Cost of living squeeze in 2022, 23 & 24 (Vol. 2)
Discussion
DeejRC said:
And? It’s the only tool they have and it’s very very blunt.
I must admit to being a little surprised by this as I thought given the Fed behavior and worries that the BOE would follow suit. Not so it would seem!
Anyway, unfortunately we are edging closer to the pessimistic 5% I estimated we could hit. Unfortunately the high inflation figure is baked in for many months - at least the next 6. If the BOE insist on this game then don’t be shocked by another rise in that time.
What's baking high inflation in for 6 months?I must admit to being a little surprised by this as I thought given the Fed behavior and worries that the BOE would follow suit. Not so it would seem!
Anyway, unfortunately we are edging closer to the pessimistic 5% I estimated we could hit. Unfortunately the high inflation figure is baked in for many months - at least the next 6. If the BOE insist on this game then don’t be shocked by another rise in that time.
In March we move to deflation YoY for petrol.
In April, domestic gas and electricity goes to 27% YoY from 96% YoY in March.
Those 2 factors alone will take a huge chunk out of CPI.
oyster said:
What's baking high inflation in for 6 months?
In March we move to deflation YoY for petrol.
In April, domestic gas and electricity goes to 27% YoY from 96% YoY in March.
Those 2 factors alone will take a huge chunk out of CPI.
October 2022 MoM CPI was very high due to the energy price rises. that bakes in a (very) large YoY CPI for the next 11 months.In March we move to deflation YoY for petrol.
In April, domestic gas and electricity goes to 27% YoY from 96% YoY in March.
Those 2 factors alone will take a huge chunk out of CPI.
oyster said:
In March we move to deflation YoY for petrol.
In April, domestic gas and electricity goes to 27% YoY from 96% YoY in March.
Those 2 factors alone will take a huge chunk out of CPI.
from personal experience and anecdotal evidence posted in this forum, I would suspect that if the basket was widened further that the outcome would be a fairly grim reading.In April, domestic gas and electricity goes to 27% YoY from 96% YoY in March.
Those 2 factors alone will take a huge chunk out of CPI.
we have a thread for drinks prices but when a pint of Guinness is touching £7 in a north west pub i think it's fair to say things have gotten a touch out of hand.
vulture1 said:
Yep lower fuel cost brings every companies costs down.
And whoever mentioned a cartel of uk supermarkets. You are mad.
They have scale but the big four Tesco Asda Sainsburys and Aldi all have tight margins. Aldi probably have the widest margins tbf
I know what margins I run my shop on. I buy from a cash and carry so you'd think we would be more expensive.. yet I could sell dog food cheaper than aldi, cheesy pasta cheaper than every super market on about 40% profit... they've been upping margins big style to keep the heating and lights on imo. Ofcourse maybe the small cash and carry just happens to get better deals than the buying power of asda etc... And whoever mentioned a cartel of uk supermarkets. You are mad.
They have scale but the big four Tesco Asda Sainsburys and Aldi all have tight margins. Aldi probably have the widest margins tbf
hotchy said:
vulture1 said:
Yep lower fuel cost brings every companies costs down.
And whoever mentioned a cartel of uk supermarkets. You are mad.
They have scale but the big four Tesco Asda Sainsburys and Aldi all have tight margins. Aldi probably have the widest margins tbf
I know what margins I run my shop on. I buy from a cash and carry so you'd think we would be more expensive.. yet I could sell dog food cheaper than aldi, cheesy pasta cheaper than every super market on about 40% profit... they've been upping margins big style to keep the heating and lights on imo. Ofcourse maybe the small cash and carry just happens to get better deals than the buying power of asda etc... And whoever mentioned a cartel of uk supermarkets. You are mad.
They have scale but the big four Tesco Asda Sainsburys and Aldi all have tight margins. Aldi probably have the widest margins tbf
Large debt and increasing commodity prices, combined with owning much of their own manufacturing (where they can't hide from increasing input costs) is a tough place to trade.
hotchy said:
vulture1 said:
Yep lower fuel cost brings every companies costs down.
And whoever mentioned a cartel of uk supermarkets. You are mad.
They have scale but the big four Tesco Asda Sainsburys and Aldi all have tight margins. Aldi probably have the widest margins tbf
I know what margins I run my shop on. I buy from a cash and carry so you'd think we would be more expensive.. yet I could sell dog food cheaper than aldi, cheesy pasta cheaper than every super market on about 40% profit... they've been upping margins big style to keep the heating and lights on imo. Ofcourse maybe the small cash and carry just happens to get better deals than the buying power of asda etc... And whoever mentioned a cartel of uk supermarkets. You are mad.
They have scale but the big four Tesco Asda Sainsburys and Aldi all have tight margins. Aldi probably have the widest margins tbf
vulture1 said:
Big supermarkets make their biggest mark ups on non food. Plants on those big tray dollies have at least 50% and non food is the other big driver. But bottom line they make 3ish% on the balance sheet. I wouldn't go into business for a potential 3% profit at best.
And that non food is rapidly becoming discretionary spend.I see everything being a bit ugly right now, there must be companies big and small struggling with input costs, behind the scenes I imagine there are many companies in a wide range of sectors in significant financial stress, being cut slack by their bank, balancing all the input costs and staff pressures with increasing their prices and trying to maintain sales volume. Most projections are probably optimistic, debt harder to come by and more expensive if you can get it. Everyone feeling the squeeze and at some point you feel something is going to give, a big name or two is going to go?
This far, during and post covid huge support has been given in various forms, and the increase in debt has been servicable now all that extra debt will impact more, making things even harder?
Support for businesses electric, huge loans after covid, there is continual support, but what is that, it's additional government borrowing, a can kicking move, but we seem to be going from one issue to the next, and with each one the future times have to be that little bit more productive to repay all this?
The interest rate mirroring of the US has to be, as far as I can see, to protect the pound, if we don't follow them the pound gets hit and it costs us more to import goods = even higher inflation? Global currency devaluation to the USD has been a big issue for many countries over the last few years, so much is priced in dollars that we can't afford to devalue too much.
Not sure where the happy ending comes from!!
vulture1 said:
Big supermarkets make their biggest mark ups on non food. Plants on those big tray dollies have at least 50% and non food is the other big driver. But bottom line they make 3ish% on the balance sheet. I wouldn't go into business for a potential 3% profit at best.
Needs to be a windfall tax on the supermarkets and energy companies who have tripled their profits.The tories do nothing.
Cobracc said:
vulture1 said:
Big supermarkets make their biggest mark ups on non food. Plants on those big tray dollies have at least 50% and non food is the other big driver. But bottom line they make 3ish% on the balance sheet. I wouldn't go into business for a potential 3% profit at best.
Needs to be a windfall tax on the supermarkets and energy companies who have tripled their profits.The tories do nothing.
IF you are do yourself a favour and search google. tesco share price or Bp share price. click financials and look at the difference between their blue bar "turnover/revenue" and orange bar "net income/profit"
Also the big oil companies already pay big windfalls and extra tax as it is.
Scootersp said:
And that non food is rapidly becoming discretionary spend.
I see everything being a bit ugly right now, there must be companies big and small struggling with input costs, behind the scenes I imagine there are many companies in a wide range of sectors in significant financial stress, being cut slack by their bank, balancing all the input costs and staff pressures with increasing their prices and trying to maintain sales volume. Most projections are probably optimistic, debt harder to come by and more expensive if you can get it. Everyone feeling the squeeze and at some point you feel something is going to give, a big name or two is going to go?
This far, during and post covid huge support has been given in various forms, and the increase in debt has been servicable now all that extra debt will impact more, making things even harder?
Support for businesses electric, huge loans after covid, there is continual support, but what is that, it's additional government borrowing, a can kicking move, but we seem to be going from one issue to the next, and with each one the future times have to be that little bit more productive to repay all this?
The interest rate mirroring of the US has to be, as far as I can see, to protect the pound, if we don't follow them the pound gets hit and it costs us more to import goods = even higher inflation? Global currency devaluation to the USD has been a big issue for many countries over the last few years, so much is priced in dollars that we can't afford to devalue too much.
Not sure where the happy ending comes from!!
A lot of businesses have been in trouble since the referendum, TBH, given the large overnight drops in FX. Coupled with wage inflation in developing countries (India, for instance, has averaged 7.5%pa for about 15 years) and our import-led economy has been in trouble. That's why the quality of so many non-food items seems to have dropped so far (it has - value engineering to try to maintain price points).I see everything being a bit ugly right now, there must be companies big and small struggling with input costs, behind the scenes I imagine there are many companies in a wide range of sectors in significant financial stress, being cut slack by their bank, balancing all the input costs and staff pressures with increasing their prices and trying to maintain sales volume. Most projections are probably optimistic, debt harder to come by and more expensive if you can get it. Everyone feeling the squeeze and at some point you feel something is going to give, a big name or two is going to go?
This far, during and post covid huge support has been given in various forms, and the increase in debt has been servicable now all that extra debt will impact more, making things even harder?
Support for businesses electric, huge loans after covid, there is continual support, but what is that, it's additional government borrowing, a can kicking move, but we seem to be going from one issue to the next, and with each one the future times have to be that little bit more productive to repay all this?
The interest rate mirroring of the US has to be, as far as I can see, to protect the pound, if we don't follow them the pound gets hit and it costs us more to import goods = even higher inflation? Global currency devaluation to the USD has been a big issue for many countries over the last few years, so much is priced in dollars that we can't afford to devalue too much.
Not sure where the happy ending comes from!!
The interest rate mirroring is a disaster, really. First because too much of our consumer debt is re-priced periodically (we fix our mortgages for 2-5 years, not 25 years, for instance) - rate rises penalise existing borrowers, rather than dampening new demand, leading to a significant overshoot on the pain scale). Second because it isn't really the dominant factor in FX any longer (if it were, we'd still be at USD 2 = 1 GBP). And third, of course, because it is itself inflationary (because so many more businesses operate with very large debt these days than even 20 years ago). Finally, because the real dominant FX drivers are confidence and economic performance; if you depress the economy with interest rate hikes, confidence bleeds away, in turn driving the pound lower).
And, yes, I know mine is a minority view. But orthodoxy hasn't served us well.
vulture1 said:
Big supermarkets... But bottom line they make 3ish% on the balance sheet. I wouldn't go into business for a potential 3% profit at best.
Poppycock in my opinion.That may be what they manage to publish but I’ve no idea why anyone would believe them. Do you think they don’t do everything possible similar to amazon etc to move money around, give loans to themselves, minimise tax, and ultimately present a picture of woe is me? They jack prices up every chance they get.
vulture1 said:
Big supermarkets make their biggest mark ups on non food. Plants on those big tray dollies have at least 50% and non food is the other big driver. But bottom line they make 3ish% on the balance sheet. I wouldn't go into business for a potential 3% profit at best.
That 3% represents billions of pounds. If you could go into business and make £3billion a year, you would.
Rivenink said:
vulture1 said:
Big supermarkets make their biggest mark ups on non food. Plants on those big tray dollies have at least 50% and non food is the other big driver. But bottom line they make 3ish% on the balance sheet. I wouldn't go into business for a potential 3% profit at best.
That 3% represents billions of pounds. If you could go into business and make £3billion a year, you would.
£3k profit from a business with £100k of revenue wouldn't be worth doing. £30m of profit from a business doing £1 billion in revenue is a rather different scenario.
Sainsburys revenue for 2022 was £36 billion apparently, so over a billion in profit if that 3% is accurate. I'd get out of bed in the morning for that personally.
isaldiri said:
Rivenink said:
That 3% represents billions of pounds.
If you could go into business and make £3billion a year, you would.
So your issue is the absolute amount of profit earned regardless of the profit margin then? If you could go into business and make £3billion a year, you would.
I read the comment as a response to a previous poster asserting that 3% profit isn't worth bothering with by pointing out that running a business at 3% profit can be very lucrative if your revenue figures are high enough.
SWoll said:
Issue?
I read the comment as a response to a previous poster asserting that 3% profit isn't worth bothering with by pointing out that running a business at 3% profit can be very lucrative if your revenue figures are high enough.
Well you'd need to be confident of delivering on said revenue figures to be high enough as well. Delivering multi billion revenues just might not be quite so easy .....I read the comment as a response to a previous poster asserting that 3% profit isn't worth bothering with by pointing out that running a business at 3% profit can be very lucrative if your revenue figures are high enough.
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