88V8 wrote:Itsallaguess wrote:The UK inflation rate rose to 1.5% in the 12 months to April, up from 0.7% in March, official figures show.
The only good thing about the 70s was hot pants.
V8
Never could get them in my size, though....
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88V8 wrote:Itsallaguess wrote:The UK inflation rate rose to 1.5% in the 12 months to April, up from 0.7% in March, official figures show.
The only good thing about the 70s was hot pants.
V8
murraypaul wrote:BOE sees inflation reaching 4% this year.
richfool wrote:Regarding inflation and interest rates, I was listening to a Kitco interview on YouTube yesterday. The gist was that, despite rising inflation, the Fed would be inhibited from raising interest rates because it would result in a stock market crash. It might raise them by 0.25 points, but that would then unnerve markets and cause equities to fall. It can't raise them by much because of the huge debts that it would have to service at higher interest rates and that slowly markets would realise that and equities would fall and gold recover again. The Fed (and presumably other central banks) has little choice but to try and "inflate" away the huge debts.
I just found the link: https://youtu.be/eHH6CZo1JnA
In another interview the "expert" was advising avoid US and big name tech and growth stocks and seek out alternative assets and value stocks.
The UK inflation rate fell to 2% in the year to July as the economy continued to reopen from Covid-19 restrictions.
The Consumer Prices Index (CPI) measure of inflation dipped from 2.5% in the year to June, the highest level for nearly three years, the Office for National Statistics (ONS) said.
The rate fell to the Bank of England's 2% inflation target, after being higher for two months in a row.
Inflation pressures
Yael Selfin, chief economist at KPMG UK, said the rate dip "masks the strength of inflationary pressures currently within the UK economy".
"We expect inflation to accelerate further during the rest of this year, rising significantly above the Bank of England's 2% target, as supply chains remain under strain faced with a strong rebound in demand," she added.
The Retail Prices Index (RPI), a separate measure of inflation, increased to 3.8%. The number in July is typically used to calculate rises in regulated rail fares.
However, the government said no decision had been made on national fares, with a spokesman stating it is "considering a variety of options".
Inflation came in lower than expected, bang on the Bank of England's target of 2%, thanks to a fall in the price of clothing.
But some of the comparisons reflect last year's reopening trends, for example in July 2020 clothes prices did not fall, as is usual during the sales.
Some prices are difficult to calculate, such as package holidays.
Other prices are still surging, such as the used car market, when in July the 12-month inflation rate was 14%, reflecting shortages of new cars due to difficulties in semiconductor production. Petrol prices are well up on a year ago too.
So the broad story is that this is a pause for breath as inflation marches towards 4% this year.
But the fact it has dipped provides more support for the majority of Bank of England decision makers on the Monetary Policy Committee who believe that the anticipated rise will be temporary and does not need an immediate response, in order to contain it.
richfool wrote:Regarding inflation and interest rates, I was listening to a Kitco interview on YouTube yesterday. The gist was that, despite rising inflation, the Fed would be inhibited from raising interest rates because it would result in a stock market crash. It might raise them by 0.25 points, but that would then unnerve markets and cause equities to fall. It can't raise them by much because of the huge debts that it would have to service at higher interest rates and that slowly markets would realise that and equities would fall and gold recover again. The Fed (and presumably other central banks) has little choice but to try and "inflate" away the huge debts.
TheMotorcycleBoy wrote:richfool wrote:Regarding inflation and interest rates, I was listening to a Kitco interview on YouTube yesterday. The gist was that, despite rising inflation, the Fed would be inhibited from raising interest rates because it would result in a stock market crash. It might raise them by 0.25 points, but that would then unnerve markets and cause equities to fall. It can't raise them by much because of the huge debts that it would have to service at higher interest rates and that slowly markets would realise that and equities would fall and gold recover again. The Fed (and presumably other central banks) has little choice but to try and "inflate" away the huge debts.
Although letting inflation rise, in order to "inflate" away debts may sound like a good idea in the near term, it's going to be problematic for governments long term because future spending will be more expensive, due to this inflationary effect. Hence without austerity, a bigger pile of debt will grow in order to fund public spending, continually needing to "inflate" away ever more.
Matt
ursaminortaur wrote:
UK debt is mostly fixed interest with fairly long maturities so can be inflated away for a while before needing to be rolled over at the newer higher rate needed to counteract inflation.
GoSeigen wrote:ursaminortaur wrote:
UK debt is mostly fixed interest with fairly long maturities so can be inflated away for a while before needing to be rolled over at the newer higher rate needed to counteract inflation.
UK debt is NOT mostly fixed interest. 45% of it is funded by issuance of Central Bank reserves, this means the median maturity of UK debt is just four years. This is great for investors but pretty poor for the taxpayer. Inflation is going to be uncomfortable for the public finances unless a long-term debt issuance campaign is undertaken sometime soon (targetting of course the dumb money).
GS
ursaminortaur wrote:TheMotorcycleBoy wrote:richfool wrote:Regarding inflation and interest rates, I was listening to a Kitco interview on YouTube yesterday. The gist was that, despite rising inflation, the Fed would be inhibited from raising interest rates because it would result in a stock market crash. It might raise them by 0.25 points, but that would then unnerve markets and cause equities to fall. It can't raise them by much because of the huge debts that it would have to service at higher interest rates and that slowly markets would realise that and equities would fall and gold recover again. The Fed (and presumably other central banks) has little choice but to try and "inflate" away the huge debts.
Although letting inflation rise, in order to "inflate" away debts may sound like a good idea in the near term, it's going to be problematic for governments long term because future spending will be more expensive, due to this inflationary effect. Hence without austerity, a bigger pile of debt will grow in order to fund public spending, continually needing to "inflate" away ever more.
Matt
UK debt is mostly fixed interest with fairly long maturities so can be inflated away for a while before needing to be rolled over at the newer higher rate needed to counteract inflation. And at least theoretically QE could be unwound, which should have a deflationary effect, as an alternative to raising interest levels to counteract inflation.
TheMotorcycleBoy wrote:ursaminortaur wrote:TheMotorcycleBoy wrote:Although letting inflation rise, in order to "inflate" away debts may sound like a good idea in the near term, it's going to be problematic for governments long term because future spending will be more expensive, due to this inflationary effect. Hence without austerity, a bigger pile of debt will grow in order to fund public spending, continually needing to "inflate" away ever more.
Matt
UK debt is mostly fixed interest with fairly long maturities so can be inflated away for a while before needing to be rolled over at the newer higher rate needed to counteract inflation. And at least theoretically QE could be unwound, which should have a deflationary effect, as an alternative to raising interest levels to counteract inflation.
I wasn't really talking about existing debt maturities. I was attempting to critique the way that economic commentary attempts to play down inflation as a "good thing", but they ignored the fact that public spending costs (i.e. potential need for additional borrowing), will rise with inflation too. So the size of UKs debt requirement will rise.
Yes rising GDP. I don't know how much GDP ends up as tax revenue (to mitigate borrowing) so I can't really argue the toss. However, for the last decade (sorry I'm on a break so this BEEB ref. was the quickest I could find with a graph in a hurry), we've scarcely averaged 2% GDP growth.
https://www.bbc.co.uk/news/business-50373505
Lets see how accurate the forecasts turn out to be.
Matt
anon155742 wrote:GDP per capita for 2020 is still at 2004 levels ...
https://data.worldbank.org/indicator/NY ... cations=GB
anon155742 wrote:
...and probably undercounts population.
dealtn wrote:anon155742 wrote:GDP per capita for 2020 is still at 2004 levels ...
https://data.worldbank.org/indicator/NY ... cations=GB
Probably best to make that statement in Local Currency Unit (although that diminishes your argument).
anon155742 wrote:Tell me, why would you not use a constant LCU? Constant ones are more appropriate since they actually take inflation into account.
dealtn wrote:anon155742 wrote:GDP per capita for 2020 is still at 2004 levels ...
https://data.worldbank.org/indicator/NY ... cations=GB
Probably best to make that statement in Local Currency Unit (although that diminishes your argument).
https://data.worldbank.org/indicator/NY ... cations=GBanon155742 wrote:
...and probably undercounts population.
Do you think the population count was accurate in 2004, and the imbetween years too?
dealtn wrote:anon155742 wrote:Tell me, why would you not use a constant LCU? Constant ones are more appropriate since they actually take inflation into account.
?
My suggestion was a constant one! Precisely as you suggest, "constant LCU".
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