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Post by Zany on May 22, 2024 8:22:33 GMT
Inflation is down again this qtr.
I have a question.
Q: Seeing as most of the 11% inflation we saw was Gas prices and they are still at 300p per therm (300% of the price in 2021. How negative must REAL inflation be to get the overall rate down to 2.2%.
How many businesses are seeing negative numbers to create this number of 2.2%
Q2: Should we have separated fuel prices from inflation figures as they do not reflect an overheating economy that needs slowing down. Quite the opposite.
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Post by equivocal on May 22, 2024 8:42:40 GMT
Inflation is down again this qtr. I have a question. Q: Seeing as most of the 11% inflation we saw was Gas prices and they are still at 300p per therm (300% of the price in 2021. How negative must REAL inflation be to get the overall rate down to 2.2%. How many businesses are seeing negative numbers to create this number of 2.2% Q2: Should we have separated fuel prices from inflation figures as they do not reflect an overheating economy that needs slowing down. Quite the opposite. If gas prices haven't increased in the last 12 months, then they will serve to reduce overall 'REAL' inflation. There is no requirement for REAL inflation to contain any negatives.
I believe fuel prices are identified separately, whether their net effect is published separately, I'm not sure.
I'm also not sure if I've understood your question properly.
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Steve
Hero Protagonist
Posts: 3,698
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Post by Steve on May 22, 2024 8:54:37 GMT
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Post by Zany on May 22, 2024 11:13:17 GMT
Inflation is down again this qtr. I have a question. Q: Seeing as most of the 11% inflation we saw was Gas prices and they are still at 300p per therm (300% of the price in 2021. How negative must REAL inflation be to get the overall rate down to 2.2%. How many businesses are seeing negative numbers to create this number of 2.2% Q2: Should we have separated fuel prices from inflation figures as they do not reflect an overheating economy that needs slowing down. Quite the opposite. If gas prices haven't increased in the last 12 months, then they will serve to reduce overall 'REAL' inflation. There is no requirement for REAL inflation to contain any negatives.
I believe fuel prices are identified separately, whether their net effect is published separately, I'm not sure.
I'm also not sure if I've understood your question properly.
The question was more historical (And maybe a lesson for the future) Gas prices drove up inflation because of very unusual circumstances (A war) The BofE response was to treat it like any normal inflation driven by an overheating economy and push up interest rates to discourage spending. However that increased spending and subsequent wage demands (Wage inflation) could not reduce demand as it was for an essential product (Electricity). Therefore all the BofE has done is cripple thousands of businesses and people for no good reason. |
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Post by equivocal on May 22, 2024 11:40:36 GMT
If gas prices haven't increased in the last 12 months, then they will serve to reduce overall 'REAL' inflation. There is no requirement for REAL inflation to contain any negatives.
I believe fuel prices are identified separately, whether their net effect is published separately, I'm not sure.
I'm also not sure if I've understood your question properly.
The question was more historical (And maybe a lesson for the future) Gas prices drove up inflation because of very unusual circumstances (A war) The BofE response was to treat it like any normal inflation driven by an overheating economy and push up interest rates to discourage spending. However that increased spending and subsequent wage demands (Wage inflation) could not reduce demand as it was for an essential product (Electricity). Therefore all the BofE has done is cripple thousands of businesses and people for no good reason. I'm still not clear on your original query - would you mind expanding, please.
You are, of course, quite right to point out the cause of the inflation. However, energy costs feed into almost everything. So, the theory goes, that as prices increase there is demand for money supply increase. As the money supply increases it drives prices up because of increased demand, and so on to Zimbabwe. Increasing interst rates dampens the increase in money supply thereby moderating the inflationary pressure. It is also important to bear in mind the effect on import prices if other countries increase their interest rates and we do not.
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Deleted
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Post by Deleted on May 22, 2024 11:47:27 GMT
Inflation is down again this qtr. I have a question. Q: Seeing as most of the 11% inflation we saw was Gas prices and they are still at 300p per therm (300% of the price in 2021. How negative must REAL inflation be to get the overall rate down to 2.2%. How many businesses are seeing negative numbers to create this number of 2.2% Q2: Should we have separated fuel prices from inflation figures as they do not reflect an overheating economy that needs slowing down. Quite the opposite. The problem is that would be the slippery slope. Once politicians start excluding particular things from the inflation figures because of huge rises in those things, then it sets a dangerous precedent in terms of potentially fiddling the figures, which could undermine public trust completely. |
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Post by patman post on May 22, 2024 12:42:24 GMT
Inflation down, but celebrations are muted. And the cost-of-living crisis is not over. Households have basically endured ten years’ worth of inflation in three years. Prices up 21.3 per cent on April 2021 (on RPI they are up 27.9 per cent). The cumulative impact of these price rises did not vanish in April 2024.
Food and non-alcoholic drink prices are still 31 per cent higher than they were in April 2021. Electricity is up 42 per cent and gas 66 per cent.
The government claimed inflation and price rises weren't its fault. Don't be hoodwinked by any claims they're responsible for falling inflation rate...
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Steve
Hero Protagonist
Posts: 3,698
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Post by Steve on May 22, 2024 16:24:52 GMT
If gas prices haven't increased in the last 12 months, then they will serve to reduce overall 'REAL' inflation. There is no requirement for REAL inflation to contain any negatives.
I believe fuel prices are identified separately, whether their net effect is published separately, I'm not sure.
I'm also not sure if I've understood your question properly.
The question was more historical (And maybe a lesson for the future) Gas prices drove up inflation because of very unusual circumstances (A war) The BofE response was to treat it like any normal inflation driven by an overheating economy and push up interest rates to discourage spending. However that increased spending and subsequent wage demands (Wage inflation) could not reduce demand as it was for an essential product (Electricity). Therefore all the BofE has done is cripple thousands of businesses and people for no good reason. Actually gas prices went up more from the recovery of demand post Covid and inane panic. The war is still there the same embargoes are there but prices have come back down to what they were pre Covid. www.bbc.co.uk/news/topics/cxwdwz5d8gxt |
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Post by Zany on May 22, 2024 16:34:07 GMT
The question was more historical (And maybe a lesson for the future) Gas prices drove up inflation because of very unusual circumstances (A war) The BofE response was to treat it like any normal inflation driven by an overheating economy and push up interest rates to discourage spending. However that increased spending and subsequent wage demands (Wage inflation) could not reduce demand as it was for an essential product (Electricity). Therefore all the BofE has done is cripple thousands of businesses and people for no good reason. I'm still not clear on your original query - would you mind expanding, please.
You are, of course, quite right to point out the cause of the inflation. However, energy costs feed into almost everything. So, the theory goes, that as prices increase there is demand for money supply increase. As the money supply increases it drives prices up because of increased demand, and so on to Zimbabwe. Increasing interst rates dampens the increase in money supply thereby moderating the inflationary pressure. It is also important to bear in mind the effect on import prices if other countries increase their interest rates and we do not.
Sorry the first part of the question. "Seeing as most of the 11% inflation we saw was Gas prices and they are still at 300p per therm (300% of the price in 2021. How negative must REAL inflation be to get the overall rate down to 2.2%." By example if in my weekly shop a tin of beans has gone up from 50p to £599.50p My £300.00 shop goes up by 100% (inflation) to £900. Correct? Assuming bean prices stay high how much do the sellers of all my other trolley items have to lose to get that inflation down to 2%? They would need to sell at a loss. That is what is happening to businesses |
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Post by Zany on May 22, 2024 16:47:59 GMT
The question was more historical (And maybe a lesson for the future) Gas prices drove up inflation because of very unusual circumstances (A war) The BofE response was to treat it like any normal inflation driven by an overheating economy and push up interest rates to discourage spending. However that increased spending and subsequent wage demands (Wage inflation) could not reduce demand as it was for an essential product (Electricity). Therefore all the BofE has done is cripple thousands of businesses and people for no good reason. Actually gas prices went up more from the recovery of demand post Covid and inane panic. The war is still there the same embargoes are there but prices have come back down to what they were pre Covid. www.bbc.co.uk/news/topics/cxwdwz5d8gxt  Certainly rose with the ramp up of demand after Covid, but no doubt in my mind the real damage was the Ukraine war. |
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Post by Zany on May 22, 2024 16:51:27 GMT
The question was more historical (And maybe a lesson for the future) Gas prices drove up inflation because of very unusual circumstances (A war) The BofE response was to treat it like any normal inflation driven by an overheating economy and push up interest rates to discourage spending. However that increased spending and subsequent wage demands (Wage inflation) could not reduce demand as it was for an essential product (Electricity). Therefore all the BofE has done is cripple thousands of businesses and people for no good reason. I'm still not clear on your original query - would you mind expanding, please.
You are, of course, quite right to point out the cause of the inflation. However, energy costs feed into almost everything. So, the theory goes, that as prices increase there is demand for money supply increase. As the money supply increases it drives prices up because of increased demand, and so on to Zimbabwe. Increasing interst rates dampens the increase in money supply thereby moderating the inflationary pressure. It is also important to bear in mind the effect on import prices if other countries increase their interest rates and we do not.
Yes, that's why I have suggested other ways to deal with this very unusual circumstance. |
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Steve
Hero Protagonist
Posts: 3,698
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Post by Steve on May 22, 2024 16:53:00 GMT
14 Jan 2022 (pre war) Gas price 208
21 May 2024 Gas price 79.5 but the war is still on
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Post by Zany on May 22, 2024 16:58:23 GMT
14 Jan 2022 (pre war) Gas price 208 21 May 2024 Gas price 79.5 but the war is still on In August 2022 Gas price 700. Slowly we find other sources of gas and electricity production. until now at 79.5. Doesn't change the effect of that invasion and pipeline destruction. |
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Steve
Hero Protagonist
Posts: 3,698
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Post by Steve on May 22, 2024 17:03:38 GMT
Yes there was panic but no true war caused issue
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Post by equivocal on May 22, 2024 17:13:28 GMT
I'm still not clear on your original query - would you mind expanding, please.
You are, of course, quite right to point out the cause of the inflation. However, energy costs feed into almost everything. So, the theory goes, that as prices increase there is demand for money supply increase. As the money supply increases it drives prices up because of increased demand, and so on to Zimbabwe. Increasing interst rates dampens the increase in money supply thereby moderating the inflationary pressure. It is also important to bear in mind the effect on import prices if other countries increase their interest rates and we do not.
Sorry the first part of the question. "Seeing as most of the 11% inflation we saw was Gas prices and they are still at 300p per therm (300% of the price in 2021. How negative must REAL inflation be to get the overall rate down to 2.2%." By example if in my weekly shop a tin of beans has gone up from 50p to £599.50p My £300.00 shop goes up by 100% (inflation) to £900. Correct? Assuming bean prices stay high how much do the sellers of all my other trolley items have to lose to get that inflation down to 2%? They would need to sell at a loss. That is what is happening to businesses In year 1. Electricty goes from £50 to £100 and other goods from £50 to the same £50 - Inflation 50%
In year 2. Electricity goes from £100 to the same £100 and other goods from £50 to £60 - inflation 6.6%
Nothing has fallen in value, but inflation has dropped from 50% to 6.6%. That is to say it's an annual measure.
I've read your other post, but can't seem to find what you suggested - is it in this thread?
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