10% pay rise nonsense

[Apple]

7 minutes ago, offshoremanxman said:

Of course they do.

F I can't see food or rents coming down.

[offshoremanxman]

10 minutes ago, Apple said:

F I can't see food or rents coming down.

Of course they will. Food is largely supply chain problems arising from Brexit and rents are demand lead. They’ll come down as things settle after covid. Will you be handing your 10% pay increase back if that happens?

[Meoir Shee]

 

3 hours ago, Apple said:

Sorry.

But those high prices will not come down again - they never do. 

 

23 minutes ago, offshoremanxman said:

Of course they do. This is being driven largely by energy prices which most certainly will come down after the current crisis is over. Gas, heating oil. petrol etc won’t be this high in 12 months time. 

Since 1988, according to the data below, there have been just 5 months in which the rate of inflation has been negative, all in 2015 and all c-0.1%.  So over the past 403 months, prices have risen every single month except 5.  When the rate of inflation falls, prices are still rising.

UK historical inflation data

[offshoremanxman]

1 minute ago, Meoir Shee said:

Since 1988, according to the data below, there have been just 5 months in which the rate of inflation has been negative, all in 2015 and all c-0.1%.  So over the past 403 months, prices have risen every single month except 5.  When the rate of inflation falls, prices are still rising.

UK historical inflation data

I’m not sure what relevance any of that has when we are talking about spikes driven by black swan events like Brexit, a global pandemic and a war in Ukraine. 

[Harry Lamb]

54 minutes ago, offshoremanxman said:

I’m not sure what relevance any of that has when we are talking about spikes driven by black swan events like Brexit, a global pandemic and a war in Ukraine. 

There are always events

[Declan]

56 minutes ago, offshoremanxman said:

I’m not sure what relevance any of that has when we are talking about spikes driven by black swan events like Brexit, a global pandemic and a war in Ukraine. 

That's an awful lot of black swans. A lamentation in fact.

[Newbie]

1 hour ago, offshoremanxman said:

I’m not sure what relevance any of that has when we are talking about spikes driven by black swan events like Brexit, a global pandemic and a war in Ukraine. 

Surely the point is that if inflation runs at 10% for a year or so it means that a basket of average goods costs 10% more than a year ago. At the moment that is driven by things such as supply chain issues, fuel prices, shortages due to the war in Ukraine etc. As those things settle, inflation will (should) come down but it will still leave the cost of a basket of average goods costing more than it did a year ago. One off hand outs by companies will compensate workers for the rise in the first year, but not sustained high prices. In order for that approach to work, the period of 10% inflation would need to be followed by a period of 10% deflation for a similar time. Historically, that has never happened, and of course the Bank of England has an inflation target of 2%, so once inflation starts coming down to that level they will take action to prevent it going lower, leaving the increase in prices from the 10% inflationary period baked in to the system.

[Apple]

I think there is also a difference in what a prices of something is as to what its value is. Take housing - I have not seen prices of houses come down.

7 minutes ago, Newbie said:

leaving the increase in prices from the 10% inflationary period baked in to the system.

Which then reduces what people have to spend and supports wage increases, or whatever else is needed - tax reductions, support mechanisms etc.  I accept it is an unattractive spiral in many cases but for once I would like to see trickle up systems.

[offshoremanxman]

25 minutes ago, Declan said:

That's an awful lot of black swans. A lamentation in fact.

That’s exactly my point. When have three things like that come along in succession? This is a big spike caused by one off events so most historic comparisons are of little value. 

[Newbie]

19 minutes ago, offshoremanxman said:

That’s exactly my point. When have three things like that come along in succession? This is a big spike caused by one off events so most historic comparisons are of little value. 

That may be true, but the overall increase in the cost of living brought about by these events is likely to remain. At least that is what the Bank of England's strategy of getting inflation down to 2% would suggest. They are not aiming for an inflation rate of -10% (or any negative figure)

[mad_manx]

Ignore the BOE rates . Has anyone looked at current mortgage rates .

Close to 6% for a 2 year fix even with a 60% LTV 

Banks are padding  on extra to cover potential further raises .

I hope all those who bid up property prices  over the last 2 years  or so have fixed for at least 5 years .

Otherwise it's going to be a nasty surprise.

Edited October 5, 2022 by mad_manx

[Harry Lamb]

1 hour ago, Declan said:

That's an awful lot of black swans. A lamentation in fact.

I'm putting him on mute.

[P.K.]

1 hour ago, Newbie said:

Surely the point is that if inflation runs at 10% for a year or so it means that a basket of average goods costs 10% more than a year ago. At the moment that is driven by things such as supply chain issues, fuel prices, shortages due to the war in Ukraine etc. As those things settle, inflation will (should) come down but it will still leave the cost of a basket of average goods costing more than it did a year ago. One off hand outs by companies will compensate workers for the rise in the first year, but not sustained high prices. In order for that approach to work, the period of 10% inflation would need to be followed by a period of 10% deflation for a similar time. Historically, that has never happened, and of course the Bank of England has an inflation target of 2%, so once inflation starts coming down to that level they will take action to prevent it going lower, leaving the increase in prices from the 10% inflationary period baked in to the system.

Never mind the BoE the value of the £ has an inflationary / deflationary effect.

Had to laugh at Thick Lizzy replying to Kuenssberg about how their ill-thought out (if at all all!) so-called policy announcement had put up interest rates giving mortgage holders nightmares she said that interest rates were down to the Bank of England!

An Andrew Marr would have shredded her for that...

[forestboy]

14 minutes ago, P.K. said:

Never mind the BoE the value of the £ has an inflationary / deflationary effect.

Had to laugh at Thick Lizzy replying to Kuenssberg about how their ill-thought out (if at all all!) so-called policy announcement had put up interest rates giving mortgage holders nightmares she said that interest rates were down to the Bank of England!

An Andrew Marr would have shredded her for that...

She’s a total empty headed and useless individual. 

[Non-Believer]

3 minutes ago, forestboy said:

She’s a total empty headed and useless individual. 

Every interview with her that I've watched confirms that, Beth Rigby from Sky News had her gasping like a goldfish. She just repeats the phrase "grow the economy" like Boris said "get Brexit done".

33% lead for Labour, I bet they can't believe their luck.