Current actual Inflation Rate
Discussion
It's pretty clear to everyone that prices on assets have massively increased and a lot of things are currently in short supply and prices have risen accordingly. You only have to read the 'Obscene increases in building/construction materials prices' on the 'Homes, Gardens and DIY' forum to see this.
Second hand car prices have jumped and trying to get a BBQ, Shed or outdoor furniture is nigh on impossible.
House demand is crazy with people complaining they cannot even get a viewing at the moment and houses are sold in days.
It is clear the government printing billions of pounds and people being stuck indoors for a year has created a massive demand that now cannot be met. It is clear the economy is not a tap that you can just turn off and restart, so raw materials and stock are in very short supply.
What is going to happen next, are we going to get massive inflation? Traditionally the government would just increase interest rates, but I just can't see that happening any more.
Is it literally going to be more printy, printy and all that debt just vanishes due to inflation?
Second hand car prices have jumped and trying to get a BBQ, Shed or outdoor furniture is nigh on impossible.
House demand is crazy with people complaining they cannot even get a viewing at the moment and houses are sold in days.
It is clear the government printing billions of pounds and people being stuck indoors for a year has created a massive demand that now cannot be met. It is clear the economy is not a tap that you can just turn off and restart, so raw materials and stock are in very short supply.
What is going to happen next, are we going to get massive inflation? Traditionally the government would just increase interest rates, but I just can't see that happening any more.
Is it literally going to be more printy, printy and all that debt just vanishes due to inflation?
The actual rate of inflation has to be alot higher than the official figures. My house has risen by a good 10% in the past year, there's hardly any houses for sale in the local area. My 3yr old car is somehow worth £2k more than it was 6mths ago. I can't buy garden furniture without selling a kidney. Someone at work can't get hold of plasterboard. Everything has gone silly, to the point there's various purchases that I've just put on hold for this year.
CPI isn't actually a very good measure of inflation, generally the "basket" is updated infrequently and the methology used to caputure data between countries is wildly different. For example some countries omit housing costs entirely outside of rent while other use an owners equivalent rent to more accurately ascertain spending. CPI is more frequently used as a favourite measure of central banks and economists rather than people trying to understand consumer behaviour.
As a starting point, if you are looking for aggregate retail spending data, commercial banks often publish card transaction data broadly categorised:
https://home.barclaycard/press-releases/2021/04/Co...
As a starting point, if you are looking for aggregate retail spending data, commercial banks often publish card transaction data broadly categorised:
https://home.barclaycard/press-releases/2021/04/Co...
speedy_thrills said:
CPI isn't actually a very good measure of inflation, generally the "basket" is updated infrequently and the methology used to caputure data between countries is wildly different. For example some countries omit housing costs entirely outside of rent while other use an owners equivalent rent to more accurately ascertain spending. CPI is more frequently used as a favourite measure of central banks and economists rather than people trying to understand consumer behaviour.
As a starting point, if you are looking for aggregate retail spending data, commercial banks often publish card transaction data broadly categorised:
https://home.barclaycard/press-releases/2021/04/Co...
CPI is a perfectly good measure of inflation. There is no one right measure. There are loads of measures all based on different baskets and each tells you its own story. There are lots of flavours of CPI and RPI, there are PPI measures that focus on manufacturers costs, there are GDP deflator measures, etc, etcAs a starting point, if you are looking for aggregate retail spending data, commercial banks often publish card transaction data broadly categorised:
https://home.barclaycard/press-releases/2021/04/Co...
Just scrapped my old Mazda 323 (2000) and pre pandemic would have struggled to get £150 for it, it’s just gone on a trailer in exchange for £260.
Price of Granny Smiths in the shops have doubled in about a year. There’s much guff about inflation being transitory due to supply chain issues, and whilst some of that is true, you’re starting to see inflation expectations being built in.
For example, due to the stimulus, people being offered signing bonuses for low paid jobs is ‘transitory’ as it’s a one off incentive to address a squeeze, however the push to $15 minimum wage and more companies moving to pay it will not be transitory and it will drive another round.
Not quite Weimar yet...
Price of Granny Smiths in the shops have doubled in about a year. There’s much guff about inflation being transitory due to supply chain issues, and whilst some of that is true, you’re starting to see inflation expectations being built in.
For example, due to the stimulus, people being offered signing bonuses for low paid jobs is ‘transitory’ as it’s a one off incentive to address a squeeze, however the push to $15 minimum wage and more companies moving to pay it will not be transitory and it will drive another round.
Not quite Weimar yet...
Trif said:
I've really been noticing this recently. Mobile phone contracts appear to be CPI+3.9% now and the price for a KW/h of electricity has gone up by quite a big margin, it looks like my utilities bill will increase by 20%!
Ah yes, the current penchant in telecoms (DSL/Mobile/Landlines), which I suspect will eventually impact everyone, for "CPI + 3.9%". Unless 3.9% is some sort of Ofcom regulated cap(?) I assume the first mover (BT?) pulled + 3.9% out of their a
e and everybody else just followed suit.It's entirely possible an annual "CPI + 3.9%", which is not a small increase when compounded year on year*, is the <cliche>"new normal"</cliche>; watch for it spreading like the (inflation) plague.
*or less - 30th June then again in March!
I couldn’t get bog roll, baked beans, or paracetamol at certain times last year.
Then a few months later they were all on offers and multi-buy giveaways.
Supply and demand.
Cause and effect.
Can people really buy that much garden furniture?
Can people buy that much timber?
Plaster board?
Bog roll?
Paracetamol?
Houses?
Cars?
Supply can’t change immediately to meet demand.
Why didn’t toilet roll factories invest millions to cater for the surge last year?
They knew it was transitory.
Why aren’t plaster board manufacturers adding capacity at huge cost?
Because it’s transitory, and right now they’re cashing in.
IF it’s not transitory, they’ll be adding capacity to cash in on the higher demand and prices.
It will end. By definition. Either by demand dropping, supply catching up, or supply levels increasing.
Just like bog rolls, how much stuff can you buy?
Your pockets are only so deep. Your space only so large.
We’re witnessing inflation fear, driving irrational buying.
A self fulfilling crack up boom driven by nothing more than FOMO.
When everyone is expecting inflation, the opposite happens.
The billions printed will evaporate when everything crashes...
Imo the risk is deflation.
No wonder we’re being fed the idea of inflation, because the idea of deflation is a death spiral for government debt servicing... though at this point it’s no more dangerous than high inflation.
Finally. Japan. They’ve been trying to stimulate inflation for 30yrs and they’ve only ever had deflation.
How is “The West” different?
Then a few months later they were all on offers and multi-buy giveaways.
Supply and demand.
Cause and effect.
Can people really buy that much garden furniture?
Can people buy that much timber?
Plaster board?
Bog roll?
Paracetamol?
Houses?
Cars?
Supply can’t change immediately to meet demand.
Why didn’t toilet roll factories invest millions to cater for the surge last year?
They knew it was transitory.
Why aren’t plaster board manufacturers adding capacity at huge cost?
Because it’s transitory, and right now they’re cashing in.
IF it’s not transitory, they’ll be adding capacity to cash in on the higher demand and prices.
It will end. By definition. Either by demand dropping, supply catching up, or supply levels increasing.
Just like bog rolls, how much stuff can you buy?
Your pockets are only so deep. Your space only so large.
We’re witnessing inflation fear, driving irrational buying.
A self fulfilling crack up boom driven by nothing more than FOMO.
When everyone is expecting inflation, the opposite happens.
The billions printed will evaporate when everything crashes...
Imo the risk is deflation.
No wonder we’re being fed the idea of inflation, because the idea of deflation is a death spiral for government debt servicing... though at this point it’s no more dangerous than high inflation.
Finally. Japan. They’ve been trying to stimulate inflation for 30yrs and they’ve only ever had deflation.
How is “The West” different?
Vanity Projects said:
Price of Granny Smiths in the shops have doubled in about a year.
My local fruit and veg who buy from a proper market, have had prices stay pretty level for years.I think Pink Lady’s went from 50p to 60p over the last 2 years... but then they seem to be buying better quality at that price too.
Mr Whippy said:
I couldn’t get bog roll, baked beans, or paracetamol at certain times last year.
Then a few months later they were all on offers and multi-buy giveaways.
Supply and demand.
Cause and effect.
Can people really buy that much garden furniture?
Can people buy that much timber?
Plaster board?
Bog roll?
Paracetamol?
Houses?
Cars?
Supply can’t change immediately to meet demand.
Why didn’t toilet roll factories invest millions to cater for the surge last year?
They knew it was transitory.
Why aren’t plaster board manufacturers adding capacity at huge cost?
Because it’s transitory, and right now they’re cashing in.
IF it’s not transitory, they’ll be adding capacity to cash in on the higher demand and prices.
It will end. By definition. Either by demand dropping, supply catching up, or supply levels increasing.
Just like bog rolls, how much stuff can you buy?
Your pockets are only so deep. Your space only so large.
We’re witnessing inflation fear, driving irrational buying.
A self fulfilling crack up boom driven by nothing more than FOMO.
When everyone is expecting inflation, the opposite happens.
The billions printed will evaporate when everything crashes...
Imo the risk is deflation.
No wonder we’re being fed the idea of inflation, because the idea of deflation is a death spiral for government debt servicing... though at this point it’s no more dangerous than high inflation.
Finally. Japan. They’ve been trying to stimulate inflation for 30yrs and they’ve only ever had deflation.
How is “The West” different?
But have bog roll prices gone back down since being inflated last year?...Then a few months later they were all on offers and multi-buy giveaways.
Supply and demand.
Cause and effect.
Can people really buy that much garden furniture?
Can people buy that much timber?
Plaster board?
Bog roll?
Paracetamol?
Houses?
Cars?
Supply can’t change immediately to meet demand.
Why didn’t toilet roll factories invest millions to cater for the surge last year?
They knew it was transitory.
Why aren’t plaster board manufacturers adding capacity at huge cost?
Because it’s transitory, and right now they’re cashing in.
IF it’s not transitory, they’ll be adding capacity to cash in on the higher demand and prices.
It will end. By definition. Either by demand dropping, supply catching up, or supply levels increasing.
Just like bog rolls, how much stuff can you buy?
Your pockets are only so deep. Your space only so large.
We’re witnessing inflation fear, driving irrational buying.
A self fulfilling crack up boom driven by nothing more than FOMO.
When everyone is expecting inflation, the opposite happens.
The billions printed will evaporate when everything crashes...
Imo the risk is deflation.
No wonder we’re being fed the idea of inflation, because the idea of deflation is a death spiral for government debt servicing... though at this point it’s no more dangerous than high inflation.
Finally. Japan. They’ve been trying to stimulate inflation for 30yrs and they’ve only ever had deflation.
How is “The West” different?
pb8g09 said:
But have bog roll prices gone back down since being inflated last year?...
I’ve not checked. I just buy the ones on offer so can’t really track it.I genuinely think people like to pay high prices.
Market forces will drive prices down if low demand forces it, but while people lap up paying more, everyone selling will cash in on it.
In any case, if stuff goes up so much, people will buy tons less over say 5 years... which is massively deflationary because half the population will be out of work.
Salary rises because of low unemployment drives economic overheating and inflation.
Having high/rising unemployment and demand only driven by government debt handouts, isn’t inflationary.
It suggests we’re on the precipice of deflation as demand contracts sharply.
We’re being strung the story of inflation to keep us spending.
Look at post 2007. It was all about confidence in spending, lowering interest rates to keep us spending, anything to keep us spending.
People are now terrified of inflation to keep them spending but the reality is it will end. It can’t go up while salaries don’t because people won’t consume, which generates unemployment, which means more gov debt, and/or even less demand.
Some pain has to come... but I’m struggling to see how it can be inflationary pain.
Again, see Japan.
Mr Whippy said:
People are now terrified of inflation to keep them spending but the reality is it will end. It can’t go up while salaries don’t because people won’t consume, which generates unemployment, which means more gov debt, and/or even less demand.
.
I agree with this somewhat..
I get invited to hear the Bank of England speak 'off the record' each quarter, usually attended by self-employed or employed people in Finance around here. What irks me is that both the BoE representative and a number of older self-employed implied that most consumers are sat on a goldmine from not being able to spend money last year. It irks me because as someone younger, I on the other hand have to service a larger mortgage (comparatively speaking) whilst now being hit by 5%+ price increases on utilities, council tax (7.5% increase!), internet (which I need to WFH), food and insurance rises. These are all hygiene costs - I can't just choose not to buy at the price.
To hear a BoE representative suggest I have more money in my mattress to be extracted is very much wide of the mark and I'm sure I can't be the only one, hence these threads. It does however draw parallels to your comment that 'they' obviously want us to spend our way out of it.
Yes temporary goldmine from last year, and not something shared equally by all those in the population.
Then you have a temporary supply shortage as some people were paid to not work.
Others got paid and WFH saving them cash.
And some had windfalls.
Almost all had less avenues to spend, though Amazon etc made good sales.
So yes... temporary high prices caused by artificial and temporary supply issues, and artificial and temporary demand.
And it doesn’t take a vast amount of participants to cause this price spiking issue, alongside subtly low supply constraints.
Quite frankly I’m baffled why everyone is wittering about inflation.
There is nothing good out there.
The economy was on its knees pre pandemic. It’s now completely fked and people are rejoicing as if the economy is going to roar away like a petrol fuelled fire for an entire business cycle.
How?
Sentiment is irrelevant when you’ve got no job and can’t pay the bills.
And banks aren’t getting mortgage payments.
And open shops and restaurants get no customers.
If the economy wasn’t roaring it’s tits off in 2019, why would it be now? After the biggest debt fuelled binge ever?
We’re getting a surge in economic activity, but at what cost?
Lockdown every other year? That would surely see us all billionaires by the end of the decade.
It’s complete fantasy yet for some reason the FOMO is blinding everyone.
More money went into the financial markets since Nov 2020, than since the financial crisis.
Let that sink in and then understand why everything is expensive... high demand, sane or limited supply.
It doesn’t mean anything is worth what people paid.
And all this magical ‘liquidity’ pumped into the markets will evaporate when everyone realises it won’t go on forever up... and everyone tries to cash out their ‘winnings’
Everyone needs to retain this magical wealth and spend it for it to be inflationary.
It’s all unrealised wealth. No significant volume of people can cash out now without crashing it.
Then you have a temporary supply shortage as some people were paid to not work.
Others got paid and WFH saving them cash.
And some had windfalls.
Almost all had less avenues to spend, though Amazon etc made good sales.
So yes... temporary high prices caused by artificial and temporary supply issues, and artificial and temporary demand.
And it doesn’t take a vast amount of participants to cause this price spiking issue, alongside subtly low supply constraints.
Quite frankly I’m baffled why everyone is wittering about inflation.
There is nothing good out there.
The economy was on its knees pre pandemic. It’s now completely f
ked and people are rejoicing as if the economy is going to roar away like a petrol fuelled fire for an entire business cycle.How?
Sentiment is irrelevant when you’ve got no job and can’t pay the bills.
And banks aren’t getting mortgage payments.
And open shops and restaurants get no customers.
If the economy wasn’t roaring it’s tits off in 2019, why would it be now? After the biggest debt fuelled binge ever?
We’re getting a surge in economic activity, but at what cost?
Lockdown every other year? That would surely see us all billionaires by the end of the decade.
It’s complete fantasy yet for some reason the FOMO is blinding everyone.
More money went into the financial markets since Nov 2020, than since the financial crisis.
Let that sink in and then understand why everything is expensive... high demand, sane or limited supply.
It doesn’t mean anything is worth what people paid.
And all this magical ‘liquidity’ pumped into the markets will evaporate when everyone realises it won’t go on forever up... and everyone tries to cash out their ‘winnings’
Everyone needs to retain this magical wealth and spend it for it to be inflationary.
It’s all unrealised wealth. No significant volume of people can cash out now without crashing it.
Sometimes interesting to look back at past comments.
When this topic faded away, inflation was being discussed at the 3.0% level (RPI).
Very different now with the November 2022 RPI at 14%.
As our domestic electricity and gas is now being mostly paid by monthly direct debit, it is not always very clear what the actual cost to us is.
With the recent very cold weather and the consequent greater consumption of energy, I decided to take meter readings on the 1st of each month, just to see what the actual cost is for each winter month.
Have taken readings today, it looks as though the cost for the month of December may come as quute a shock to many people. Obviously it was going to be much higher than the (mild month) November, but I was surprised how much more.
Another point which might be confusing for some people - the expected decline in inflation.
It is quite possible that the published inflation rate may reduce this year. Some people seem to associate that hope, with lower prices.
We know that the quoted inflation rate, measures the percentage change over 12 months.
If (in theory) all prices remained at the present high level for 12 months, the inflation rate then would then become 0%.
No price rises.
However, we would still continue to pay those high prices. Just that they will not have increased further.
Do you think that is an aspect which is misunderstood ?
Some people might be raising their hopes, for a reversion to the past lower prices.
In reality of course, the prices of certain goods and services will reduce, should the supply/demand alter for those products.
Oil and gas prices in particular, have fluctuated enormously at times, both up and down.
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