RPI to 6% !

[NotSure]

First, the 'margins' can be cut, then the divi, then the executive bonuses... no, now I'm being silly...

V8

February's numbers again, but they would suggest margins are being cut:

The headline rate of output prices showed positive growth of 10.1% on the year to February 2022, up from 9.9% in January 2022.

The headline rate of input prices showed positive growth of 14.7% on the year to February 2022, up from 14.2% in January 2022.

[BT63]

First, the 'margins' can be cut, then the divi, then the executive bonuses... no, now I'm being silly...

V8

February's numbers again, but they would suggest margins are being cut:

The headline rate of output prices showed positive growth of 10.1% on the year to February 2022, up from 9.9% in January 2022.

The headline rate of input prices showed positive growth of 14.7% on the year to February 2022, up from 14.2% in January 2022.

Sometimes output prices don't need to rise as much as input prices to retain the same level of profit.

I offer items for sale at £10 and it costs me £8 after all costs, with £2 profit per item.

My costs go up 14.7% from £8 per item to £9.18.

To retain my £2 profit I need to increase the price of my £10 items by £1.18 to £11.18; a price increase of 11.8%.

So input costs +14.7%, output prices +11.8% gives me the same profit.

However, although my profit will remain the same, it won't rise in line with inflation. If I want an inflation-linked increase in profit, I need to increase my prices roughly in line with my input costs.

So with +14.7% input cost inflation and +10.1% output inflation, profit per item might be stable in nominal terms but declining in real terms.

[MDW1954]

People are still posting about February's numbers (the March release). I'm not sure why. Here's March's numbers (the latest, April, release):

https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/producerpriceinflation/march2022includingservicesjanuarytomarch2022

MDW1954

[NotSure]

People are still posting about February's numbers (the March release). I'm not sure why. Here's March's numbers (the latest, April, release):

https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/producerpriceinflation/march2022includingservicesjanuarytomarch2022

MDW1954

Thanks for the link

The headline rate of output prices showed positive growth of 11.9% on the year to March 2022, up from 10.2% in February 2022; this is the highest the rate has been since September 2008.

The headline rate of input prices showed positive growth of 19.2% on the year to March 2022, up from 15.1% in February 2022; this is the highest the rate has been since records began.

Phew! It's largely driven by oil, but high across the board. Chemical and pharmaceutical plus Metal, machinery and equipment in particular. At least fags and beer are down! (That's simply because their weighting has be reduced).

Do ONS or similar produce forecasts on PPI? It's hard to see the numbers reducing any time soon - not until oil drops out the figures after 1 year (assuming it does at least stabilise). And UK base rate at 0.5%.

[BT63]

A friend of mine has a store on an internet auction site which had been booming in the last few years.
He says demand has disappeared in the last several weeks like the flick of a switch. He says he's not even getting many page views any more; people aren't even browsing.
He says he is now slashing prices to the lowest ever ('deflation') to try to move stock but still very little is selling.

[MDW1954]

A friend of mine has a store on an internet auction site which had been booming in the last few years.
He says demand has disappeared in the last several weeks like the flick of a switch. He says he's not even getting many page views any more; people aren't even browsing.
He says he is now slashing prices to the lowest ever ('deflation') to try to move stock but still very little is selling.

Out of interest, what does it sell? Fascinating data point, though. Thank you.

MDW1954

[BT63]

Out of interest, what does it sell? Fascinating data point, though. Thank you.
MDW1954

Mostly garden and a few home items. The sort of things you might find in large garden centres and plant nurseries but much more competitively priced because he has low overheads.
Several weeks ago he said the sun came out and gave people the first taster of spring, and, as expected, garden items were great sellers.
The sun came out again last week and he was expecting good sales but almost nothing sold.
He has 99 - 100% satisfaction rating and good prices so it's not that he's a dodgy or expensive seller.

Earlier he gave a more exact figure and said the first half of April sales are down 67% compared to previous years.

[MDW1954]

Out of interest, what does it sell? Fascinating data point, though. Thank you.
MDW1954

Mostly garden and a few home items. The sort of things you might find in large garden centres and plant nurseries but much more competitively priced because he has low overheads.
Several weeks ago he said the sun came out and gave people the first taster of spring, and, as expected, garden items were great sellers.
The sun came out again last week and he was expecting good sales but almost nothing sold.
He has 99 - 100% satisfaction rating and good prices so it's not that he's a dodgy or expensive seller.

Earlier he gave a more exact figure and said the first half of April sales are down 67% compared to previous years.

Hmm. Disturbing. Thank you!

MDW1954

[Nimrod103]

Out of interest, what does it sell? Fascinating data point, though. Thank you.
MDW1954

Mostly garden and a few home items. The sort of things you might find in large garden centres and plant nurseries but much more competitively priced because he has low overheads.
Several weeks ago he said the sun came out and gave people the first taster of spring, and, as expected, garden items were great sellers.
The sun came out again last week and he was expecting good sales but almost nothing sold.
He has 99 - 100% satisfaction rating and good prices so it's not that he's a dodgy or expensive seller.

Earlier he gave a more exact figure and said the first half of April sales are down 67% compared to previous years.

Hmm. Disturbing. Thank you!

MDW1954

Easter in 2021 was at the beginning of April. This year it is in the second half.

[scrumpyjack]

I see today's papers report the NIESR saying that RPI is going to get to over 14%!

[rhys]

I find it unhelpful that RPI and CPI don't focus on the main costs of living.

Our experience of inflation is that it is way more than 6%. More like 30-50%. Supermarket items are being priced upwards every month. No need to mention fuel. Building materials for home renovation - timber and cement have leapt in price.

[Dod101]

I find it unhelpful that RPI and CPI don't focus on the main costs of living.

Our experience of inflation is that it is way more than 6%. More like 30-50%. Supermarket items are being priced upwards every month. No need to mention fuel. Building materials for home renovation - timber and cement have leapt in price.

Home renovations are not part of the day to day costs of living. You do not have to renovate your house but most need to eat and pay utility bills. I have checked my regular supermarket items and so far have seen little change in costs. Fuel in all its forms is showing by far the biggest increase for me.

Dod

[Dod101]

Incidentally I am currently away from home visiting relatives in the Scottish countryside. Cannot get a hotel room and the roads are full of campervans. A lot of people seem to have no concern about the cost of living at the moment or it would seem the future.

They will probably be the ones taking the lead in meaning about it later in the year.

Dod

[Dod101]

Incidentally I am currently away from home visiting relatives in the Scottish countryside. Cannot get a hotel room and the roads are full of campervans. A lot of people seem to have no concern about the cost of living at the moment or it would seem the future.

They will probably be the ones taking the lead in meaning about it later in the year.

Dod

Obviously ‘moaning about it’ is what I mean

Dod

[servodude]

Incidentally I am currently away from home visiting relatives in the Scottish countryside. Cannot get a hotel room and the roads are full of campervans. A lot of people seem to have no concern about the cost of living at the moment or it would seem the future.

They will probably be the ones taking the lead in meaning about it later in the year.

Dod

Obviously ‘moaning about it’ is what I mean

Dod

Aren't you taking the lead by moaning about their potential of moaning about it here?

I do think we're in an interesting period at the moment with a good proportion of people probaby feeling unusually cash rich given the past couple of years having curtailed their discretionary spending but staring at a short/medium term future of increased outgoings

I know from family that hospitality are finding it difficult to run at normal capacity because of staffing issues - there appears to be a shortage of the seasonal workers that the sector relied on (local youngsters though have a good choice of casual jobs - so that's swings and roundabouts)

You don't mention which part of Scotland you've decamped to, but a campervan trip in most parts could be seen from a couple of different sides: one man's miserable mobile "staycation" is another's extravagant road trip
- I suppose it depends on what their "expected"/"I'm worth it" holiday was

Enjoy your trip
-sd

[Dod101]

Incidentally I am currently away from home visiting relatives in the Scottish countryside. Cannot get a hotel room and the roads are full of campervans. A lot of people seem to have no concern about the cost of living at the moment or it would seem the future.

They will probably be the ones taking the lead in meaning about it later in the year.

Dod

Obviously ‘moaning about it’ is what I mean

Dod

Aren't you taking the lead by moaning about their potential of moaning about it here?

I do think we're in an interesting period at the moment with a good proportion of people probaby feeling unusually cash rich given the past couple of years having curtailed their discretionary spending but staring at a short/medium term future of increased outgoings

I know from family that hospitality are finding it difficult to run at normal capacity because of staffing issues - there appears to be a shortage of the seasonal workers that the sector relied on (local youngsters though have a good choice of casual jobs - so that's swings and roundabouts)

You don't mention which part of Scotland you've decamped to, but a campervan trip in most parts could be seen from a couple of different sides: one man's miserable mobile "staycation" is another's extravagant road trip
- I suppose it depends on what their "expected"/"I'm worth it" holiday was

Enjoy your trip
-sd

You are of course right that people will have accumulated savings and they are now happy to spend that and of course have the freedom after a couple of years of restrictions. I am actually in the far north, Caithness on the NC500 which according to the locals has been wonderful for business although they acknowledge has caused big problems for capacity all round, roads very busy with all manner of vehicles, campervans, flash cars being driven far too fast and motorbikes, often ditto. Good restaurants ( of which there are not that many) not too busy though although burger type places packed out. John o’ Groats now even worse than it was, if that is possible. Seems no shortage of staff, although in my usual haunts in Edinburgh and Glasgow restaurants have big problems and are often closed at lunchtimes for instance.

Dod

[dealtn]

I find it unhelpful that RPI and CPI don't focus on the main costs of living.

Our experience of inflation is that it is way more than 6%. More like 30-50%. Supermarket items are being priced upwards every month. No need to mention fuel. Building materials for home renovation - timber and cement have leapt in price.

I find it unhelpful you don't explain what those missing main costs of living are. Incidentally some building materials for home renovation are included in the CPI basket (section 04.3.1 if anyone is interested).

[AF62]

A lot of people seem to have no concern about the cost of living at the moment or it would seem the future.

Why would the cost of living increases concern a lot of people?

Sure the rises in prices of food and energy will be terrifying to a sizeable group of people on very low incomes or relying on state benefits, and will be concerning to a larger group of people on low to middling incomes, but to a vast number of people those increases will be annoying rather than life changing.

I know from family that hospitality are finding it difficult to run at normal capacity because of staffing issues - there appears to be a shortage of the seasonal workers that the sector relied on (local youngsters though have a good choice of casual jobs - so that's swings and roundabouts)

Aside from the 'B' issue limiting overseas workers, this is an interesting side-effect of the minimum wage.

Whilst waiting for my wife recently I was stood outside a regional development office that had a signboard outside advertising local jobs, and every job whether it was a shop assistant, receptionist, bar staff, waiters, cleaners, and even more responsible and skilled jobs such as fast food chefs, was being advertised at the minimum wage or only a few pence over it. The only higher paid jobs were sales jobs with commission such as sales staff in kitchen showrooms.

If there is a surplus of jobs compared to the workers, so those looking have their pick and choice, and all the jobs are priced at the same rate then most looking for a seasonal casual job will simply take the job that involves the least effort, the most pleasant working environment, and the most convenient working hours.

Why work in a bar or restaurant on evenings and weekends and rushing around dealing with difficult customers, when you can be a faceless employee sat on the till at the supermarket of a mega-corporation earning the same amount of money - the answer used to be tips for waiters, but with card payments, not so much a thing these days.

[pje16]

Why work in a bar or restaurant on evenings and weekends and rushing around dealing with difficult customers, when you can be a faceless employee sat on the till at the supermarket of a mega-corporation earning the same amount of money

Hang on, not faceless
I always have a quick chat with checkout staff as I'm packing my shopping and that makes life a bit better for both of us

[AF62]

Why work in a bar or restaurant on evenings and weekends and rushing around dealing with difficult customers, when you can be a faceless employee sat on the till at the supermarket of a mega-corporation earning the same amount of money

Hang on, not faceless
I always have a quick chat with checkout staff as I'm packing my shopping and that makes life a bit better for both of us

So do I!

But I meant 'faceless' as in being one of hundreds of 'drones' working for a large corporation where you could merge into the scenery if you wanted to, rather than being one of a few people employed by an individual business owner, where that individual business owner might be the best employer in the world... or might not be and have no idea about current employment practices and employee rights.