Guest 655- Registered: 13 Mar 2008
- Posts: 10,247
#1
Just announced:
CPI inflation at 5.2 per cent in September, a three-year high.
RPI inflation 5.6 per cent, the highest for twenty years.
I have been saying that inflation was set to get worse for a while now, ever since QE1.
The Bank of England needs to get a grip but having another round of QE this is set to get even worse in 18 months/2years time. Clear down mortgages and debt while the going is good. QE will push down investment interest rates more while the pressures for lending rates to rise will increase as a means to battle inflation. Only the very weak economy, being made all the weaker by the European malaise, is preventing rates from rising now but this will not last forever and as soon a life appears in the economy lending interest rates will start to go up. The gaps between low investment rates and (higher) borrowing rates will increase.
Better add, that there will be some easing in price rises next year (VAT increase dropping out and overall economic weakness) but that will be temporary. The big problem is the devaluing of the currency (what 'inflation' really is) by increased money supply (QE) and the £75bn QE is not likely to be all there is.
Guest 658- Registered: 13 Mar 2008
- Posts: 660
#2
The other side of the coin is that those of us on a pension will get a reasonable increase
beer the food of the gods
Guest 640- Registered: 21 Apr 2007
- Posts: 7,819
#3
Jeez things are getting worse, and nobody seems to be able to do anything about it. This begs the question if the latest round of Quantatitive Easing was worthwhile at all. They are trying to get the money swirling into the economy but its not working, the banks themselves appear to have hoarded the latest QE.
QE drives the returns we get on our savings way down, its time savers and investers got a break.
Im not sure there will be an easing in price rises next year, I believe petrol is due to go up considerably in the New Year..that will effect everything from family petrol pump prices to cost of delivering food to the supermarket..driving food prices up further. But politicians seem ever more powerless. The newspapers today dismissed David Camerons efforts yesterday with the all powerful utility companies as tepid..it was a window dressing. Go for Direct Debit was the summation of the effort.
Guest 710- Registered: 28 Feb 2011
- Posts: 6,950
#4
This coalition is all talk without any action that is the least bit positive. They do talk, or rather they do talk 'as if' , positive is what they are about, but the only good thing to be heard is a little background noise of honesty and boy! do they strive to drown even that out.
The 'energy' bloke (LD) was on Channel4 news last night and all I could discern from all that he said, in common with ALL Dave says to, was that he 'wanted' this or that outcome to ensue from whatever policy he was being asked about.
With their avowed determination to concentrate on all things Standard & Poor, they are all too standard and lack the indefinite-article after the ampersand.
Indefinite article. Just about sums them up.
Ignorance is bliss, bliss is happiness, I am happy...to draw your attention to the possible connectivity in the foregoing.
Guest 683- Registered: 11 Feb 2009
- Posts: 1,052
#5
Paul
I can't decide if no one knows what to do about it or is no-one wants to tackle it as they should do because it will be too unpopular. Politicians are only looking to the next by-election but we probably need a 20 or 30 year plan.
Guest 725- Registered: 7 Oct 2011
- Posts: 1,418
#6
Guest 655- Registered: 13 Mar 2008
- Posts: 10,247
#7
#2 - Guzzler, sorry you are wrong mate. QE2 is forcing down savings interest rates, in particular driving down gilt rates and it is 15 years gilts that are a factor in annuity rates. As I tried to explain, there will be a growing gap between savings rates and debt rates because higher inflation will drive them up.
In addition high inflation means that the value of money held on deposit is and will be falling in buying power at an ever faster rate, even if interest is rolled up.
As for the State Pension - it does you no good at all either as any increase is offset by higher prices. Wages are also depressed from a weak economy so the new NAE link will not benefit you.
Sorry but the news is all bad for borrowers, pensioners and savers alike. Unless, that is....
Guest 698- Registered: 28 May 2010
- Posts: 8,664
#8
.....you are on an index-linked public sector pension (or two).
I'm an optimist. But I'm an optimist who takes my raincoat - Harold Wilson
Guest 655- Registered: 13 Mar 2008
- Posts: 10,247
#9
....well guessed Peter.
howard mcsweeney1- Location: Dover
- Registered: 12 Mar 2008
- Posts: 62,352
#10
let's not forget the that benefits will rise in line so that will add to the deficit.
Brian Dixon
- Location: Dover
- Registered: 23 Sep 2008
- Posts: 23,940
#11
guzzler and howard are right here barry,the pension and benifit rates are based on septembers inflation figures.osbourne is looking at a 1.2 billion payout minimum payout,he will have to look at other savings to cover the payout.osbourne and his coherts may be looking at loopholes to get out paying the money,something to keep an eye on between now and the budget in april.
Guest 725- Registered: 7 Oct 2011
- Posts: 1,418
#12
I must say I really don't know what the fuss is all about surrounding inflation. It's what people voted for surely? When you elect a government they carry out their election manifestos as far as they possibly can.
Part of the reason our energy bills have risen is because of rising commodity prices but a very substantial proportion of that rise is due to measures voted for by most members of Parliament, notably the climate change act.
A mere handful of sane MPs voted against what is the most damaging and expensive piece of legislation in our history leaving the deluded majority to vote for it. So we only have ourselves to blame really.
Ironically George Osbourne refers to the act as "Labours climate change act" so as to deflect any blame for his part in helping to fuel inflation.
Yet he, himself, was amongst most of the rest of the conservatives who voted for this nonsense.
Good ol' George eh? Honest as ever.