Inflation

[SueEllen]

CPI is 9.1%

Is that a B* bonus?

No wonder the unions are striking over pay.

https://www.theguardian.com/business...te-in-40-years

UK inflation has increased to 9.1%, its highest rate in 40 years amid record prices for petrol and the soaring cost of food.

The figures from the Office for National Statistics showed an increase in May from 9% in April, as measured by the consumer price index, in a reading that matched the forecasts of City economists. In a fresh high, the headline inflation rate has hit a level not seen since February 1982, piling pressure on households in the cost of living crisis.

Inflation is being fuelled by food and non-alcoholic drink prices, which are rising at the fastest annual rate since 2009, the ONS said, with the most dramatic increases seen in the cost of bread, cereals and meat.

Soaring prices for petrol and diesel also drove up inflation in May, adding to the pressure on motorists and business costs with a 32.8% jump motor fuels over the past year – the biggest annual increase on records dating back to 1989.

[AtW]

Looks like fall in prices of plasma TVs no longer help - Dishy Rishy should not have blindly used Brown's tricks that got a bit too old

[SueEllen]

What's a plasma TV?

[mattster]

CPI is 9.1%

No wonder the unions are striking over pay.

It needs to be repeated over and over that a pay deal below the rate of inflation is a pay cut. The RMT aren't even asking for a a pay deal at (or above) the rate inflation, btw, just for less of a pay cut than they've been offered. Things are going to get ugly I think if this inflation isn't brought under control soon, and there is little to suggest that it will be.

Another pernicious effect of high inflation over the next few years (let's be realistic) is that we are currently 1 year into a 5 year tax-band freeze, which affects everything from PAYE to IHT bands and pension lifetime limit. Even if you are lucky enough to enjoy inflation meeting pay rises over the next few years (doubtful), after tax income is still very likely to go down. Consider someone on £50k who currently just dodges higher rate tax. Keeping up with inflation for 4 years would put you on nearly £75k, but now nearly a third of your income is subject to the higher rate. No doubt child benefit taper won't be adjusted either (haven't actually checked this) so you can kiss goodbye to that as well - likewise personal allowance clawback etc. The pension lifetime limit could also be 30% or more lower in real terms.

We're all getting poorer fast - how soon until people really start to notice?

[vetran]

CPI is 9.1%

Is that a B* bonus?

No wonder the unions are striking over pay.

https://www.theguardian.com/business...te-in-40-years

UK inflation has increased to 9.1%, its highest rate in 40 years amid record prices for petrol and the soaring cost of food.

The figures from the Office for National Statistics showed an increase in May from 9% in April, as measured by the consumer price index, in a reading that matched the forecasts of City economists. In a fresh high, the headline inflation rate has hit a level not seen since February 1982, piling pressure on households in the cost of living crisis.

Inflation is being fuelled by food and non-alcoholic drink prices, which are rising at the fastest annual rate since 2009, the ONS said, with the most dramatic increases seen in the cost of bread, cereals and meat.

Soaring prices for petrol and diesel also drove up inflation in May, adding to the pressure on motorists and business costs with a 32.8% jump motor fuels over the past year – the biggest annual increase on records dating back to 1989.

to quote my old mate Gordon B'Ruin

"its a global problem"

Is it a USEXIT bonus?

https://www.pewresearch.org/fact-tan...as%20the%20CPI.

8.6% in the Ex European confederacy the good ole US ofA!

is it a Turexit bonus?

In 37 of these 44 nations, the average annual inflation rate in the first quarter of this year was at least twice what it was in the first quarter of 2020, as COVID-19 was beginning its deadly spread. In 16 countries, first-quarter inflation was more than four times the level of two years prior. (For this analysis, we used data from the Organization for Economic Cooperation and Development, a group of mostly highly developed, democratic countries. The data covers 37 of the 38 OECD member nations, plus seven other economically significant countries.)

Among the countries studied, Turkey had by far the highest inflation rate in the first quarter of 2022: an eye-opening 54.8%.

did we miss IsExit, Grexit & Iexit? When did Germany go it alone? When did China join the EU?

Will you blame NLyUK's crabs on the B word next?

[d000hg]

We're all getting poorer fast - how soon until people really start to notice?

But one problem is simply inflating wages to match inflation further drives inflation. It's easy to say "don't raise wages" when you can afford to comfortably take a 10/20/30% effective income drop of course.

Does the problem actually have a solution, even theoretically, when inflation is due to external factors?

[Fraidycat]

Does the problem actually have a solution, even theoretically, when inflation is due to external factors?

If people dont get pay rises they cant afford to buy stuff at the same rate they did last year.
Even worse, create a recession and people get laid off, then they cant afford to buy anything.

Demand destruction.

They cant increase supply so will destroy the demand side of the equation.

[mattster]

But one problem is simply inflating wages to match inflation further drives inflation. It's easy to say "don't raise wages" when you can afford to comfortably take a 10/20/30% effective income drop of course.

Does the problem actually have a solution, even theoretically, when inflation is due to external factors?

Inflation is a monetary phenomenon, and the idea of a wage/price spiral has been largely discredited - although it doesn't stop people believing it is true, and doesn't stop opportunistic politicans from repeating it. Certainly wages aren't the cause of the current inflation, and businesses are right at this moment enjoying record profits as they raise prices but not wages. Somehow it is not greedy for business to do this, but it is greedy for workers to ask for their pay to be kept the same in real terms.

I have no idea what the solution is tbh but things could certainly get ugly towards the end of this year, especially if the mooted ~50% energy price rise comes in October. We'll be looking at £5k+ a year after that - not only is that going to stretch a lot of families to breaking point, it is a huge amount of dosh to remove from the rest of the economy. Surely an epic recession is baked in now?

[DealorNoDeal]

We're all getting poorer fast - how soon until people really start to notice?

Except pensioners with the triple lock reinstated.

https://inews.co.uk/inews-lifestyle/...rnment-1699779

With a GE in 2024, they wouldn't have dared not reinstate it.

[d000hg]

Pensioners have a pretty rough deal (those relying on the state pension at least), they can't typically take a 2nd/higher paying job and are at particular risk from energy poverty. Looking after the elderly is a good thing.