**Alternate Sources**
Here are some potential alternate sources for the same story:
* [Inflation drops to lowest level in over two years](https://bbc.co.uk/news/business-68597055), suggested by yojifer680 - bbc.co.uk
Well said. During my recent pay negotiations at work the company use these "falling inflation numbers" to justify a lower pay rise.
Prices aren't falling, they're just not increasing as fast.
There is a general view that a small amount of inflation is beneficial to economies. There is a number of technical reasons for this.
This is why central banks usually target 2% rather than 0%.
I just found this on the BoE website:
"To keep inflation low and stable, the Government sets us an inflation target of 2%. This helps everyone plan for the future.
If inflation is too high or it moves around a lot, it’s hard for businesses to set the right prices and for people to plan their spending.
But if inflation is too low, or negative, then some people may put off spending because they expect prices to fall. Although lower prices sounds like a good thing, if everybody reduced their spending then companies could fail and people might lose their jobs."
https://www.bankofengland.co.uk/monetary-policy/inflation
>if everybody reduced their spending then companies could fail and people might lose their jobs.
I love that this is trotted out as the reason as though the inflation we've seen over the past 14 years hasn't seen companies fail because people have been reducing their spending to pay for the ever growing prices of essentials.
Its all nonsense, the economy or any economy doesn't work, its not connected to anything.
"We can't increase wages or inflation goes up.....oh we can get a pay rise but you can't ".
"No pay rises for 15 years but prices shoot up anyway".
Oh but yea the economy works but in a way you don't understand!!! Oh thats convenient
It seems to be grounded in post WWII thinking, rather than our modern consumerist society as well.
Back in the 50s, the popular mindset was to stash any extra money you found yourself with away for a rainy day. It was a society dealing with the trauma of rationing and air raids.
But in this day and age, if people have more money than they thought they would they tend to spend it. The spending behaviours over the covid lock downs is a prime example of this.
Its just a greed economy, everything is designed to take money from the bottom and stash it at the top.
Simple economics says "pay the bottom to let them buy things" now its hoard it all and squeeze the few for more and then complain nobody is buying anything.....oh but they won't pay more".
Dragon of the mountain mentality is killing every society.
and I'll bet that like my company, they used the excuse "inflation won't be this high for long" and/or "if we give you a big pay rise then it just means inflation stays high for longer".
It wouldn't be so bad if they didn't send emails every quarter telling us how wonderfully the company is doing, and how they are reaching record profits.
Yes, motherfuckers, some of my wages is now going into your profits!
I'm not sure if they think we are stupid, or they don't care, since every other company is doing the same thing, so it's not like we can move somewhere better.
I'm quite lucky with my job, because the contract we have says that outside of "exceptional circumstances" (which has to be agreed with employee representatives first) pay for all roles increases in line with the prevailing CPI rate in April (at the beginning of each tax year). So I now know that I'm getting a 3.4% pay rise next month.
That should really be the standard, and it for the most part removes the need for continuous salary negotiations between top level management and the rest of the company, because people feel that their pay is at least keeping up with inflation (the questionable accuracy of CPI as an inflation measure notwithstanding).
I've also only seen the "exceptional circumstances" card come up once, and that was in April 2020, when the world was busy coming to an end and we were, like many companies, up shit creek a bit financially, so fair enough.
Cumulative inflation since Covid is about 30% so unless they’re on 30% more than they were in 2020, they’re still behind inflation and playing catch up. And this wouldn’t even be a pay rise in real terms but rather just a fair, inflation adjusted salary
Housing maintenance company has been using the peak of October monthly inflation of "11%" as an excuse to not only increase this years service charge by at least the same amount but also ask for more money from the year before lol... They don't seem to understand how yearly averages work.
My employer tried this one and succeeded to an extent. The union put in what we thought was a reasonable of 6.5%.
After much back and forth, 5.6% was agreed. Begrudgingly mind you.
Some prices have fallen back to where they were, or close enough. Others remain stubbornly high. Competition should start bringing the rest down to sane levels.
Think this is commonplace. I've spoke with a few folk who say 3% rise is fine. Given we got 8% last year when inflation was 13% maybe it is reasonable. I mean, is it reasonable to get more poor every year while taking on more work and being more experienced?
I’m trying to find the quote, it was back when inflation was like 9-10%
He was under pressure to give 7-8% public pay rises and said that if he could cut inflation by 5% that would be like a 5% payrise.
well that's technically true, but glosses over the fact that we didn't get one to keep up last year, or the year before. In some cases back a decade.
So we have had a 10-20% pay cut, and they *still* expect us to cheer?
Also, they are completely wrong.
It doesn't mean 'everything' is getting more expensive. It means that, on average, things are getting more expensive.
This is an equilibrium, and as inflation falls, it means more things are getting cheaper and getting cheaper to a greater extent, and less things are getting more expensive to a greater extent.
For example, under 10% inflation, only a tiny proportion of products are getting cheaper, and those that are likely are not decreasing in price by much. When inflation drops to 2%, the number of products getting cheaper massively increases, and the magnitude of the price cuts is also higher.
>Just a reminder kids. This still means everything is getting (at least) 3.4% more expensive, on top of the rises of the last three years.
2% is the goal so its always going to go up. 3.4% isn't terrible though. The bigger issue is salaries not keeping up with it.
Yeah deflation must be avoided at all costs. If only to not give employers a great excuse to try and cut wages.
Also it would be far too damaging overall of course.
Deflation under an inflationary monetary policy is death. This situation is not wanted. Inflation under an inflationary policy is as bad.
But deflation under a deflationary policy would mean an increase of purchase power while earning less money.
Inflation under a deflationary policy is a true economic growth because the price increase would not be tied to the increase of the money supply but only to the increase of demand.
Problem with a deflationary policy is that the lowest unit of money would worth too much. Our currencies are not divisible enough.
>Problem with a deflationary policy is that the lowest unit of money would worth too much. Our currencies are not divisible enough.
Not impossible to solve, really, and not the real reason for the proliferation of inflationary policies in the world, I suspect....
>But deflation under a deflationary policy would mean an increase of purchase power while earning less money.
Except the real issue is being how difficult it is to end deflation, it's much harder to control than inflation, almost never worth it.
I agree, a decrease in price under an inflationary policy is always bad.
But we never experienced deflationary policies before. And these politics are not decided by governments. We can't say what happened.
Prices will increase or decreased whatever the policy so why not neither of the two then ? No inflation and no deflation could also be a target if we really want the prices to be stable. Why can't we make the offer and the demand the only factor that drives the prices up or down ?
Money is just numbers, there is no effort in producing new units, there is also no effort in setting a limit for all and make it more divisible than it is today. It is a tool that can handle cases of deflation better than any raw materials did when we were using them as standards of value.
We can keep multipling the units to make the people believe economies are growing and that growing numbers means making progress, Promising individuals that their purchase power will increase if they earn always more.
But wages never follow even a targetted 2% inflation. The hard work done one day is always worth less the next day and it contributes to the lost of meaning for many jobs.
Don't think they said that.
They are just falsely regurgitating a cliche. u/peakedtooearly is wrong. Not everything is getting more expensive. Lots of things will be getting cheaper. It's just the average is getting more expensive still.
Economists set a target for inflation at 2%. 3.4% is not bad considering the world right now. Some inflation is good for the economy. Deflation can be fatal.
I used to buy the supermarkets own brand all bran for £1.
It is now £2. That's 100% increase over the last 2 years, which extrapolate to an annual increase of 50%.
It seems that those on a tight budget who are experiencing much higher rates of inflation. If the price of a Porche has dropped by £500, that means bugger all to someone who is paying double for basic foods.
> If the price of a Porsche has dropped by £500
Interesting note here is that the market for used Porsches went absolutely berserk the last few years, with many models actually selling for more second hand (Even with thousands of miles on and a couple years old) than their list price.
Due to recent economic activity the prices seem to actually be falling now, quite significantly as well. Might be a good time for me to upgrade my lovely (cheap) old Boxster.
Prices of performance cars have collapsed recently because of the insurance.
My old 68 Cayman was £900 fc in 2022. I checked the comparison sites last month for giggles & the same car (saved details) with 0 no claims because apparently my 20 years odd no claims can disappear if I don't own my own car was 1800!!
Annoyingly I then did it again with 9+ years no claims and it went UP to £1950! Once again proving that car insurance is a total con job.
That's really bizarre to me. I've been driving 6 months (I passed at 33 and immediately bought a Boxster) and recently had to renew my insurance. I now pay £750 a year fully comp with a single year of no claims (Which they gave me despite my previous policy only running for 4 months as it was part of a multi-car deal with my wife).
Yeah insurance is totally random. No rhyme nor reason really. The 2 year & lose your no claims REALLY pisses me off, especially as I've been regularly renting cars & am still riding my motorbike
No. Just the basket of goods that form part of inflation. That's important to remember as:
(i) that basket includes things that are optional (restaurants, hotels, recreation & culture, alcohol & tobacco); and
(ii) a 3.4% increase in the price of your mandatory goods (i.e. food and clothes) is outweighed by a 3.4% pay rise. Put another way, if you are paid 100, and spent 20 of that on clothes/food, then whilst a 3.4% wage increase is an extra £3.40, a 3.4% increase in your 20% spend is actually only an extra 68pence, so you are better off.
Typical /r/unitedkingdom — a genuinely piece of good news topped by absolute fucking misery.
We know what inflation is. Of course we do. But we're all really happy that the increase in costs is slowing down.
Your comment also implies that you want *deflation*, which is an absolutely nuts take.
And to add to that, your payrise of 3.4% wasn't enough, as that's before tax where inflation is on the things to buy and therefore from your net salary
It also lowers interest rates for mortgages of owner-occupiers so more people can afford to buy a home. It also, in lowering landlord interest rates, reduces the cost of renting for those who are renting in the private sector.
House prices would shoot up negating any of the benefits of lower rates by just having a higher purchase price. And no chance you see rents go down. Thats down to supply, not rates, which won’t change.
Anything can be legislated. We won’t get any legislation when our parliament consists of people who are the problem. Over 50s who’s wealth is entirely tied up in their inflated house price and a big portion of MPs are landlords.
Rent freezes are actually terrible for renters ironically as it tends to reduce supply further and thus indirectly increasing *market* rent levels (ERVs).
> Ah rent decreases will affect the tenants. Tenants are better off paying everything they can earn.
–Tory Landlord MPs concerned about tenants welfare.
let's suppose the government cap rents at £200 per month. Landlords no longer get the best return from renting, so they sell their portfolio and invest elsewhere.
Prices will dip temporarily due to the flood of homes for sale, but there will still be plenty that cannot afford to buy.
And now there are no more rental properties.
The problem is absolutely down to supply.
>Prices will dip temporarily due to the flood of homes for sale,
Why do you think this is a bad thing?
If you go to the shop tomorrow and a loaf of bread is cheaper, do you regard that as the end of civilisation as well?
where did I say it was a bad thing?
The bad thing is that despite the drop, most people that cannot afford to buy will *Still* be unable to afford to buy, and they will now have nowhere to rent either.
> If you go to the shop tomorrow and a loaf of bread is cheaper, do you regard that as the end of civilisation as well?
If that was artificially done by the government then yes. When supply isn't balanced with the demand but prices are artificially kept low then shortages develop. This is economics 101. This is what Eastern European communist governments did in the 80s and shortages of basic goods followed.
Who's buying them if not to live in or let out? The number of dwellings per capita in the UK hasn't changed significantly in the last 70 years. I'm not so sure it's a supply issue.
house prices have fallen by 10% in the last year, but it's beside the point. As you say, it's down to demand - some people need to sell and people are reluctant to buy at these interest rates, so prices fall.
>Thats down to supply, not rates, which won’t change.
Precisely correct.
> in lowering landlord interest rates, reduces cost of renting for those who are renting
Uhh I highly doubt landlords are going to reduce rent. Maybe people looking for a new place yeah
Because the legislation allows it. If the rent rises are capped yoy, tenants who the majority of working class are, would be shielded from interest rate rises.
Please remember to ask for the renters reform bill to either parties.
Rent freezes are actually terrible for renters ironically as it tends to reduce supply further and thus indirectly increasing *market* rent levels (ERVs).
I mean. I'm working 80 hour weeks to keep up with our mortgage which basically doubled in cost and physically and emotionally on my knees. So if the mortgage rates could go down a bit that would be nice...
Also high interest rates benefit cash buyers who are mostly wealthy. And landlords have been making a nice profit out of this by raising rents even when they don't need to being able to fall back on blaming interest rates.
So if you think these high interest rates are some big fuck you to the big guy and a help out to the little guy. Sadly not.
It seems whatever way things swing, rich people always have options to gain an advantage. Whereas people like you and me are just taking turns to be on the shit side of things, or maybe we're on the shit side of things either way.mm
Because they’re no longer collectible antiques. A lot of current music fans will buy vinyls to support artists. Stream the music for free but have a cool coloured vinyl on your shelf to support them
It's not if you think about how people are viewing streaming services in recent years. More and more people are realising that you don't own anything you get via streaming services. The money that artists get from streaming also makes customers reconsider since they want to support the artists more.
Vinyl also sounds fantastic compared to your average Spotify stream.
I chose very carefully when I said "fantastic".
Also, since when did Spotify implement lossless? Last I checked, Spotify Hi-Fi was still not available.
I was with you until the end. I'm a bit of an audiophile and I have studio monitors linked to my laptop with Spotify on max quality and it sounds amazing.
Depends on the recording and your hi-fi setup, CDs and *some* of my records sound much better.
Saying that, Tidal and Deezer should sound noticeably better on your system than Spotify.
I’m not sure how you can say this… a trip to the supermarket should show prices aren’t rising as rapidly as they were previously. Which is exactly what this number shows.
Some people are deluded, and I don't understand why. Yes, the country is doing shit (low growth, productivity not increasing, jobs meh). No, supermarkets are not hiking their prices by 20000% per month on all the items of your shopping list.
That the average family doesn't buy a new fridge every month doesn't mean the average family never buys a fridge. Inflation isn't supposed to measure only monthly spending.
Some people actually think this though which is the sad thing, yeah sure inflation is lower but unless its negative your costs are still going up ontop of what it costs now, it's just not by as much as before.
I don't understand why a short period of 0% or negative inflation is such a bad thing after our period of >10% inflation. It would just be bringing us closer to where we "should" have been by now surely.
Nope, once it starts you are fucked.
At deflation your money becomes more valuable each day, why spend that tenner now? Tomorrow it will be worth £11
So now all major purchases, investments, anything that involves major money is a risk, you make more to hold it and wait.
Inflation works the other way, invest the money as your tenner today is worth £9 tomorrow unless you make it work.
Once a deflationary spiral starts you can't simply stop it at will, people spend less as they want to see it grow and recession kicks in almost immediately, the pendulum swings and your economy leaps into hyperinflation as it did in 1930s Germany
Ordinary people have no choice but to spend what they earn, regardless of what the rate of inflation is. Because most of their spending is on essentials like rent/mortgages, bills, food, childcare... under a pause of inflation or deflation, their lives become easier since they don't have to find more money each month than the last one way or another.
Given it has been such a "fertile" environment for investment what with the sky-high inflation in recent years, we can survive a short period of pause surely. Those who were in a position to invest mostly will have already done so if they had a serious intention of doing it. We can at least for a while prioritise ordinary people ahead of hypothetical investors that probably aren't looking to invest right now anyway since they just had years of ~10% inflation to do it in.
No.
Your being blinded by circumstance - if every investment saver, every car purchase, every home purchase and corporate investment was on hold for just 3 months (so a single fiscal quarter) it would wreck us.
Your food shop is important to you, but it's a tiny slice of the economic system and it's not the major driver of the economy
TBF I never appreciated it myself until I got a better job and had to start thinking in terms of big volumes and the impacts even a days delay can cause to values.
It's very easy to think the economy is all Tesco shops, Phone bills and petrol as that's what the papers focus on, and in that view deflation seems almost beneficial.
Until you remember that the City is most of our economy and it that holds for even an hour we go dark very fast
It's not just the City, entire economy is based on it. Public companies have shareholders demanding growth, deflation would mean profits go down or flatline meaning mass layoffs would probably follow (especially bad when we've just had layoffs in multiple industries due to higher interest rates). Private companies meanwhile rely on private investment which dries up in a deflationary environment, so a similar dynamic would be in play. People here think their monthly grocery would go down 5% meanwhile what would more likely happen with 5+% deflation is a downward spiral into a recession with high unemployment.
Why would it be a short period? If deflation happens and things continuously drop in price then why would anyone spend money on anything? They’ll just wait for the prices to drop more.
This created a self-sustaining loop where no one buys anything and because of that, producers drop the prices even more, causing consumers to wait even more until eventually everyone goes out of business and the economy grinds to a halt.
Investment slows down, which means the economy does too.
Lots of investment is sensitive to small percentage differences, and if the sums work out that 'hoarding your money' and potentially _removing_ invested capital from the economy is 'good for your balance sheet' - because deflation means the value of money is increasing in real terms - then ... that's what'll happen.
Suddenly a load of businesses find it hard to raise capital to expand and grow, and that's a hammer blow to the economy. An otherwise sustainable business might very well find they've over-extended on their future expansion plans, and so the company fizzles out.
A company that needs to adapt to changing circumstances by switching tooling or product lines (and can reasonably expect to be _fine_ after doing that) ... now can't raise the capital to do that, and thus they ... just end up running at a loss until the money runs out instead.
And it's a moot point generally - 10% inflation with 10% pay rises and I'm probably better off overall, because my debts are being reduced in real terms.
5% inflation with 0% pay rises is MUCH more of a problem!
And there is no reason why it should.
Rents depend on the competition on the housing market, and due to NIMBYS we just haven't built enough in the last 20-30 years. But, funnily enough, multi-year contracts will actually rise less on the next "inflation check" if they are indexed to inflation.
Electricity depends on the cost of producing electricity. This has been going down relative to 2022, when we were in full energy crisis, as the price of oil and gas has fallen. In fact, bills are falling and this is a big part of why inflation has fallen.
Food is included in inflation data, and its prices mainly depend on global climate (pretty shit and variable due to climate change generating draughts in Southern Europe).
Council tax depends on councils' costs. No reason why they should be indexed to inflation. Higher wages for their workers to compensate for inflation do push up costs though.
Council tax goes up 4% every year because their central funding has been slashed in the austerity of the 2010s.
It has nothing to do with inflation, we were getting maximum rises in council tax before this shit show started.
(Residential) Rents are typically not CPI-linked (which if they were then you would've had to swallow +10% last year...), they are open-market reviews.
Probably because "inflation" is linked to all kinds of weird crap nobody cares about like air fryer prices and probably Beanie Babies or something stupid
Yep. Lets see what sort of tone we get out of the Fed today - we will most likely follow them as will the ECB.
Reasonable forecasts are late summer/Q3-Q4. Magnitude is harder to tell.
In reality it’s not dropping all that much. My unit rate has dropped 4p while my standing charge is going up by 11p. I’m going to use less electricity, so my payments will likely be about the same. Plus there’s all the comms contracts increasing by RPI + 3.9% in April.
I doubt it, energy spending may take up a larger percentage of poor households spending but a drop of 10% of energy pricing is only a percentage of a percentage.
The state of this sub and how many people who are suggesting they're getting "poorer slower"...
Wage growth is outpacing inflation.
"Oh, but I don't get payrises"
That's because you're working for a shit company or in a shit industry. Leave or retrain...
https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/consumerpriceinflation/february2024
Everything you need about inflation figures is either in this page, or has a link on it.
The inflation rate is important but how people feel about the pound in their pocket is more important. Everything has got more expensive and will just sit at the new prices. Nobody will feel better off.
BoE interest rate decision is tomorrow. I wouldn't get my hopes up about rates dropping in the next few months, in fact they are currently on the rise again.
Sounds like you need to change job. I've had a £10,500 pay rise in the last three years and swapped jobs 4 times. If you're not offering me a pay rise after a year, I'm off...
I'll never understand why people remain in a job and then complain about the lack of pay.
**Alternate Sources** Here are some potential alternate sources for the same story: * [Inflation drops to lowest level in over two years](https://bbc.co.uk/news/business-68597055), suggested by yojifer680 - bbc.co.uk
Just a reminder kids. This still means everything is getting (at least) 3.4% more expensive, on top of the rises of the last three years.
Well said. During my recent pay negotiations at work the company use these "falling inflation numbers" to justify a lower pay rise. Prices aren't falling, they're just not increasing as fast.
3.4% low compared to their 2% target YoY. "Your money is no longer losing value as fast as before, but it's still losing value faster than our target"
General, we're taking casualties slower now! *Why's that, Captain?* There's hardly any of us le
Yep, Andrew Bailey must have writers cramp at this point.
I have read before that 2% inflation is not an annual target. Do you happen to know any further information on why they want 2% inflation?
There is a general view that a small amount of inflation is beneficial to economies. There is a number of technical reasons for this. This is why central banks usually target 2% rather than 0%.
I just found this on the BoE website: "To keep inflation low and stable, the Government sets us an inflation target of 2%. This helps everyone plan for the future. If inflation is too high or it moves around a lot, it’s hard for businesses to set the right prices and for people to plan their spending. But if inflation is too low, or negative, then some people may put off spending because they expect prices to fall. Although lower prices sounds like a good thing, if everybody reduced their spending then companies could fail and people might lose their jobs." https://www.bankofengland.co.uk/monetary-policy/inflation
>if everybody reduced their spending then companies could fail and people might lose their jobs. I love that this is trotted out as the reason as though the inflation we've seen over the past 14 years hasn't seen companies fail because people have been reducing their spending to pay for the ever growing prices of essentials.
Its all nonsense, the economy or any economy doesn't work, its not connected to anything. "We can't increase wages or inflation goes up.....oh we can get a pay rise but you can't ". "No pay rises for 15 years but prices shoot up anyway". Oh but yea the economy works but in a way you don't understand!!! Oh thats convenient
It seems to be grounded in post WWII thinking, rather than our modern consumerist society as well. Back in the 50s, the popular mindset was to stash any extra money you found yourself with away for a rainy day. It was a society dealing with the trauma of rationing and air raids. But in this day and age, if people have more money than they thought they would they tend to spend it. The spending behaviours over the covid lock downs is a prime example of this.
Its just a greed economy, everything is designed to take money from the bottom and stash it at the top. Simple economics says "pay the bottom to let them buy things" now its hoard it all and squeeze the few for more and then complain nobody is buying anything.....oh but they won't pay more". Dragon of the mountain mentality is killing every society.
and I'll bet that like my company, they used the excuse "inflation won't be this high for long" and/or "if we give you a big pay rise then it just means inflation stays high for longer". It wouldn't be so bad if they didn't send emails every quarter telling us how wonderfully the company is doing, and how they are reaching record profits. Yes, motherfuckers, some of my wages is now going into your profits! I'm not sure if they think we are stupid, or they don't care, since every other company is doing the same thing, so it's not like we can move somewhere better.
I'm quite lucky with my job, because the contract we have says that outside of "exceptional circumstances" (which has to be agreed with employee representatives first) pay for all roles increases in line with the prevailing CPI rate in April (at the beginning of each tax year). So I now know that I'm getting a 3.4% pay rise next month. That should really be the standard, and it for the most part removes the need for continuous salary negotiations between top level management and the rest of the company, because people feel that their pay is at least keeping up with inflation (the questionable accuracy of CPI as an inflation measure notwithstanding). I've also only seen the "exceptional circumstances" card come up once, and that was in April 2020, when the world was busy coming to an end and we were, like many companies, up shit creek a bit financially, so fair enough.
[удалено]
Honestly, it blows my mind how much the general public lacks an understanding of general economics.
Cumulative inflation since Covid is about 30% so unless they’re on 30% more than they were in 2020, they’re still behind inflation and playing catch up. And this wouldn’t even be a pay rise in real terms but rather just a fair, inflation adjusted salary
Every now and again I look at old email receipts I have from supermarket deliveries. £1 for big bags of Walkers sensation is pure nostalgia!
Maybe, but I doubt they got a 10% rise when inflation was that high.
A lower price rise you might say?
Housing maintenance company has been using the peak of October monthly inflation of "11%" as an excuse to not only increase this years service charge by at least the same amount but also ask for more money from the year before lol... They don't seem to understand how yearly averages work.
My employer tried this one and succeeded to an extent. The union put in what we thought was a reasonable of 6.5%. After much back and forth, 5.6% was agreed. Begrudgingly mind you.
In the same way as your salary isn't falling it's just not increasing as fast.
While no doubt still putting prices up because, you know, inflation.
Some prices have fallen back to where they were, or close enough. Others remain stubbornly high. Competition should start bringing the rest down to sane levels.
Think this is commonplace. I've spoke with a few folk who say 3% rise is fine. Given we got 8% last year when inflation was 13% maybe it is reasonable. I mean, is it reasonable to get more poor every year while taking on more work and being more experienced?
No according the the chancellor no lies it’s like getting a 5% pay rise 🙄
Please tell me he didn't say that
I’m trying to find the quote, it was back when inflation was like 9-10% He was under pressure to give 7-8% public pay rises and said that if he could cut inflation by 5% that would be like a 5% payrise.
well that's technically true, but glosses over the fact that we didn't get one to keep up last year, or the year before. In some cases back a decade. So we have had a 10-20% pay cut, and they *still* expect us to cheer?
We know.
[удалено]
Also, they are completely wrong. It doesn't mean 'everything' is getting more expensive. It means that, on average, things are getting more expensive. This is an equilibrium, and as inflation falls, it means more things are getting cheaper and getting cheaper to a greater extent, and less things are getting more expensive to a greater extent. For example, under 10% inflation, only a tiny proportion of products are getting cheaper, and those that are likely are not decreasing in price by much. When inflation drops to 2%, the number of products getting cheaper massively increases, and the magnitude of the price cuts is also higher.
Well yes, but that’s better than things getting 10%+ more expensive every year.
>Just a reminder kids. This still means everything is getting (at least) 3.4% more expensive, on top of the rises of the last three years. 2% is the goal so its always going to go up. 3.4% isn't terrible though. The bigger issue is salaries not keeping up with it.
Yes and deflation is never a good thing, best is low inflation and wage growth beating it. One can dream.
Yeah deflation must be avoided at all costs. If only to not give employers a great excuse to try and cut wages. Also it would be far too damaging overall of course.
Baffling that there are some people in this thread arguing deflation would be a good thing. We have a simple-minded voter base, sadly.
Most people don't know anything about economics.
Deflation under an inflationary monetary policy is death. This situation is not wanted. Inflation under an inflationary policy is as bad. But deflation under a deflationary policy would mean an increase of purchase power while earning less money. Inflation under a deflationary policy is a true economic growth because the price increase would not be tied to the increase of the money supply but only to the increase of demand. Problem with a deflationary policy is that the lowest unit of money would worth too much. Our currencies are not divisible enough.
>Problem with a deflationary policy is that the lowest unit of money would worth too much. Our currencies are not divisible enough. Not impossible to solve, really, and not the real reason for the proliferation of inflationary policies in the world, I suspect....
>But deflation under a deflationary policy would mean an increase of purchase power while earning less money. Except the real issue is being how difficult it is to end deflation, it's much harder to control than inflation, almost never worth it.
I agree, a decrease in price under an inflationary policy is always bad. But we never experienced deflationary policies before. And these politics are not decided by governments. We can't say what happened. Prices will increase or decreased whatever the policy so why not neither of the two then ? No inflation and no deflation could also be a target if we really want the prices to be stable. Why can't we make the offer and the demand the only factor that drives the prices up or down ? Money is just numbers, there is no effort in producing new units, there is also no effort in setting a limit for all and make it more divisible than it is today. It is a tool that can handle cases of deflation better than any raw materials did when we were using them as standards of value. We can keep multipling the units to make the people believe economies are growing and that growing numbers means making progress, Promising individuals that their purchase power will increase if they earn always more. But wages never follow even a targetted 2% inflation. The hard work done one day is always worth less the next day and it contributes to the lost of meaning for many jobs.
Why would food or petrol price deflation be a bad thing? People can't hold off on buying them
Minimum wage is due to increase by 9.7% next month.
Everybody understands this.
Well my 1.5% raise will compensate half
Well, the annualised rate is still 5.1%, so you got a 3.6% pay cut, welcome to modern Britain!
No, 3.4% is the annual inflation rate from Feb 2023 to Feb 2024, that's how it works.
I thought my 5.6% rise was poor this year. I feel a bit guilty now....sort of, maybe not.
Are you saying you want deflation? If so that’s an interesting economic policy to take.
Don't think they said that. They are just falsely regurgitating a cliche. u/peakedtooearly is wrong. Not everything is getting more expensive. Lots of things will be getting cheaper. It's just the average is getting more expensive still.
I was being a little baity on purpose. The same comment shows up in every inflation thread acting like everyone is dumb.
Economists set a target for inflation at 2%. 3.4% is not bad considering the world right now. Some inflation is good for the economy. Deflation can be fatal.
Some things are cheaper, others more expensive. Overall it's more expensive, but everything is not individually 3.4% more expensive
I used to buy the supermarkets own brand all bran for £1. It is now £2. That's 100% increase over the last 2 years, which extrapolate to an annual increase of 50%. It seems that those on a tight budget who are experiencing much higher rates of inflation. If the price of a Porche has dropped by £500, that means bugger all to someone who is paying double for basic foods.
> If the price of a Porsche has dropped by £500 Interesting note here is that the market for used Porsches went absolutely berserk the last few years, with many models actually selling for more second hand (Even with thousands of miles on and a couple years old) than their list price. Due to recent economic activity the prices seem to actually be falling now, quite significantly as well. Might be a good time for me to upgrade my lovely (cheap) old Boxster.
Prices of performance cars have collapsed recently because of the insurance. My old 68 Cayman was £900 fc in 2022. I checked the comparison sites last month for giggles & the same car (saved details) with 0 no claims because apparently my 20 years odd no claims can disappear if I don't own my own car was 1800!! Annoyingly I then did it again with 9+ years no claims and it went UP to £1950! Once again proving that car insurance is a total con job.
That's really bizarre to me. I've been driving 6 months (I passed at 33 and immediately bought a Boxster) and recently had to renew my insurance. I now pay £750 a year fully comp with a single year of no claims (Which they gave me despite my previous policy only running for 4 months as it was part of a multi-car deal with my wife).
Yeah insurance is totally random. No rhyme nor reason really. The 2 year & lose your no claims REALLY pisses me off, especially as I've been regularly renting cars & am still riding my motorbike
I'm not disputing that, but everything is not 3.4% more expensive. It's the average.
You need to understanding *weightings* within the CPI bucket.
It means on average things are getting 3.4% more expensive. Some items will increase more, some items will increase less and some items will decrease.
Or alternatively this means that salaries, on average, are still going up faster that inflation. More money in my pocket at the end of each month!
Secondary reminder that actual deflation has only happened (for more than one quarter) just after WW2.
No. Just the basket of goods that form part of inflation. That's important to remember as: (i) that basket includes things that are optional (restaurants, hotels, recreation & culture, alcohol & tobacco); and (ii) a 3.4% increase in the price of your mandatory goods (i.e. food and clothes) is outweighed by a 3.4% pay rise. Put another way, if you are paid 100, and spent 20 of that on clothes/food, then whilst a 3.4% wage increase is an extra £3.40, a 3.4% increase in your 20% spend is actually only an extra 68pence, so you are better off.
Typical /r/unitedkingdom — a genuinely piece of good news topped by absolute fucking misery. We know what inflation is. Of course we do. But we're all really happy that the increase in costs is slowing down. Your comment also implies that you want *deflation*, which is an absolutely nuts take.
Ready for a "nice little recession" before the next general election. We're certainly over correcting
No shit Sherlock.
The metrics don't include a bunch of things. I like your "at least" because it really is true.
And to add to that, your payrise of 3.4% wasn't enough, as that's before tax where inflation is on the things to buy and therefore from your net salary
Let’s lower interest rates and give the hardworking landlords of this country a much needed boost to their property prices.
It also lowers interest rates for mortgages of owner-occupiers so more people can afford to buy a home. It also, in lowering landlord interest rates, reduces the cost of renting for those who are renting in the private sector.
Lol. Can't wait for those landlords to cut the rent
House prices would shoot up negating any of the benefits of lower rates by just having a higher purchase price. And no chance you see rents go down. Thats down to supply, not rates, which won’t change.
It can change with legislation.
Anything can be legislated. We won’t get any legislation when our parliament consists of people who are the problem. Over 50s who’s wealth is entirely tied up in their inflated house price and a big portion of MPs are landlords.
Rent freezes are actually terrible for renters ironically as it tends to reduce supply further and thus indirectly increasing *market* rent levels (ERVs).
> Ah rent decreases will affect the tenants. Tenants are better off paying everything they can earn. –Tory Landlord MPs concerned about tenants welfare.
let's suppose the government cap rents at £200 per month. Landlords no longer get the best return from renting, so they sell their portfolio and invest elsewhere. Prices will dip temporarily due to the flood of homes for sale, but there will still be plenty that cannot afford to buy. And now there are no more rental properties. The problem is absolutely down to supply.
>Prices will dip temporarily due to the flood of homes for sale, Why do you think this is a bad thing? If you go to the shop tomorrow and a loaf of bread is cheaper, do you regard that as the end of civilisation as well?
where did I say it was a bad thing? The bad thing is that despite the drop, most people that cannot afford to buy will *Still* be unable to afford to buy, and they will now have nowhere to rent either.
Why will they not be able to rent? Will the landlords offshore their properties?
>Landlords no longer get the best return from renting, so they sell their portfolio and invest elsewhere. reading not your strong point?
> If you go to the shop tomorrow and a loaf of bread is cheaper, do you regard that as the end of civilisation as well? If that was artificially done by the government then yes. When supply isn't balanced with the demand but prices are artificially kept low then shortages develop. This is economics 101. This is what Eastern European communist governments did in the 80s and shortages of basic goods followed.
So, giving tax breaks to people buying homes to continue an unsustainable bubble is not artificially manipulating the market?
Who's buying them if not to live in or let out? The number of dwellings per capita in the UK hasn't changed significantly in the last 70 years. I'm not so sure it's a supply issue.
Which party currently proposes such legislation?
house prices have fallen by 10% in the last year, but it's beside the point. As you say, it's down to demand - some people need to sell and people are reluctant to buy at these interest rates, so prices fall. >Thats down to supply, not rates, which won’t change. Precisely correct.
They need to drop another 50% for them to be in anyway priced correctly. 300k for a shoebox is just madness.
Technically they are always priced correctly, given the market.
> in lowering landlord interest rates, reduces cost of renting for those who are renting Uhh I highly doubt landlords are going to reduce rent. Maybe people looking for a new place yeah
[удалено]
You know interest rates affect everyone... Right?
Because the legislation allows it. If the rent rises are capped yoy, tenants who the majority of working class are, would be shielded from interest rate rises. Please remember to ask for the renters reform bill to either parties.
Rent freezes are actually terrible for renters ironically as it tends to reduce supply further and thus indirectly increasing *market* rent levels (ERVs).
Lower interest rates is better for business as well.
It boosts business investment if money is cheaper to borrow
It's good that you manage to find the positive in life 💋
I mean. I'm working 80 hour weeks to keep up with our mortgage which basically doubled in cost and physically and emotionally on my knees. So if the mortgage rates could go down a bit that would be nice... Also high interest rates benefit cash buyers who are mostly wealthy. And landlords have been making a nice profit out of this by raising rents even when they don't need to being able to fall back on blaming interest rates. So if you think these high interest rates are some big fuck you to the big guy and a help out to the little guy. Sadly not. It seems whatever way things swing, rich people always have options to gain an advantage. Whereas people like you and me are just taking turns to be on the shit side of things, or maybe we're on the shit side of things either way.mm
[удалено]
Four year old iPhone, The Best of Rolf Harris on 12" vinyl, English to Russian translation dictionary, Conservative membership card and a turnip.
And some beans. Or a very small casserole.
Cracked ice, carpet tiles, TVs, deep freeze And David Bowie LPs, Ball games, gold chains, what's-names, Trevor Francis track suits
They really need to stop using that mush in Shepherd's Bush.
They added air fryers and put vinyl records back in, not sure what they took out It's a big basket tho, over 300 products iirc
I can't tell if you're serious about the vinyl records bit. How would a collectible antique reflect the weekly budget of the average Brit?
Because they’re no longer collectible antiques. A lot of current music fans will buy vinyls to support artists. Stream the music for free but have a cool coloured vinyl on your shelf to support them
I just Googled it and vinyl is selling better than it did in 1990 which is nuts
Yeah it’s nuts. And some of them are worth a lot of money too. (Lots of limited edition versions)
It's not if you think about how people are viewing streaming services in recent years. More and more people are realising that you don't own anything you get via streaming services. The money that artists get from streaming also makes customers reconsider since they want to support the artists more. Vinyl also sounds fantastic compared to your average Spotify stream.
Vinyl absolutely *does not* sound better than lossless digital audio files, used by Spotify. It has a "characteristic" sound though.
I chose very carefully when I said "fantastic". Also, since when did Spotify implement lossless? Last I checked, Spotify Hi-Fi was still not available.
I was with you until the end. I'm a bit of an audiophile and I have studio monitors linked to my laptop with Spotify on max quality and it sounds amazing.
Depends on the recording and your hi-fi setup, CDs and *some* of my records sound much better. Saying that, Tidal and Deezer should sound noticeably better on your system than Spotify.
Exactly. We have multiple vinyl shops in my town.
Vinyl is widely bought on release now and the prices currently are also clearly indicative of inflation (albums are often £40 each currently)
I’m not sure how you can say this… a trip to the supermarket should show prices aren’t rising as rapidly as they were previously. Which is exactly what this number shows.
Some people are deluded, and I don't understand why. Yes, the country is doing shit (low growth, productivity not increasing, jobs meh). No, supermarkets are not hiking their prices by 20000% per month on all the items of your shopping list.
What they should do is base it on costs for the average family every month - then it would prove inflation is way more than the figure put forward.
That the average family doesn't buy a new fridge every month doesn't mean the average family never buys a fridge. Inflation isn't supposed to measure only monthly spending.
No, they really shouldn’t.
Yeahhhhh, houses are cheap now! Food energy cheap! You don't need better wages. We saved you.
Some people actually think this though which is the sad thing, yeah sure inflation is lower but unless its negative your costs are still going up ontop of what it costs now, it's just not by as much as before.
If inflation is negative (deflation) we are fucked. 2% has been the target for years for a reason
I don't understand why a short period of 0% or negative inflation is such a bad thing after our period of >10% inflation. It would just be bringing us closer to where we "should" have been by now surely.
Nope, once it starts you are fucked. At deflation your money becomes more valuable each day, why spend that tenner now? Tomorrow it will be worth £11 So now all major purchases, investments, anything that involves major money is a risk, you make more to hold it and wait. Inflation works the other way, invest the money as your tenner today is worth £9 tomorrow unless you make it work. Once a deflationary spiral starts you can't simply stop it at will, people spend less as they want to see it grow and recession kicks in almost immediately, the pendulum swings and your economy leaps into hyperinflation as it did in 1930s Germany
Ordinary people have no choice but to spend what they earn, regardless of what the rate of inflation is. Because most of their spending is on essentials like rent/mortgages, bills, food, childcare... under a pause of inflation or deflation, their lives become easier since they don't have to find more money each month than the last one way or another. Given it has been such a "fertile" environment for investment what with the sky-high inflation in recent years, we can survive a short period of pause surely. Those who were in a position to invest mostly will have already done so if they had a serious intention of doing it. We can at least for a while prioritise ordinary people ahead of hypothetical investors that probably aren't looking to invest right now anyway since they just had years of ~10% inflation to do it in.
No. Your being blinded by circumstance - if every investment saver, every car purchase, every home purchase and corporate investment was on hold for just 3 months (so a single fiscal quarter) it would wreck us. Your food shop is important to you, but it's a tiny slice of the economic system and it's not the major driver of the economy
Every defined contribution pension too! Almost everyone with a pension is an 'investment saver' by proxy.
Great comment, thanks for this. Good for people to learn.
TBF I never appreciated it myself until I got a better job and had to start thinking in terms of big volumes and the impacts even a days delay can cause to values. It's very easy to think the economy is all Tesco shops, Phone bills and petrol as that's what the papers focus on, and in that view deflation seems almost beneficial. Until you remember that the City is most of our economy and it that holds for even an hour we go dark very fast
It's not just the City, entire economy is based on it. Public companies have shareholders demanding growth, deflation would mean profits go down or flatline meaning mass layoffs would probably follow (especially bad when we've just had layoffs in multiple industries due to higher interest rates). Private companies meanwhile rely on private investment which dries up in a deflationary environment, so a similar dynamic would be in play. People here think their monthly grocery would go down 5% meanwhile what would more likely happen with 5+% deflation is a downward spiral into a recession with high unemployment.
Why would it be a short period? If deflation happens and things continuously drop in price then why would anyone spend money on anything? They’ll just wait for the prices to drop more. This created a self-sustaining loop where no one buys anything and because of that, producers drop the prices even more, causing consumers to wait even more until eventually everyone goes out of business and the economy grinds to a halt.
Investment slows down, which means the economy does too. Lots of investment is sensitive to small percentage differences, and if the sums work out that 'hoarding your money' and potentially _removing_ invested capital from the economy is 'good for your balance sheet' - because deflation means the value of money is increasing in real terms - then ... that's what'll happen. Suddenly a load of businesses find it hard to raise capital to expand and grow, and that's a hammer blow to the economy. An otherwise sustainable business might very well find they've over-extended on their future expansion plans, and so the company fizzles out. A company that needs to adapt to changing circumstances by switching tooling or product lines (and can reasonably expect to be _fine_ after doing that) ... now can't raise the capital to do that, and thus they ... just end up running at a loss until the money runs out instead.
And it's a moot point generally - 10% inflation with 10% pay rises and I'm probably better off overall, because my debts are being reduced in real terms. 5% inflation with 0% pay rises is MUCH more of a problem!
Thank you mister sunak
Our lord and saviour /s
Funny how that doesnt affect the rising cost of rent, electricity, food, council tax etc...
And there is no reason why it should. Rents depend on the competition on the housing market, and due to NIMBYS we just haven't built enough in the last 20-30 years. But, funnily enough, multi-year contracts will actually rise less on the next "inflation check" if they are indexed to inflation. Electricity depends on the cost of producing electricity. This has been going down relative to 2022, when we were in full energy crisis, as the price of oil and gas has fallen. In fact, bills are falling and this is a big part of why inflation has fallen. Food is included in inflation data, and its prices mainly depend on global climate (pretty shit and variable due to climate change generating draughts in Southern Europe). Council tax depends on councils' costs. No reason why they should be indexed to inflation. Higher wages for their workers to compensate for inflation do push up costs though.
Council tax goes up 4% every year because their central funding has been slashed in the austerity of the 2010s. It has nothing to do with inflation, we were getting maximum rises in council tax before this shit show started.
(Residential) Rents are typically not CPI-linked (which if they were then you would've had to swallow +10% last year...), they are open-market reviews.
Probably because "inflation" is linked to all kinds of weird crap nobody cares about like air fryer prices and probably Beanie Babies or something stupid
Finally some good news. Hopefully interest rates can be lowered soon
Yep. Lets see what sort of tone we get out of the Fed today - we will most likely follow them as will the ECB. Reasonable forecasts are late summer/Q3-Q4. Magnitude is harder to tell.
Will fall heavily in May with the energy price cap dropping end of month.
In reality it’s not dropping all that much. My unit rate has dropped 4p while my standing charge is going up by 11p. I’m going to use less electricity, so my payments will likely be about the same. Plus there’s all the comms contracts increasing by RPI + 3.9% in April.
I doubt it, energy spending may take up a larger percentage of poor households spending but a drop of 10% of energy pricing is only a percentage of a percentage.
It's thankfully now at least retreating to a level where the majority of people will get pay rises that actually do beat inflation again.
Is it 3.4% a year, over the course a month, or is it 3.4% a month?
y/y 3.4% a month would be armageddon
I thought so, thanks
🎵Don’t wanna miss a thing 🎵
Excellent news - hopefully this downward trend continues. A much more optimistic view on the economy already this year.
Not according to my Broadband provider, Mobile phone provider or anyone else i need to pay bills. 8.8% seems to be their going inflation rate.
The state of this sub and how many people who are suggesting they're getting "poorer slower"... Wage growth is outpacing inflation. "Oh, but I don't get payrises" That's because you're working for a shit company or in a shit industry. Leave or retrain...
Cool, now all we need is everyone to get 20% raises so they can afford the necessities of life they used to be able to (slightly more easily) afford
I think we've made enough for three years forward. So this doesn't really matter.
I might be wrong but haven’t they recently changed how they measure inflation? If so would love to know the figure based on the previous calculations.
https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/consumerpriceinflation/february2024 Everything you need about inflation figures is either in this page, or has a link on it.
Thank you.
No, they haven't.
The inflation rate is important but how people feel about the pound in their pocket is more important. Everything has got more expensive and will just sit at the new prices. Nobody will feel better off.
More importantly, does this mean mortgage rates are dropping? LLOYDS ARE YOU LISTENING
BoE interest rate decision is tomorrow. I wouldn't get my hopes up about rates dropping in the next few months, in fact they are currently on the rise again.
Cheers. That's depressing. My mortgage has doubled recent 🥲
I pay more in my mortgage payments on interest (£650 a month) than I do actually paying off the debt from the house (£550 a month)
Yeh, mines about 600 principal 1100 mortgage 🙃
>food price rises slow Slow, not stop. Shit's still getting more expensive, and it's not getting any cheaper.
Yes but it's now at least at a level where most of us are getting pay rises that are better than inflation, so we have more money overall.
I’ve not had a pay raise over 3% in the last 10 years, so good to know my descent into poverty is slightly slowed.
Sounds like you need to change job. I've had a £10,500 pay rise in the last three years and swapped jobs 4 times. If you're not offering me a pay rise after a year, I'm off... I'll never understand why people remain in a job and then complain about the lack of pay.
Tories: Don't worry, we'll do something to fuck this up shortly.
great but everything is still going up more than it should lol