supermarkets, because we can't produce it efficiently here.
The deflationary argument presented here assumes that as demand falls prices will just continue to fall with it. That is not deflation, that is falling demand in a market which is for the time being oversupplied. And very much oversupplied from abroad. What happens when the price you can achieve falls below the cost of production and distribution? They stop making it, obviously. You can buy a cheap Jag or Porsche today, really cheap. But do you think that you will be able to do so in a year or two years? No, because they will not continue to make them to sell below cost, and we are nowhere near efficient enough to make them cheaper in UK. Real deflation is where productivity rises through efficiency so less money will buy more product. People get richer without having more money. That is what should happen with the benefit of technology. But what we produce is bureaucratic 'services', which in the end of the day don't help anyone eat or keep a roof over their heads. That is what we do in Britain today and production it isn't.
Prices will rise, not fall, as the fall in the pound bites. Unlike the US we have minimal commodities to sell. A little very expensive oil. The only way the government can counteract that is to throw money into the system in increasing volumes so that people can buy the essentials. That is where hyperinflation comes in. That is what drives it, whether you are talking about Germany in the 1920's or Zimbabwe today.
I don't think that a degree of inflation would be a bad thing. Asset prices would rise, at least in relation to the debt secured on them, and people would be able to deleverage nore easily, increasing the feelgood factor, bringing house prices back up at least in nominal terms if not more. There would have to be pay increases, but this could be seen as an oportunity to level out prosperity a little by giving higher increases to the lower paid. At some time the brakes would have to be applied. But ultimately the solution is to increase productivity and we have been avoiding the evil day for half a century. On the credit side the reduction in value of the pound will make manufacturing here more cost effective, if we can just get off our arses and do it.
The deflationary argument presented here assumes that as demand falls prices will just continue to fall with it. That is not deflation, that is falling demand in a market which is for the time being oversupplied. And very much oversupplied from abroad. What happens when the price you can achieve falls below the cost of production and distribution? They stop making it, obviously. You can buy a cheap Jag or Porsche today, really cheap. But do you think that you will be able to do so in a year or two years? No, because they will not continue to make them to sell below cost, and we are nowhere near efficient enough to make them cheaper in UK. Real deflation is where productivity rises through efficiency so less money will buy more product. People get richer without having more money. That is what should happen with the benefit of technology. But what we produce is bureaucratic 'services', which in the end of the day don't help anyone eat or keep a roof over their heads. That is what we do in Britain today and production it isn't.
Prices will rise, not fall, as the fall in the pound bites. Unlike the US we have minimal commodities to sell. A little very expensive oil. The only way the government can counteract that is to throw money into the system in increasing volumes so that people can buy the essentials. That is where hyperinflation comes in. That is what drives it, whether you are talking about Germany in the 1920's or Zimbabwe today.
I don't think that a degree of inflation would be a bad thing. Asset prices would rise, at least in relation to the debt secured on them, and people would be able to deleverage nore easily, increasing the feelgood factor, bringing house prices back up at least in nominal terms if not more. There would have to be pay increases, but this could be seen as an oportunity to level out prosperity a little by giving higher increases to the lower paid. At some time the brakes would have to be applied. But ultimately the solution is to increase productivity and we have been avoiding the evil day for half a century. On the credit side the reduction in value of the pound will make manufacturing here more cost effective, if we can just get off our arses and do it.
Edited by cardigankid on Thursday 20th November 17:08
Welshbeef said:
But your talking about a specific product/sector. Were having hyper deflation in car prices that doesnt mean that the whole economy is in hyperdeflation does it.
I know our suppliers prices have cooled a hell of a lot and will be passing on cuts in the coming months. Our picking & dispatch costs have dropped significantly (mind you only cost around £0.07/case of goods) but the meat cost is plumeting and forecast to drop significantly - why... because the cost of feeding the animal etc has significantly decreased.
On your products timber - well dispatch will certainly have dropped, but last year there was a mass shortage of 6x6 garden fences due to a global scarcity of such wood. That really drove the prices of those products up it happened just at the time of the storms in the UK so people had to make do with bodged up old ones until they could actually get any stock in stores to replace them with.
I'd expect your timer cost will not vary that much given its from sustainable forests otherwise with the big crackdowns on the braziling bowl that would create a supply issue.
If your talking about pots/building materials then demand in the UK is flat dead so hyperinflation in a market segment which is stone dead is going to do nothing to re energise it & as so few products will be sold it will have no impact on UK inflation. You need the big ticket items i.e. loaf of bread, milk, news paper, ipod, ltr fuel, gas electric etc - i.e. things you have to buy (ignore the ipod & newspaper) you dont need any wooden or building materials/items.
This is exactly what I was talking about earlier:-I know our suppliers prices have cooled a hell of a lot and will be passing on cuts in the coming months. Our picking & dispatch costs have dropped significantly (mind you only cost around £0.07/case of goods) but the meat cost is plumeting and forecast to drop significantly - why... because the cost of feeding the animal etc has significantly decreased.
On your products timber - well dispatch will certainly have dropped, but last year there was a mass shortage of 6x6 garden fences due to a global scarcity of such wood. That really drove the prices of those products up it happened just at the time of the storms in the UK so people had to make do with bodged up old ones until they could actually get any stock in stores to replace them with.
I'd expect your timer cost will not vary that much given its from sustainable forests otherwise with the big crackdowns on the braziling bowl that would create a supply issue.
If your talking about pots/building materials then demand in the UK is flat dead so hyperinflation in a market segment which is stone dead is going to do nothing to re energise it & as so few products will be sold it will have no impact on UK inflation. You need the big ticket items i.e. loaf of bread, milk, news paper, ipod, ltr fuel, gas electric etc - i.e. things you have to buy (ignore the ipod & newspaper) you dont need any wooden or building materials/items.
http://news.sky.com/skynews/Home/Business/Electron...
As I said before in my opinion lots of retail products will have quite drastic price increases next year, once the retailers have panic cleared all the existing stock. We import so many products now that the weak pound plus increases in production costs in the far east it is inevitable.
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