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Post by Zany on May 22, 2024 17:20:30 GMT
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?
You missed out the bit where year one Electricity hike lead to year two food and wage hikes, which are offset by other goods and services coming down in price as business struggle to sell at all. |
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Post by equivocal on May 22, 2024 17:28:16 GMT
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?
You missed out the bit where year one Electricity hike lead to year two food and wage hikes, which are offset by other goods and services coming down in price as business struggle to sell at all. Is that what happened? I haven't checked but didn't notice it myself and I've only been retired (for the second time) for six weeks.
Genuine question - I could look up the tables, but if you've done that...
EDIT - is your suggestion in this thread?
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Post by equivocal on May 22, 2024 18:08:57 GMT
The above is the table from Steve's link. The only negative numbers appear to be in the two sectors which had very substantial inflation in the previous months.
Is there something else I should be looking at?
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Post by Zany on May 22, 2024 19:01:14 GMT
You missed out the bit where year one Electricity hike lead to year two food and wage hikes, which are offset by other goods and services coming down in price as business struggle to sell at all. Is that what happened? I haven't checked but didn't notice it myself and I've only been retired (for the second time) for six weeks.
Genuine question - I could look up the tables, but if you've done that...
EDIT - is your suggestion in this thread?
My company increased wages by average 14% to keep staff at the same time we reduced prices by 8% because of falling sales so we are currently running at a loss. That electricity caused increased prices in food and pay is surely undisputed? Interest rates were raised to reduce the inflation caused by those fuel, food and wages price rises. Net result no one has any spare money and business sales fall. That drives down inflation even though wage inflation hasn't. My idea for solving this was to recognise the gas price rises were temporary and not an overheating economy. That if government raised taxes and used the money to subsidise energy prices it would have A, Spread the load fairer, and B, Prevented those irreversible wages rises. The wage rises that lead to even more inflationary pressures and even higher draconian interest rates to squash them back down. |
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Steve
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Post by Steve on May 22, 2024 19:15:28 GMT
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?
You missed out the bit where year one Electricity hike lead to year two food and wage hikes, which are offset by other goods and services coming down in price as business struggle to sell at all. What is this supposed causal link between electricity price increases and employers choosing to pay more money? I don't see one. |
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Post by equivocal on May 22, 2024 19:43:07 GMT
Is that what happened? I haven't checked but didn't notice it myself and I've only been retired (for the second time) for six weeks.
Genuine question - I could look up the tables, but if you've done that...
EDIT - is your suggestion in this thread?
My company increased wages by average 14% to keep staff at the same time we reduced prices by 8% because of falling sales so we are currently running at a loss. That electricity caused increased prices in food and pay is surely undisputed? Interest rates were raised to reduce the inflation caused by those fuel, food and wages price rises. Net result no one has any spare money and business sales fall. That drives down inflation even though wage inflation hasn't. My idea for solving this was to recognise the gas price rises were temporary and not an overheating economy. That if government raised taxes and used the money to subsidise energy prices it would have A, Spread the load fairer, and B, Prevented those irreversible wages rises. The wage rises that lead to even more inflationary pressures and even higher draconian interest rates to squash them back down. Staying away from your business, you can see from the table that most sectors had no decrease in prices and the ones that did (recently) had very substantial increases in earlier months. I can see, though, why you may have rationalised your experience to fit the national picture.
I think we may have discussed your idea previously. I think the problem with the idea (and it's by no means a bad one) is that if tax increases are matched with low interest rates, the propensity to borrow and spend long term savings is increased thereby causing inflationary pressures by increasing the money supply and, unless other countries follow the system, there would be a sharp increase in the price of imports, again causing inflationary pressure.
That's not to say something along those lines could not have been incorporated into a mix of ideas which might have eased the initial surges which, as you say, never really reverse.
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Post by Zany on May 22, 2024 20:13:16 GMT
You missed out the bit where year one Electricity hike lead to year two food and wage hikes, which are offset by other goods and services coming down in price as business struggle to sell at all. What is this supposed causal link between electricity price increases and employers choosing to pay more money? I don't see one. People were having to find more money so they were looking around for more hours, better rates over job enjoyment. Thus any member of staff we valued we had to offer more money to ensure they stayed. Do you think inflation did not lead to demands for pay rises? Why do you think employers gave substantial pay rises? |
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Steve
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Post by Steve on May 22, 2024 20:51:00 GMT
Or in other words it was the supply/demand dynamics of the job market that led to pay rises. Employers don't pay more money just because their employees need it.
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Post by Zany on May 22, 2024 21:42:56 GMT
Or in other words it was the supply/demand dynamics of the job market that led to pay rises. Employers don't pay more money just because their employees need it. You could be right. Coincidence. |
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Post by Orac on May 23, 2024 8:48:34 GMT
Or in other words it was the supply/demand dynamics of the job market that led to pay rises. Employers don't pay more money just because their employees need it. In a sense they do. Employers have to make a judgment call about people leaving or not joining |
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Steve
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Post by Steve on May 23, 2024 12:07:32 GMT
Which is all to do with the available job market supply/demand and not whether employees need/want it
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Post by Orac on May 23, 2024 13:57:14 GMT
Which is all to do with the available job market supply/demand and not whether employees need/want it Okay - if you say so. I would say those things are related. Prices go up because the seller needs / wants to be paid more for his role |
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Steve
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Post by Steve on May 23, 2024 14:16:34 GMT
But prices are set by the seller (judging the market) whereas wages are set by the buyer (judging the supply/demand job market)
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Post by Orac on May 23, 2024 14:29:10 GMT
But prices are set by the seller (judging the market) whereas wages are set by the buyer (judging the supply/demand job parket) Prices are not set by either the seller or buyer in either case. You could say prices are set by t he transactions that actually happen, but both sides are party to any transaction. It's an overlap of needs type thing. If one side has its needs moved, then transactions also shift |
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Post by Zany on May 23, 2024 15:34:59 GMT
But prices are set by the seller (judging the market) whereas wages are set by the buyer (judging the supply/demand job parket) As Orac says, prices are set by the market. If they were set by the seller everything would be One Trillion pounds please. |
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