Inflation

[Andyhsufc]

http://news.bbc.co.uk/1/hi/business/7458209.stm

With inflation on the CPI index now hitting 3.3%, 1.3% over the BoE target, are people starting to feel the pinch and what can be done to bring it back under control??

 

[dloman]

Well the first thing the BoE may well do is increase interest rates again.

 

[leeblue]

Definitely noticing things like food and fuel costing more and more, being a nurse its fair to say I dont get inflation busting pay rises, in fact I have just taken up a part time job as well, I dread to think how it would be if I was single and only on my wage........scary.

 

[Slipperduke]

It's all getting a bit concerning, isn't it? I've been watching the storm gather for a while now and I've spent the last few months diverting every spare penny at my remaining debts. All clear now, I'm in credit this week for the first time since 1996, but with no assets at all and only a month-to-month contract as security.

Wibble.

The biggest concern is that it all seems linked to the rising price of oil. This wouldn't be so much of a problem if we had loads of it left, but apparently it's starting to run out. That drives up the price of everything, because you've got to drive a product to the shop if you want to sell it, and everything follows suit.

Now, I'm not nearly clever enough to figure out we get oursleves out of this mess, but if someone here is, would they mind awfully having a word with Alistair Darling because he strikes me as the kind of chap who drinks his own bath water, if you know what I mean.

 

[dloman]

Now, I'm not nearly clever enough to figure out we get oursleves out of this mess, but if someone here is, would they mind awfully having a word with Alistair Darling because he strikes me as the kind of chap who drinks his own bath water, if you know what I mean.

It is the eyebrows that give it away.


Sadly though since Mr Brown decided in 2003 to switch to CPI as opposed to RPI for calculating the true level of inflation, it has been seriously undercalculated. At a laymans guess (or should that be Lomans) i would suggest inflation is probably closer to 9%.

Worrying times indeed.

 

[Interpol Shrimper]

I'm definitely feeling the effect on my pocket just now.
I prefer working as a contractor as that gives me a relative amount of freedom in what I do, however my contract is expiring soon, and my new team-leader called me in yesterday and said despite her offering me another 3 month extension, she now had been told it would not be signed at my current hourly rate and was I prepared to continue working for over 50% less than I've been getting for the past 11 months! When I stopped laughing I said it wasn't even worth me getting out of bed for that rate, espeically with the cost of living rising so dramatically!

 

[Napster]

The biggest concern is that it all seems linked to the rising price of oil. This wouldn't be so much of a problem if we had loads of it left, but apparently it's starting to run out. .

Apparently there's a huge load of oil under the arctic ice caps. There's a dilemma for you.

 

[Napster]

Well the first thing the BoE may well do is increase interest rates again.

But they wouldn't dare. That would increase the effects of the credit crunch, more bankruptcies, housing market would implode.

 

[Slipperduke]

Apparently there's a huge load of oil under the arctic ice caps. There's a dilemma for you.

Technically, it belongs to Russia, doesn't it? They managed to get a tiny, remote control submarine to stick a flag in it a little while back.

I loved that story, mainly because of the indignant British Foreign Office spokesman who derided Russia's claim without a trace of irony, saying, "You can't just put a flag in the ground and say 'that's ours!'"

They're really not teaching enough history at school, are they?

 

[dloman]

But they wouldn't dare. That would increase the effects of the credit crunch, more bankruptcies, housing market would implode.

Wouldn't they ? ;) well maybe not yet anyway.

 

[MrB]

Don't know what's in the govt shopping basket these days but 3.3% seems way too low.

 

[Firestorm]

Is there a problem with high inflation ? as long as it is matched with wage inflation (and the interest rate does not go up)we will all end up better off.
If your salary increases with inflation and you are spending an element of it on a mortgage (which will not be going up as long as interest rates are pegged) you get ,for example, a 5% increase in disposible income yet a 5% increase on only (say) 60% of your spending (the rest being the mortgage)

Where the problems arise in my mind is when the Interest rates are hiked up to prevent inflation, therefore the mortgage rate rises dramatically yet, as inflation is pegged , the salaries don't.

 

[osymandus]

It is the eyebrows that give it away.


Sadly though since Mr Brown decided in 2003 to switch to CPI as opposed to RPI for calculating the true level of inflation, it has been seriously undercalculated. At a laymans guess (or should that be Lomans) i would suggest inflation is probably closer to 9%.

Worrying times indeed.

SOme sources inform me closer to 12% but hey ho teh shadow world et al. I guess the issue is the free rein oil companies have and the fact that the US econonmey is so closely linked to it . Again more rumours abound of un tapped feild in Alaska, off teh coast Florida as well as Russia and other countries , however if suddenly you have surpluss the price falls away.
And those that alerady have the money can propably ensure that if everything else goes belly up their safe ;)

Sell it in euros i say :D

 

[dloman]

Sell it in euros i say :D

Actually a very valid point there. This would help greatly.

 

[osymandus]

Actually a very valid point there. This would help greatly.

You must watch Rob Newmans a history of oil ;) . Basiclly he explains that what would happen is about 40% (and ive had this explained to me by a finacial Norwegian chum of mine) of the US economia would be knackered . As Oil is sold in dollars its a licence to print , however they have secured a lot of "loans" on this so if peopel stop selling dollars then it all starts coming back and other banks want their money back :D

 

[Mad Cyril]

I am concerned about the price of my grocery bill to the point that I am considering switching from Herta Frankfurters to Ye Olde Oak tinned hot dog sausages.

 

[loz]

Sadly though since Mr Brown decided in 2003 to switch to CPI as opposed to RPI for calculating the true level of inflation, it has been seriously undercalculated. At a laymans guess (or should that be Lomans) i would suggest inflation is probably closer to 9%.

Worrying times indeed.

the worst bit about that wheeze is that when it's money you owe the govt, they still use RPI! For example, the interest rates on student loans are calculated based on RPI, + hence are rising a lot higher than current wage settlements.

 

[Flinty]

You must watch Rob Newmans a history of oil ;) . Basiclly he explains that what would happen is about 40% (and ive had this explained to me by a finacial Norwegian chum of mine) of the US economia would be knackered . As Oil is sold in dollars its a licence to print , however they have secured a lot of "loans" on this so if peopel stop selling dollars then it all starts coming back and other banks want their money back :D

sorry but we all know what a useless tosser he was !!!:whistling:

 

[dloman]

You must watch Rob Newmans a history of oil ;) . Basiclly he explains that what would happen is about 40% (and ive had this explained to me by a finacial Norwegian chum of mine) of the US economia would be knackered . As Oil is sold in dollars its a licence to print , however they have secured a lot of "loans" on this so if peopel stop selling dollars then it all starts coming back and other banks want their money back :D

I haven't seen that, but having worked and supplied to some of the oil producing countries like Iran and The Yemen, i know that the majority would rather the price was in euros and in fact pretty much all their other trade as in purchasing is done in euros.

 

[Lancashire shrimper]

the worst bit about that wheeze is that when it's money you owe the govt, they still use RPI! For example, the interest rates on student loans are calculated based on RPI, + hence are rising a lot higher than current wage settlements.

Noted

. . . and then we're shafted with the move to CPI for general inflation which is then undervalued. If CPI = 3% & RPI = 9% what would the government rather use as leverage for salary negotiations?