Inflation

[Long slender neck]

So if the price did not go up when demand is high, there'd just be a shortage?

[Max Fowler]

If there is more demand than supply, the price has to go up. That’s The Market.

[Max Fowler]

But please bear in mind I only got a C.

[Long slender neck]

Dont remember the cost of bog roll going up when it was very in demand during lockdown.

[Long slender neck]

Although saying that Panda has just doubled its price.

[Dunners]

The bog roll think was a flash in the pan.

Right now there are shortages of certain commodities and products. As traders compete with each other for a diminished supply, they inevitably pay more. That is what is causing some, if not most, of the inflation we're experiencing right now.

The bad news is that the supply of some of those products and commodities may be about to reduce even further.

And then there's us. There's a shortage of us too.
Boomers are shifting into mass retirement. Gen X and Y will shift up the demographic pyramid to replace them, but there's fewer of us than them. And, the generation entering into the workforce (the Zoomers), are the smallest cohort in our lifetimes.

[Max Fowler]

The bog roll think was a flash in the pan.

Da boom tish

[Max Fowler]

Dont remember the cost of bog roll going up when it was very in demand during lockdown.

I do. Maybe not in the national supermarkets - they wouldn't have done so for the adverse publicity - but lots of little corner shops were having it away.

[Currywurst and Chips]

But please bear in mind I only got a C.

Professor Plumb, if we're facing the most dramatic fall in wages since records began, interest rates only going one way and recession probably by the Autumn why is inflation still expected to to be rising until next year?

[Admin]

Are there any good inflation for dummies articles? I don’t fully understand it tbh. It feels ultra made up and intangible I understand it at a high level but it feels weird that the government talk about controlling it through various random actions that don’t seem connected with things like companies just passing on their costs to consumers without a care in the world

Something that costs £1 today is going to cost £1.10 in a years time (if we’re lucky).

If interest rates are 2% today, then the £1 you have in your bank account will be £1.02 in a years time and you won’t be able to buy the thing that costs £1 today.

You may as well spend the £1 today and buy the thing for £1. As more people are looking to spend their £1s, trying to buy the £1 thing, so the price of the thing goes up due to the increased demand.

If the interest rate goes up, say to 5% and you will have £1.05 in your bank account next year, some people will be happy with that and not buy the thing for £1 today. Less people trying to buy the thing will bring the price down.

This is why I only got a C in A Level Economics.

Thanks.

How’s that work for those who say for instance, don’t have any savings?

Asking for a friend.

[BoniO]

You’re fecked!

[Max Fowler]

But please bear in mind I only got a C.

Professor Plumb, if we're facing the most dramatic fall in wages since records began, interest rates only going one way and recession probably by the Autumn why is inflation still expected to to be rising until next year?

Sorry matey, I bunked that lesson. I’ll see if my mate Barry the Sparkie - he’s the clever one, he got a B - has any idea.

[tuffers#1]

[Adz]

Are there any good inflation for dummies articles? I don’t fully understand it tbh. It feels ultra made up and intangible I understand it at a high level but it feels weird that the government talk about controlling it through various random actions that don’t seem connected with things like companies just passing on their costs to consumers without a care in the world

It's the bank of England's remit to control inflation not the government. But the government have more powers to affect it than them, but they can blame the boe when things go wrong.

And you are right in thinking that they have no control in externally driven inflation.

The problem is, price increases can become entrenched even when the external factors abate. At that point you need wage inflation to bring things in line. But that triggers higher CPI and you get stuck in a loop. Eventually unemployment kicks in to break it but that is not a great position to be in.

In short, it's going to be a tough next few years.

[tuffers#1]

[Dunners]

CPI at 10.1% puts us ahead of the curve. If you haven't already done so, you may want to look into fixing your mortgages now.

[Max Fowler]

Double digits!

Still, at least we didn’t go for that joker Jezza.

[tuffers#1]

I spent £40 more on shopping & got less.
Shocking state of affairs !

[Dunners]

Citi bank are predicting that UK inflation, measured through CPI, will hit 18% early in 2023. The Resolution Foundation are predicting 15%. Both are higher than the BoE's own prediction of 13%

And the energy price cap is expected to rise to £3,582 in October and £4,266 in January.

We're also only just beginning to see the wave of uncapped energy bills to businesses.

[Dunners]

Still, at least we're not Germany, facing costs increasing by at least 14 times the seasonal average for the past 5 years. And it's not even winter yet.

[Rich Tea Wellin]

Can’t ofgem just not increase the price cap? What would happen?

[Long slender neck]

Energy companies go bust

[Dunners]

Yep. But you also have to remember that many residential customers (i.e. those in blocks of flats with communal heat and water systems, oil fired heating etc) and all business customers, have no price cap protection at all.

This is a catastrophe. In fact, it's so bad, that it may be that the government has no choice but to intervene. Even if that means going against decades of ideology. The scale of business foreclosures will be massive.

[Max Fowler]

I just wish there was some other way of organising ourselves and avoiding all this.

[Max B Gold]

Yep. But you also have to remember that many residential customers (i.e. those in blocks of flats with communal heat and water systems, oil fired heating etc) and all business customers, have no price cap protection at all.

This is a catastrophe. In fact, it's so bad, that it may be that the government has no choice but to intervene. Even if that means going against decades of ideology. The scale of business foreclosures will be massive.

It will be the first Tory nationalisation in a very long time. Water (not necessary for Scotland as we weren't stupid enough to trust the invisible hand of the mystical market) & Railways next please.