The Lemon Fool

October figures:

CPI 4.2%
RPI 6.0%

https://www.ons.gov.uk/economy/inflationandpriceindices

Steve

PS Smile bank offers a savings rate of 0.03% but for Smile customers, goes up to a whopping 0.09%!

stevensfo wrote:October figures:

CPI 4.2%
RPI 6.0%
:

Those who regularly shop the old fashioned way may have noticed this. A pint of milk that was 50p is now 55p. Goods priced at £ 1.00 are now £ 1.25 or £ 1.30. Examining a recent receipt showed that many prices seemed to be multipliers of 25p. A fiver for a pint of beer is becoming common as is £1.499 for a litre of petrol.

stevensfo wrote:October figures:

CPI 4.2%
RPI 6.0%

https://www.ons.gov.uk/economy/inflationandpriceindices

Steve

PS Smile bank offers a savings rate of 0.03% but for Smile customers, goes up to a whopping 0.09%!

CPIH (probably the most useful from my point of view) is at 3.8%
The full set of differing indices can be found here :- https://www.ons.gov.uk/economy/inflationandpriceindices

So according to: https://assets.publishing.service.gov.u ... ndices.pdf

CPIH includes rent equivalence - as a (lousy?) proxy for homeowner housing costs
RPI includes mortgage rates. Which haven't gone up. So why is RPI so high?

Gryff

Ah. Answering my own question. Apparently rates for future 2 years fixed mortgages have gone up a fair bit in the last month. In anticipation of BoE base rate rises. Although this cost will have affected very few people yet, the index is presumably based on average rates rather than average payments.

https://www.ft.com/content/42299ac9-cb5 ... 6f3c7c5c7b

Gryff

gryffron wrote: Which haven't gone up. So why is RPI so high?

It measures the prices of a portfolio of goods and services. These prices have increased. It's like the FTSE 100 Index. If the prices of shares, particularly large cap ones increase, the FTSE 100 Index increases in value.

Medium inflation with very low interest rates and moderately rising wages is just what indebted governments want.......until the positive feedback mechanism starts to cause lenders to squeal.

I strongly doubt governments and central banks will take inflation seriously until its effects become painful and disruptive enough to cause voters to complain. It would not surprise me if we eventually return to the 1970s.

I have been tilting my portfolio towards a more inflationary and unstable world. Perversely, I hope my recent investments don't do well.

stevensfo wrote:October figures:

CPI 4.2%
RPI 6.0%

https://www.ons.gov.uk/economy/inflationandpriceindices

Steve

PS Smile bank offers a savings rate of 0.03% but for Smile customers, goes up to a whopping 0.09%!

And I offer the concept of invisible inflation. You want a carton of orange juice, you usually buy own label. Due to shortages, there is a gap on the shelf where that is stocked, so you are seduced into buying the premium OJ, which is twice the price. Prices of the items haven't gone up, what you pay for the item you want has gone up ....

yorkshirelad1 wrote:And I offer the concept of invisible inflation. You want a carton of orange juice, you usually buy own label. Due to shortages, there is a gap on the shelf where that is stocked, so you are seduced into buying the premium OJ, which is twice the price. Prices of the items haven't gone up, what you pay for the item you want has gone up ....

And I offer the methodology guidelines of the produced figures.

https://www.ons.gov.uk/economy/inflatio ... iandrpiqmi

If the product ceases to be available, a replacement product is chosen and quality adjustment may be required.

It doesn't mean individuals don't have substitution effects on their individual circumstances, but does mean these (should be) are removed in the produced and aggregated and published indices.

And whichever way you look at it, the Tories were both lucky and snide to give go back on the triple lock, with pensions going up 3.1% (so I'v been told). You could say the Treasury were lucky that inflation didn't take off earlier, as it will not show up in the new pension amount, yet the costs for pensioners will. So instead of a one-off chance to allow pensions to catch up little, the opposite has happened.


Arb.

Arborbridge wrote:And whichever way you look at it, the Tories were both lucky and snide to give go back on the triple lock, with pensions going up 3.1% (so I'v been told). You could say the Treasury were lucky that inflation didn't take off earlier, as it will not show up in the new pension amount, yet the costs for pensioners will. So instead of a one-off chance to allow pensions to catch up little, the opposite has happened.

Arb.

Which also affects all those yet to retire. In the US the higher inflation was added, so their pensions move that bit further ahead of the UK, for all of time.

stevensfo wrote:October figures:

CPI 4.2%
RPI 6.0%

https://www.ons.gov.uk/economy/inflationandpriceindices

Steve

PS Smile bank offers a savings rate of 0.03% but for Smile customers, goes up to a whopping 0.09%!

November figures released today: https://www.ons.gov.uk/economy/inflationandpriceindices

CPI 5.1%
RPI 7.1% !!!


Steve

stevensfo wrote:November figures released today: https://www.ons.gov.uk/economy/inflationandpriceindices

CPI 5.1%
RPI 7.1% !!!

That makes the 1.2% interest rate on my fixed mortgage quite tolerable.

Best wishes


Mark.

It's reasonably well known hereabouts that I'm Motley Fool columnist (and paid-for-service analyst) Malcolm Wheatley. I've been writing publicly since the summer saying that the Bank of England have got inflation wrong, and were being far too sanguine about it. Andrew Bailey disagreed with Andy Haldane, and has been proved wrong.

I've been expecting CPI to exceed 6% in the next couple of months, and have been saying so.

This is the disastrous 2007 fantail projection all over again.

The sad thing is this: what do I know? My PhD is in the field of microeconomics, not macroeconomics. I'd say I was pretty rubbish at macroeconomics. But you don't need to be good at it to remember the 1970s and early 80s.

MDW1954

MDW1954 wrote:It's reasonably well known hereabouts that I'm Motley Fool columnist (and paid-for-service analyst) Malcolm Wheatley. I've been writing publicly since the summer saying that the Bank of England have got inflation wrong, and were being far too sanguine about it. Andrew Bailey disagreed with Andy Haldane, and has been proved wrong.

I've been expecting CPI to exceed 6% in the next couple of months, and have been saying so.

This is the disastrous 2007 fantail projection all over again.

The sad thing is this: what do I know? My PhD is in the field of microeconomics, not macroeconomics. I'd say I was pretty rubbish at macroeconomics. But you don't need to be good at it to remember the 1970s and early 80s.

MDW1954

You're right, apart from anything else it seems to me that the cost of energy will rise considerably over the coming years and that will have a significant inflationary stimulus beyond the short term.

RC

ReformedCharacter wrote:.. apart from anything else it seems to me that the cost of energy will rise considerably over the coming years and that will have a significant inflationary stimulus beyond the short term.

I fear so.

Moreover The rapidly evolving energy crisis has spilled over into global fertilizer markets, with bullish consequences. Fertilizers have been the best performing commodities over the last nine months. Urea (solid nitrogen) doubled, while phosphate is up 70% and potash (the fertilizer every analyst loves to hate) is up 160%.
Fertilizer production (especially nitrogen and phosphate) is very energy intensive. China has already restricted production of both fertilizers to help conserve energy and has announced export restrictions. The ramifications are huge: China produces half of global urea and nearly 60% of global phosphate-based fertilizers making it the world’s largest exporter.

https://blog.gorozen.com/blog/tightness-in-grain-markets?utm_campaign=Weekly%20Blog%20Notification&utm_medium=email&_hsmi=193630411&_hsenc=p2ANqtz-8cAKs1UEi8rwm2Gq9yrJuioKH9Dx03RZYMkvRRvguTkT38ftWtdi5KF9FcKgYerIwWb_THyAsIZKHjsTh4fdOnzen-eg&utm_content=193630411&utm_source=hs_email

Now, it has to be said that the funds these chaps run have not been outstanding; they assemble some interesting facts whilst at the same time illustrating the difficulty of making money from their knowledge.

But one way and another, expect higher food prices, and as regards inflation, forget 'transitory'.

V8

ReformedCharacter wrote:You're right, apart from anything else it seems to me that the cost of energy will rise considerably over the coming years and that will have a significant inflationary stimulus beyond the short term.

RC

That is exactly what sparked the prolonged '70s inflation - the oil price shock. It got to 27% at one point in the UK.

Western governments have been very foolish in allowing this to build up and they will find that once the genie has been let out of the bottle it is very very hard to put it back.

Andrew Bailey sadly is woefully inadequate in his job.

scrumpyjack wrote:Andrew Bailey sadly is woefully inadequate in his job.

He was Mr Donothing at the FCA and he was appointed to The Bank to continue doing nothing.

To be fair though, there is not much The Bank can do as the inflationary pressure are largely external to the UK.
The recent years' slowdown in oil & gas exploration would have been a problem even without the ESG nonsense, now it's beginning to bite us all in the situpon.

V8

scrumpyjack wrote:Andrew Bailey sadly is woefully inadequate in his job.

Are there any central bankers who seem competent?
I can't think of any for decades.
They all apply too much stimulus for too long, which leads to distortions which causes boom and bust cycles about once per decade.

BT63 wrote:

scrumpyjack wrote:Andrew Bailey sadly is woefully inadequate in his job.

Are there any central bankers who seem competent?
I can't think of any for decades.
They all apply too much stimulus for too long, which leads to distortions which causes boom and bust cycles about once per decade.

This point has been debated many times. Competence is one thing, but the idea that central bankers' policy has been too loose is a logical error IMO. Over the period discussed the mandate of CBs was to bring down inflation by applying tight monetary policy. This they succeeded in doing. One must therefore interpret monetary policy as having been tight, not loose, else inflation would have risen (or stayed the same) rather than falling. In fact policy was so tight that inflation was driven to practically zero or negative at times; this produced a problem for Central Banks (but recently not decades ago) where they had to reverse their strategy and try to raise inflation back to their targets. So yes, perhaps policy is loose or even too loose now, but that is a recent phenomenon.


GS