Is UK inflation becoming a worry?

[Caddyshack]

Crumpet said:

covmutley said:

Jon39 said:

ATM said:

I did some quick maths.

30k salary gives £2,093.30 take home pay per month.

I used the Nationwide mortgage calculator - screenshot attached. Borrowing £180k and paying £900 per month over 35 years obviously. So almost 50% of their income. That leaves our imaginary person around £1193 per month to live on and pay for everything else. The good news is its a fixed rate product.

Where would they buy a house?
How much would it cost?
A mortgage of £180k, but what about the deposit, perhaps a £120k deposit.

How long would it take any average salary person to save £120k?

I feel very sorry for the younger generation at present.
Financially, many are scuppered.

Car and maintenance and repairs £300
Fuel £100
Energy £250
Council tax £200
Food £150
Clothes etc £100

Nothing left, not even for phone, coffee or avocados. Kids anyone?? Sorry, no.

I m surprised interest only mortgages aren t being pushed more. At the moment they re fairly restricted by salary and how you plan to repay the capital but they d be an effective way of freeing up some monthly income.

It s very possible to get a three bed house in large parts of the country for £140k. With a £20k deposit, £120k mortgage and on interest only you d be looking at a monthly of about £400-450 - half the price of the rent on the same property and probably £400 or so less than a repayment mortgage.

Effectively you could run this through until death, essentially renting the house from the bank. And your rent never changes so you have a degree of control (except when the rate changes on your mortgage come renewal time).

I am a mortgage broker and you can’t get a high loan to value interest only mortgage nor can you get one with a small deposit on monetary terms. Most lenders want 200k plus deposit or at least that after a repayment part repaid. Many have 75k min income as well and the deposit needs to be 25%….so 25% and min 200k and £75k income. Santander will do without 75k income but they want £250k deposit and 25# deposit to unlock some interest only.

[Downward]

borcy said:

ATM said:

Me again

Out of interest what is the normal person supposed to do with this information? Are you suggesting there's a way the average person can mitigate this?

Haha folks can see going the shops 3 or 4 times a week.

Those products you would pay £1 for are now £1.50 in 12 months. Those luxury items for me are getting left on the shelves.

I m talking junk food mainly ! Fizzy Pop, Chocolate and Crisps. Also Alcohol purchasing has also reduced this year.
Bills have gone up so although the food bill hasn t less food is getting purchased.

I’ll be going back to Jam or Lemon Curd sandwiches.

[bloomen]

https://www.independent.co.uk/news/uk/home-news/in...

This goes to show how stagnant things have been in the last couple of decades.

If growth had been similar to 1995-2005 the average salary would be £51,000. Obviously there are golden stretches that can't be replicated, but it really has been in the crapper ever since then.

[snuffy]

bloomen said:

https://www.independent.co.uk/news/uk/home-news/in...

This goes to show how stagnant things have been in the last couple of decades.

If growth had been similar to 1995-2005 the average salary would be £51,000. Obviously there are golden stretches that can't be replicated, but it really has been in the crapper ever since then.

I found an old pension statement from the early 90s for my first job. At the time my salary was around £14k after a couple of years of work. It used a 9% annual salary growth for every year until 60. It predicts my final salary would be around £415k. It also used 12% annual invest return to predict a pension pot of over £1.6m.

Hmmm...

[ATG]

snuffy said:

bloomen said:

https://www.independent.co.uk/news/uk/home-news/in...

This goes to show how stagnant things have been in the last couple of decades.

If growth had been similar to 1995-2005 the average salary would be £51,000. Obviously there are golden stretches that can't be replicated, but it really has been in the crapper ever since then.

I found an old pension statement from the early 90s for my first job. At the time my salary was around £14k after a couple of years of work. It used a 9% annual salary growth for every year until 60. It predicts my final salary would be around £415k. It also used 12% annual invest return to predict a pension pot of over £1.6m.

Hmmm...

Did it explain its assumptions? Or was it just produced by massive spivs?

If they'd assumed inflation would continue at the levels seen back then, then 9% nominal might have only been s forecast of 3% in real terms.

The way inflation and therefore rates fell from the late 90s onwards was unprecedented and almost completely unpredicted.

I have started to wonder if a bit of "boom and bust" might help us right now. It would at least give Joe Public the idea that the economy can change and sometimes it actually grows. Given people's expectations are usually irrationally optimistic (which is why a small about of inflation is A Good Thing) it strikes me a bit of boom and bust probably plays to exactly the same propensity for money illusion.

[snuffy]

ATG said:

Did it explain its assumptions? Or was it just produced by massive spivs?

If they'd assumed inflation would continue at the levels seen back then, then 9% nominal might have only been s forecast of 3% in real terms.

The way inflation and therefore rates fell from the late 90s onwards was unprecedented and almost completely unpredicted.

I have started to wonder if a bit of "boom and bust" might help us right now. It would at least give Joe Public the idea that the economy can change and sometimes it actually grows. Given people's expectations are usually irrationally optimistic (which is why a small about of inflation is A Good Thing) it strikes me a bit of boom and bust probably plays to exactly the same propensity for money illusion.

Unfortunately I threw it all away as it had been all transferred to a section 32 and closed down. But I know the figures are correct because I emailed to them some who was in the same scheme. It's a pity I didn't keep it.

This was Scottish Equitable (now Aegon).

However, it's GMP is actually staggeringly good considering how little was paid into my pot before it was transferred.

[Peterpetrole]

snuffy said:

Unfortunately I threw it all away as it had been all transferred to a section 32 and closed down. But I know the figures are correct because I emailed to them some who was in the same scheme. It's a pity I didn't keep it.

This was Scottish Equitable (now Aegon).

However, it's GMP is actually staggeringly good considering how little was paid into my pot before it was transferred.

Blimey sounds bonkers, the world has changed a bit.

[Mr Whippy]

Perhaps a big mega bust is coming, ala 1929?

Having looked at the headlines from the 20s it was new paradigm back then too.

The end of boom and bust, the pandemic in the rear view mirror, new technology and innovations that would drive growth forever, the second renaissance of man.

Who wouldn’t buy into that?


It’d certainly be a bit of a financial liberator for younger people, unless of course our dear leaders decide to try protect the wealth inequality by bailing out the wealthy, again again again…

[Wills2]

Food inflation is the worry as that starts to eat into middle earners pay and starts to reduce the money available for the rest of the economy and it's rampant at the moment, there things I know won't buy like steak as it's too much and not worth it but there are man things you have to buy you can't avoid the rises.

[Crumpet]

Wills2 said:

Food inflation is the worry as that starts to eat into middle earners pay and starts to reduce the money available for the rest of the economy and it's rampant at the moment, there things I know won't buy like steak as it's too much and not worth it but there are man things you have to buy you can't avoid the rises.

I guess it’s a triple whammy for pubs and restaurants; food inflation, extra costs for labour with minimum wage and NI increases, and then energy costs. We’ve cut back and impromptu ‘shall we go out for lunch’ moments are now a thing of the past.

That being said, the don’t seem to be closing around us, so that’s a good thing!

[AlexGSi2000]

I had a nice pay rise last year (10k) - on my previous salary it was a big bump.
Not feeling quite as flush as I was and nothing has really changed on the spending front.
I really don't know how those on minimum wage do it.

[Shnozz]

ATG said:

Did it explain its assumptions? Or was it just produced by massive spivs?

If they'd assumed inflation would continue at the levels seen back then, then 9% nominal might have only been s forecast of 3% in real terms.

The way inflation and therefore rates fell from the late 90s onwards was unprecedented and almost completely unpredicted.

I have started to wonder if a bit of "boom and bust" might help us right now. It would at least give Joe Public the idea that the economy can change and sometimes it actually grows. Given people's expectations are usually irrationally optimistic (which is why a small about of inflation is A Good Thing) it strikes me a bit of boom and bust probably plays to exactly the same propensity for money illusion.

I completely agree. But then I’ve always thought it should be a free market to find equilibrium based on what’s actually happening in the world. Instead the artificial money supply just gets pumped up and further inflation arises as the value of money gets eroded but the can kicked down the road.

[Phooey]

AlexGSi2000 said:

I had a nice pay rise last year (10k) - on my previous salary it was a big bump.
Not feeling quite as flush as I was and nothing has really changed on the spending front.
I really don't know how those on minimum wage do it.

I'm guessing with full support from the gov. Don't underestimate what help there is out there - even down to stuff like free school meals, trips, laptop loan etc for students. So I'm guessing workers / families on minimum wage can actually absorb a lot of this inflation. Inflation is a (roughly) middle-income rot. There's a band of people that will be feeling it and bands that will whine, but won't.

eta - I'm not saying specifically *you're* whining but if we're honest we're all fed up off price rises.

[trickywoo]

Fruit juice is a really noticeable one for me. A few years ago I’d be paying around £1.50 a litre. Then around covid it started creeping up. Now it seems to go up 5p a week and is around £2.40.

[covmutley]

Mince beef is the one my wife mentions going up every week. Feeding a family of 5 on a household income of 'only' a smidge over 100k (me being the main earner) something like fresh fish is an occasional treat, but that now seems to be extending to beef.

I'm not complaining too much, obviously i have financial choices and make choices, but it's interesting that we are having to think about so many more purchasing decisions

Edited by covmutley on Friday 19th September 07:46

[Shnozz]

Cooked chicken and olive oil, albeit the latter perhaps more (non-financial) climate related.

[ooid]

trickywoo said:

Fruit juice is a really noticeable one for me. A few years ago I d be paying around £1.50 a litre. Then around covid it started creeping up. Now it seems to go up 5p a week and is around £2.40.

Lidl orange juice used to be 99p. Now it's 1.39

Literally, annualised 7% increase since 2020.

[Jon39]

Mr Whippy said:

Perhaps a big mega bust is coming, ala 1929? ...

Who knows?

I do wonder whether the huge and increasing government debt, is eventually going to be the cause of big trouble.

If citizens continually kept borrowing more and more, just to pay the minimum monthly credit card bill, we know how that ends.

The UK government is not alone having increasing debt, but in 2025-26 the grandly named Office for Budget Responsibilities said;
"We expect debt interest spending to total £111.2 billion. That would represent 8.3 per cent of total public spending.
Tax payers are obviously having to keep paying for this increasing amount of annual interest. Think what better ways this money could be used.

[Mr Whippy]

trickywoo said:

Fruit juice is a really noticeable one for me. A few years ago I d be paying around £1.50 a litre. Then around covid it started creeping up. Now it seems to go up 5p a week and is around £2.40.

Bottle Green juices were about £2.50 ish, now hovering around £4.50. I don't buy it now unless it's on offer.

Organic Waitrose Milk was £1.84, now £2.45 iirc.

Coconut Milk was mostly £1.10, now mostly £2.10+

Chicken at my local butchers was £6.95 for a 1kg pack, then it was £9.95 for a 1kg pack, now it's £8.50 for a 750g pack (iirc)... which is annoying because they've shrinkflationed rather than just put it to £11.00.

Also at the local butchers, £1.10 for a sausage roll in 2015. Now a whopping £2.45 ten years later... 8% inflation for 10 years straight! I also get a feeling they've got less meat in them now than they did back then too.


So UK inflation isn't really becoming a worry. This has been going on post GFC in my view, but has become evident now we look back.


Shrinkflation becoming more apparent over time, which is now very evident if you have a 10yr+ memory (or even stuff from 10 years ago to compare with new), combined with the egregious covid shenanigans, means looking back 10 years from today is a serious case of WOW!

[bloomen]

ooid said:

Lidl orange juice used to be 99p. Now it's 1.39

Literally, annualised 7% increase since 2020.

The Lidl freshly squeezed stuff has way more than doubled in a similar time frame.

However there've been all sorts of supply, crop and market problems for certain products so it's not always been jacking things up for the sake of it.

200g of Tesco chocolate was £1 forever. Now it's £2.30. You may as well get the good stuff for a fairly modest amount more, or forget about it.

A lot of things are simply an uninteresting proposition at their current prices, but obviouly there's certain things that can't be avoided.