Cost of living squeeze in 2022
Discussion
oyster said:
I'm pretty sure loafer123 is smarter than you're alluding to.
GBP stability has a huge impact on inflation, which IS a mandate of the BoE.
And in a year we've already gone from 1.38 to 1.22 on the GBP/USD rate, so fuel (priced in $) has gone up for us more than in the US and their increases, breaching $5/gallon, is making news. GBP stability has a huge impact on inflation, which IS a mandate of the BoE.
Biggy Stardust said:
Throttlebody said:
Some more good news for you: UK retail sales dropped significantly in May.
If this means a significant fall in buying Chinese tat & an increase in reusing/recycling/repairing stuff then I'm in favour of it.Scootersp said:
And in a year we've already gone from 1.38 to 1.22 on the GBP/USD rate, so fuel (priced in $) has gone up for us more than in the US and their increases, breaching $5/gallon, is making news.
And unless the FX rate continues to fall at that rate, the impact of FX changes to inflation are 'transitory' and will not meaningfully affect future inflation which is measuring the rate of change of prices rather than whether prices per se are existingly high.Welshbeef said:
Throttlebody said:
Welshbeef said:
Throttlebody said:
UK Consumer Confidence hits a record low. The latest GfK index drops to the lowest on record.
This will be playing on the minds of the BOE panel. The weights on pushing up rates are vanishing as every day passes. This is good news indeed.
The markets are pricing in significant interest rate rises.
isaldiri said:
Scootersp said:
And in a year we've already gone from 1.38 to 1.22 on the GBP/USD rate, so fuel (priced in $) has gone up for us more than in the US and their increases, breaching $5/gallon, is making news.
And unless the FX rate continues to fall at that rate, the impact of FX changes to inflation are 'transitory' and will not meaningfully affect future inflation which is measuring the rate of change of prices rather than whether prices per se are existingly high.Throttlebody said:
Welshbeef said:
Throttlebody said:
Welshbeef said:
Throttlebody said:
UK Consumer Confidence hits a record low. The latest GfK index drops to the lowest on record.
This will be playing on the minds of the BOE panel. The weights on pushing up rates are vanishing as every day passes. This is good news indeed.
The markets are pricing in significant interest rate rises.
Welshbeef said:
Care to answer the point made not spelling police please.
Sure, the MPC will consider a range of economic data and apply it to its core remit and then vote. No one single piece of economic data will dictate the outcome. Even within the MPC, there are opposing views on current and future interest rate policy. Throttlebody said:
Welshbeef said:
Care to answer the point made not spelling police please.
Sure, the MPC will consider a range of economic data and apply it to its core remit and then vote. No one single piece of economic data will dictate the outcome. Even within the MPC, there are opposing views on current and future interest rate policy. With 0.5% nailed on now or similar. Yet when an opposing view comes up you default to MPC will take a range of data.
Stop sitting on the fence - this is social media where people share thoughts and challenge views
Scootersp said:
Agreed, but the US raising rates, arguable forced us to, to ensure this didn't continue? ie without rate BoE rises the fx changes won't be/have less chance of being transitory? ie we could head towards 1:1 rather than stabilise or go back toward 1:1.3?
well the fx markets already have certain expectations of what the base rates are going to move to - and it's pricing in forward levels considerably higher than current base rates already. The relative difference between currency rates will have an impact on fx rates obviously but how much and whether it overrides the overall perception of desirability of said currency which is likely affected by perceptions of potential growth rates is....unclear to put it mildly. If the BoE was perceived to be raising rates irrespective of the effect on growth and the economy is thought to be going to tank as a result, the gbp isn't exactly going to be strengthening to 1.3 anytime soon.
skwdenyer said:
LOL, I didn't spend a great deal of time searching for an exciting one 
This one is a touch more concise: https://youtu.be/m89khGGrM_4
However, the main productivity booster is that the workers don't have to be down on their hands and knees all day, with constant movement of materials and so on. They can lay as many blocks in the last hour as in the first; overall, experience shows a productivity gain of 20-30%. But because those people can work simultaneously, the overall project productivity can be far higher - some estimates speak of a 5-fold reduction in overall project duration.
There are of course lots of other examples; that one is just relatively easy to understand and visualise.
The UK is just too used to a low-investment way of working. The much-vaunted transition to a higher-wage economy requires investment. Not just private investment, but access to cheap investment capital and an appropriate tax framework (not necessarily lower taxes, but a different structure) to incentivise objectives of national interest.
Until we can fix the productivity gap, we're either condemned to lower wages, or reliant upon a falling pound. Neither is desirable.
If you introduce such automation won't the workers just strike in protest of the authorities trying to push them out of a job? This one is a touch more concise: https://youtu.be/m89khGGrM_4However, the main productivity booster is that the workers don't have to be down on their hands and knees all day, with constant movement of materials and so on. They can lay as many blocks in the last hour as in the first; overall, experience shows a productivity gain of 20-30%. But because those people can work simultaneously, the overall project productivity can be far higher - some estimates speak of a 5-fold reduction in overall project duration.
There are of course lots of other examples; that one is just relatively easy to understand and visualise.
The UK is just too used to a low-investment way of working. The much-vaunted transition to a higher-wage economy requires investment. Not just private investment, but access to cheap investment capital and an appropriate tax framework (not necessarily lower taxes, but a different structure) to incentivise objectives of national interest.
Until we can fix the productivity gap, we're either condemned to lower wages, or reliant upon a falling pound. Neither is desirable.
pquinn said:
Some incredibly myopic comments criticising the UK with apparently zero clue about how similarly f
ked so many other European and G20 economies are. More often than not identical or worse problems with productivity/labour/property/shortages/whatever.
If it was just the UK that would be a problem but when it's all over the place that's a proper problem and beyond the shallow solutions some people think exist.
We are all so fked and narrow little obsessions with particular countries to back your own prejudices really aren't going to help.
A good point.ked so many other European and G20 economies are. More often than not identical or worse problems with productivity/labour/property/shortages/whatever.If it was just the UK that would be a problem but when it's all over the place that's a proper problem and beyond the shallow solutions some people think exist.
We are all so f
ked and narrow little obsessions with particular countries to back your own prejudices really aren't going to help. This issue is global, so it is difficult to blame Brexit (I'm not pointing to any particular comment before we go down that rabbit hole) or any government.
isaldiri said:
Scootersp said:
And in a year we've already gone from 1.38 to 1.22 on the GBP/USD rate, so fuel (priced in $) has gone up for us more than in the US and their increases, breaching $5/gallon, is making news.
And unless the FX rate continues to fall at that rate, the impact of FX changes to inflation are 'transitory' and will not meaningfully affect future inflation which is measuring the rate of change of prices rather than whether prices per se are existingly high.Using numbers:
The BoE target is CPI of 2.0%.
In May 2021 (1 year ago) annual inflation was at/near target at 2.1%, when the overall index of CPI was at 111.3.
The current index (May 2022) is at 120.8.
So assume annual inflation drops back to 2.0% by May 2023 (1 year on from latest figures).
The index would have risen to 123.2. Had inflation remained at target from 2021 to 2023 the index would have been at 115.8.
So even if this inflation spike is nipped in the bud now, prices will be permanently higher by 6% than if we had never had the inflation spike. Is this acceptable, or do we need to target inflation at 1% for a few years to 'catch up'?
Another way of looking at it is with petrol prices. They've gone up from 140p ish to 190p ish a litre. If they now only rise by 2% a year for the next few years - is that ok?
oyster said:
Another way of looking at it is with petrol prices. They've gone up from 140p ish to 190p ish a litre. If they now only rise by 2% a year for the next few years - is that ok?
Oil prices aren't monotonically increasing like that though - for example they fell from 110p to 40p after their last peak c.2013- if this happened again the we would see similar falls at the pump. Of course this time we have £ weakness to contend with, but there's hope it will come down as economies slow.Actually here's are the figures from the RAC:- https://www.racfoundation.org/data/uk-pump-prices-... 140p/litre at the peak peak to 104.5p in 2016.
jonny70 said:
Welshbeef said:
Negative rates are possible.
Quantitive tightening
High prices quell demand naturally.
How are negative interest rates a possibility when we are in an inflationary environment ( when inflation is heading to 11%)?Quantitive tightening
High prices quell demand naturally.
Not saying it's likely, however the premise Beefy was replying to was that the BoE are raising rates now in order to create some movement room down the line. That movement room already exists.
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