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Inflation about to run out of control
The inflation rate for February is 4.4%. With peoples wages frozen and living costs climbing through the roof is it likely to cause people taking to the streets experienced in some other countries?
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It should come as no surprise to anybody that inflation is as high as it is. In fact what is surprising is that it is as low as is stated.
- The previous government printed upwards of £200bn in money that had no substance. They called it “quantitative easing”. In fact I might just as well have printed a few £££s off for myself, such is the value of the exercise. This means that the value of the cash that was already in circulation was diluted.
- This government increased by 14% the VAT on many of the goods that make up the “basket” that is used to measure prices. They added duty to fuel (which itself attracted additional VAT), which influences the price of just about everything we buy as almost all our goods are moved by road.
- Energy companies (allegedly “regulated” by Ofgem) increased gas and electricity prices far beyond any justification just prior to one of the harshest winters in recent years. In addition energy prices are increasing to pay for ludicrously expensive and almost useless “wind farms” which will all require the same capacity of conventional power generation to be provided as back up for when it is not windy.
- Rail fares (again, allegedly under regulation) rose in January by an average of 3.9%. Some of them (mainly those that captive customers use) rose by up to 13%.
These are just a few factors over which the government does have influence. Add to this the many items over which we have little or no control (many of which we are dependent on other nations for because we have allowed our own production to cease) and it is no wonder that prices are on the increase.
Still, at least Mervyn King can keep writing his nice letters to George Osborne each month. That will soon sort the problem out.
- The previous government printed upwards of £200bn in money that had no substance. They called it “quantitative easing”. In fact I might just as well have printed a few £££s off for myself, such is the value of the exercise. This means that the value of the cash that was already in circulation was diluted.
- This government increased by 14% the VAT on many of the goods that make up the “basket” that is used to measure prices. They added duty to fuel (which itself attracted additional VAT), which influences the price of just about everything we buy as almost all our goods are moved by road.
- Energy companies (allegedly “regulated” by Ofgem) increased gas and electricity prices far beyond any justification just prior to one of the harshest winters in recent years. In addition energy prices are increasing to pay for ludicrously expensive and almost useless “wind farms” which will all require the same capacity of conventional power generation to be provided as back up for when it is not windy.
- Rail fares (again, allegedly under regulation) rose in January by an average of 3.9%. Some of them (mainly those that captive customers use) rose by up to 13%.
These are just a few factors over which the government does have influence. Add to this the many items over which we have little or no control (many of which we are dependent on other nations for because we have allowed our own production to cease) and it is no wonder that prices are on the increase.
Still, at least Mervyn King can keep writing his nice letters to George Osborne each month. That will soon sort the problem out.
Yes quite right, steg, it’s all very relative.
Of course some people are struggling, especially those who have lost their jobs. However, many are not. Those with mortgages and other loans are enjoying record low interest rates. Unfortunately the recent inflation (which I actually think is far higher than the published figure if measured realistically) is part of the inevitable rebalancing that is necessary following ten or twelve years of people living way beyond theirs (and the country’s) means.
The attitude that people (and indeed the media) have was summed up quite succinctly in an article I read a few days ago. It was explaining how the proposed increase in Air Passenger Duty would hit “struggling families”. It went on to explain how much extra tax a family of four would have to pay on their trip to Florida. How a family that can afford holidays to Florida can be described as “struggling” was lost on me.
And so it is with the so-called recession. When it was first announced that the country was officially in recession I thought “That’s handy. I’ll be able to walk into my favourite restaurant and get a table at any time. All the hotels I use for my short breaks will be falling over themselves to give me a good deal. All the shops will be empty and offering me great discounts”.
Not so. Go out any Saturday night where I live and everywhere is packed. The car parks are full of large cars and 4x4s. If you don’t book a hotel six months in advance you don’t get a room (school holiday times are the worst). Shops are packed to the gunwales all day.
I’m very disappointed.
Of course some people are struggling, especially those who have lost their jobs. However, many are not. Those with mortgages and other loans are enjoying record low interest rates. Unfortunately the recent inflation (which I actually think is far higher than the published figure if measured realistically) is part of the inevitable rebalancing that is necessary following ten or twelve years of people living way beyond theirs (and the country’s) means.
The attitude that people (and indeed the media) have was summed up quite succinctly in an article I read a few days ago. It was explaining how the proposed increase in Air Passenger Duty would hit “struggling families”. It went on to explain how much extra tax a family of four would have to pay on their trip to Florida. How a family that can afford holidays to Florida can be described as “struggling” was lost on me.
And so it is with the so-called recession. When it was first announced that the country was officially in recession I thought “That’s handy. I’ll be able to walk into my favourite restaurant and get a table at any time. All the hotels I use for my short breaks will be falling over themselves to give me a good deal. All the shops will be empty and offering me great discounts”.
Not so. Go out any Saturday night where I live and everywhere is packed. The car parks are full of large cars and 4x4s. If you don’t book a hotel six months in advance you don’t get a room (school holiday times are the worst). Shops are packed to the gunwales all day.
I’m very disappointed.
Well put New Judge!
You are right about QE....just printing money must have an affect on inflation. Its just like monopoly money.
People have been protected with their low interest rate mortgages so far but that was at the expense of savers who did not get a reasonable rate of return. This is likely to change as the Bank of England were deliberately holding the bank rate down artificially.
You are right about QE....just printing money must have an affect on inflation. Its just like monopoly money.
People have been protected with their low interest rate mortgages so far but that was at the expense of savers who did not get a reasonable rate of return. This is likely to change as the Bank of England were deliberately holding the bank rate down artificially.
We must all expect a little hardship if the Government is to reduce the deficit. I wonder how they are doing on that?
// Public borrowing hits record high for month of February. The official figure, provided by the Office for National Statistics, was nearly double the £6.9bn forecast by economists.
Public sector net borrowing now stands at £123.5bn for the financial year so far.
This suggests the government remains on course to meet the £149bn borrowing total forecast for the full year.
Net debt, which is the sum of all borrowing, was £875.8bn, the ONS said. That is equivalent to 58% . This time last year, the total was £729.9bn, or 50.8% of GDP. //
Not a good combinatin.
// Public borrowing hits record high for month of February. The official figure, provided by the Office for National Statistics, was nearly double the £6.9bn forecast by economists.
Public sector net borrowing now stands at £123.5bn for the financial year so far.
This suggests the government remains on course to meet the £149bn borrowing total forecast for the full year.
Net debt, which is the sum of all borrowing, was £875.8bn, the ONS said. That is equivalent to 58% . This time last year, the total was £729.9bn, or 50.8% of GDP. //
Not a good combinatin.
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