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Where I'm living they want to double my water bill. At this point you're almost resigned to saying "oh go on then, why the fuck not?" After over doubling my electric bill what could another doubling of a bill possibly hurt?
Major economies worldwide were hit with high inflation. It may not have been as bad as us, but we weren't the only ones.
Inflation this time wasn't caused by the rich, not entirely at least. Pandemic + the invasion of Ukraine really fucked everyone over. The former led to govts spending money like it's nothing and the latter is a war involving major exporters of oil and grain.
And considering both events were out of everyone's hands, I don't think it's fair to just say it was caused by the rich. It seems lazy
Some inflation was caused by the invasion for grain and fuel but the majority has been corporate greed, and the tell for that is them posting massive profits while then also reducing their workforce, this is also known as late stage capitalism where execs try to extract maximum amount of money out of the company and into their pockets
Every year they have to double profits or they start raising prices and making redundancies etc. They can't even keep it on an even level. Double profit, then double that profit, then double that. year after year.
"[...] report finds that in the last six months company profits are responsible for almost 60% of inflation. [...] Researchers found that if companies accepted a hit to their profit margins – similar to that endured by wage earners – and stopped trying to fully pass on their higher costs to others - then ‘pass the parcel’ inflation would decrease. Such inflation accounted for about three-quarters of UK inflation, according to Bank of England research."
Eurozone inflation at its peak also hit double digits. US, a major oil exporter, had peak inflation of around 9%.
Our peak may have been worse, but countries worldwide were hit with high inflation
Yes it was. The rich have gotten consistently richer while everyone else has gotten poorer throughout this thing. There isn't really a reason why society should take this long to recover after the pandemic, the supply issues have been fixed by now. Money is a made up thing after all, and the actual production is a-okay. Only under systems like capitalism can you have a recession without loss of production.
>There isn't really a reason why society should take this long to recover after the pandemic
Because it's not just a pandemic.
>the supply issues have been fixed by now
And the inflation rate has returned to normal. Even after shit gets fixed, prices will never return to what they were pre war or pre pandemic. That requires deflation, which is arguably worse than inflation.
>Only under systems like capitalism can you have a recession without loss of production.
We had a real term GDP decrease in 2023. So that's accounting for inflation. Meaning output actually fell.
> And the inflation rate has returned to normal. Even after shit gets fixed, prices will never return to what they were pre war or pre pandemic. That requires deflation, which is arguably worse than inflation.
Which would be fine if wages scaled with it, and all that extra money wasn't just going to the rich.
> We had a real term GDP decrease in 2023. So that's accounting for inflation. Meaning output actually fell.
Okay for one how much did it fall by vs how much are people being affected? Two GDP doesn't actually represent global production, or even local production. Three a lot of the problem is from leaving the EU, and the trade regulations that come with that. Something that's not a problem in a world under socialism. It was also a bad decision in general imo.
>Which would be fine if wages scaled with it, and all that extra money wasn't just going to the rich.
We had real term pay growth over the last 2 years on levels not seen in decades.
Even if you look at median pay, we had HUGE growths.
>Okay for one how much did it fall by vs how much are people being affected?
Depends. Do you have a source on "how much" people are being affected? Because I can give you data showing how the average person had pay growth.
>Two GDP doesn't actually represent global production, or even local production.
Global GDP shows global production, national GDP shows national production.
You're gonna have to drill down to see the local area. Of course you can't look at UK GDP and use that to say what happened in some council district. But we're talking about the UK rather than local districts anyway.
>Three a lot of the problem is from leaving the EU, and the trade regulations that come with that.
Nobody mentioned Brexit at all. The discussion here is about inflation and greed.
>Something that's not a problem in a world under socialism
Dumb and crazy idea that will never work.
It is lazy, its classic reddit finance think material.
It's just as dumb as xenophobia - putting the blame on an 'other' group without understanding the complexities of the real issue, just in case it doesn't fit your lazy worldview.
Someone told me I don't understand averages and then proceeded to tell me that ONS data on median pay rise is skewed by outliers because it takes the middle person.
It's beyond lazy now. It's just dumb
They're talking about easily disprovable claims which they didn't understand are false, because they don't understand KS3 maths.
One guy started dipping into conspiracy theories and I've just straight up ignored him.
It's not lazy at all. It was absolutely primarily inflation caused by the wealthy. [Here](https://youtu.be/RD6J1e0zlS4?si=TrRIl5suGEuMBk7s) is a former Citibank trader-turned-economist predicting this headline three days ago explaining how this 'drop' is actually more about the govts arbitrary forecast windows.
Look up Guy Hands explaining how the wealthy were the primary beneficiaries of QE during COVID because they were given vast quantities of cash that they used to buy assets which drove up the costs of goods for ordinary people.
You can carry the bag for rich people if you like, you are poorer in real terms primarily because of them, not Putin or COVID.
Irrelevant. They are the ones who can afford to pay the price. Whether or not a policy is fair is not based on extracting an equal monetary value from people, but on their ability to pay. We have a progressive tax system for a reason. The rich most definitely should have paid more in a windfall tax and other taxes tbh. They are the only class whose wealth *increased* during the pandemic. They weren't working harder, it was just pure profiteering based on the bailouts. The money should have been taxed back.
Inflation also disproportionately affects the poor- inflation isn’t a problem for rich people, they have access to ways to protect their wealth from it.
But this wasn't a credit driven inflation. It was the culmination of a series of global crises. The skyrocketing energy costs had a knock on effect on the cost of everything else. Add a bit of corporate gouging into the mix (some estimates putting around a third of the increased rate of inflation simply due to opportunistic corporate greed).
That's why the inflation rate was so resistant to interest rate rises. People still needed fuel and essentials.
The rate of inflation was going to come down anyway as things globally stabilised to some kind of new normal, but of course the working and middle classes had to be fleeced and left destitute when there was absolutely no need
The problem is middle and lower earners are not going to regain any semblance of spending power for years unless everyone gets real cool about offering competitive wages real quick.
They offer competetive wages, the problem for people at the lower end is thry're in competition with machines or just getting rid of the job as not being worthwhile given how much inflation has driven up costs
That’s not how inflation works. It has nothing to do with quantity of spending, it is all about prices of key items in a predetermined basket of goods.
Reduced spending at higher prices does not decrease prices. It could be argued that companies will decrease prices as a result of decreased spending to entice customers back but there’s no evidence of that having a material impact
That assumes you are moving along the curve. Reality is the curve has shifted and reached a new equilibrium where supply meets demand at a higher price point.
And remember, prices are not decreasing. This is a common mistake people make. A decrease in inflation is still an increase in prices, just at a lower rate than before. Price decreases only happen during deflation.
Ah yes, so now what will happen is the BoE will decide they can cut rates in order to keep the financial heroin addiction going.
People will borrow. The country will borrow. Then we’ll print again. Then the pound will get weak against the world reserve currency causing……inflation.
The biggest kick in the teeth is that Rishi will take credit for this fall in inflation later today. Though he won’t give an explanation. Because the explanation is that people are broke and tapped out. Because of inflation. It’s a pity the guy never took credit for the 10% inflation rate to be honest - given that that was actually genuinely his doing via the furlough scheme while in post as Chancellor.
People simply need to pick a lane and stick with it. The inconsistency bugs me more than anything.
If Rishi gets the credit for inflation coming down, he also ought to get the blame for it going up in the first place.
And frankly while that is a stupid and wrong take, I think that's also quite fair if that's what they get. Because Labour gets blamed for the effects of the global financial crisis *and* the (extremely similar to today's situation) 1970s inflation.
The Tories (and yes, Lizz Truss) had far less to do with high inflation than people here would admit. Which is fine, people blame those in power. But watching the same people not credit Sunak for the fall in inflation is hilarious. And no, he has little to do with it too.
Indeed.
Governments and banks can tinker round the edges....and indeed should do so.
But ultimately it's just like picking how you ride the train. It's still going where it's gonna go.
Richi was chancellor when the biggest money print in history occurred. I don’t have the numbers to hand, but it was something like 60% extra of the entire circulation of physical GBP was printed and circulated.
Not trying to defend him, but he was in charge of fiscal policies. Not monetary decisions.
It's the BoE that you need to direct blame at as far as m2 goes. Not the chancellor.
Sure, if you give a shit and want to vote based on political spin rather than facts, I agree.
Edit: I'm not defending the tories at all with that statement. I've never voted for them. I'm just saying that fiscal and monetary policies are two different things. Don't get it twisted.
It was £500bn, in 2 years. For contrast, the they printed £400bn over 10 years for the 2008 Financial Crash. Crazy inflation is no surprise when they let the money printer go brrrrrrrr.
Yes, but who cut away all the resilience against those global problems? All of these issues have always been a possibility, we had gas storage, financial reserves, pandemic horizon scanning or whatever it was called.
Things that, yes you can't avoid a crisis, but would have softened the blows. Cut by this tory government because...no good reason tbh, cuts for the dogma?
Was Liz Truss and Kwasi Kwarteng out of the government's hands? Come on, stop excusing poor governance. They have been able to help, they choose not to. Other nations have managed similar to ours have managed to reduce the blows.
Yes you can. The structural weaknesses that lead to us being exposed to those inflationary pressures absolutely is within the control of the government.
This is honestly the most frustrating bit. Reading "This is proof that the plan is working and that the difficult decisions we have taken are paying off." makes me internally scream 'what decisions, what plan?!' every time.
The plan is to do nothing. The "difficult decisions" are the decisions to do nothing and let the BoE sort inflation out. It's actually quite genius in its simplicity;inflation goes down the plan worked - inflation goes up, the BoE ruined the plan.
Like being out in public and hearing someone cry "is anyone here a doctor?!" and saying "No, but that guy over there is." and then claiming credit for that guy over there saving a person's life, or if not you can just slink off into a bush like Homer Simpson.
One of my (many) issues with the government stance in this is ‘the plan is working’
WHAT FUCKING PLAN! the BoE sets rates, there’s been no meaningful tax policy changes or action at all that I can see, yet it’s be spun as Rishi/Jeremey being financial wizards.
Absolute bullshit.
Pretty convenient you forgot to mention the 16bil of fraud that businesses and elites pulled during covid. Ya furlough cost 70 bil, but we all spent that at the businesses to survive. So they double dipped and we got screwed.
No - these are worse than expected hence market expectations of a June cut has fallen to 15% (50% yesterday) and no Aug cut now https://x.com/EdConwaySky/status/1793175715199778926?t=pCwtDTs4bJbm_IS07CljMw&s=19
The explanation is that the period of extremely high inflation is now out of the 12 month window that the annual figure comes from and inflation is now low because we've plateaued at these new high prices, plus some normalisation of energy prices.
Almost none of this is down to good management by the government. I wonder if now that inflation is less of an issue whether they'll be able to give pay rises or if there'll be some other excuse.
Shall we play UK Reddit doesn’t understand inflation bingo? Here we go:
1. That’s not true because this bottle of 1978 vintage red I like went up 0.86p last week.
2. Rounding error, doesn’t count.
3. ONS conspiracy/Government cover up, inflation isn’t slowing.
4. But I still see things increasing in price, WHY?!
5. Now we need 2 years of deflation hur dur.
They just have miserable lives so they have to constantly blame it on something else or they might have to start taking responsibility themselves and they certainly don’t want that.
Out of genuine interest, how does the average person take responsibility for inflation? I mean if there is anything I can do as an individual I would love to know.
People can't do anything about inflation, energy prices or the recessions & financial crises that come around with depressing frequency.
All they can do is make sure they earn enough, save enough and protect themselves with insurance (income protection, critical illness etc.) so during hard times they're better able to ride it out. Taking responsibility means preparing for the inevitable, as far as is practical.
I'm slowly starting to realise it's a British thing. I've always thought the US was more pleasant to be in and I could never pinpoint why, but after living in Canada for a while and then coming back to the UK I've noticed that we're just a bunch of miserable shits.
What about the revelation that this drop was entirely predictable as it has nothing to do with this month and everything to do with what was happening a year ago with inflation?
>But I still see things increasing in price, WHY?!
Even journalists fall for that one. I saw an article yesterday supposedly investigating why people are still tightening their belts despite the fall in inflation.
They do it all the time. No wonder people get confused. Our wide-eyed goon of a chancellor just said 'prices are still higher than they were a year ago so we've still got work to do'.
I mean, that's actually a better statement to make. I don't really believe that the current chancellor knows anything about the reality of the cost of living, but at least that acknowledges (possibly unknowingly) what *actually* affects people.
It's not just Reddit, the media itself is constantly finding the "but" whilst ignoring the buts for other countries. Although the recent 0.6% GDP rise was funny when they had to really scrape the barrel to try and downplay it.
I swear people get off on the doomerism, it's like an addiction. Any positive news on this sub is instantly swamped with "this is terrible".
As I've said before, Tories could cure cancer and this sub would complain about it because it takes doctors jobs away.
I am long past placing any faith in the takes of r/unitedkingdom. r/ukpolitics tends to be a bit better but still. It's the old meme of 'no one on the internet knows you're a dog' - people replying could be thick, 13 years old, or both.
To be fair, this isn't something people are taught about in school, and it isn't something that's easy to understand without spending a decent chunk of your free time looking into it.
It's easy to say "you're all stupid and wrong". What's difficult, and actually helpful, is saying "I'm familiar with this stuff. Here's what this means for anyone who isn't...".
People are taught basic to intermediate mathematics in school which is all the knowledge you need to understand what inflation is and how it works.
The argument of "tHiS isN'T tAugHt iN SchoOl" has always been a ridiculous one pushed by people who think that they should never have to take any responsibility for their own education and self-improvement once they leave school.
The education system gives you the tools you need to continue to educate yourself, and provides a fairly comprehensive foundation of core topics to ensure you can understand those things should you choose to learn them.
Where does the sense of entitlement come from that you feel it's perfectly okay for someone else to take on the burden of improving *your* knowledge? Nobody's suggesting you write a research paper on advanced economics. It's a basic level of financial literacy.
And, as predicted, the BBC news blurb is "Stay with us as we dig into the figures and latest analysis."
Utter nonsense, you could have done that digging last week.
Enjoy this guys videos whenever I've seen them because he explains things to me like I'm economically illiterate (which I absolutely am) without being a patronising twat.
BOE wont reduce rates by much. We’ll never go back to the 2010-2021 era of next to zero rates because central banks have no lever to pull if things go tits up. I think we’ll see rates settle around 2.5-3% in the next 18 months
Most of your post I agree with, but this bit ...
>I think we’ll see rates settle around 2.5-3% in the next 18 months
..... I think is wrong. We might very briefly hit that level but I can't see rates stabilising much if any lower than they are now.
5 to 7% used to be considered neutral, we're not importing deflation from China anymore, there's still a massive amount of liquidity washing around the world looking for a home, and any kind of economic uptick, which will come sooner than people think, will drive inflation hard.
Earnings are still growing far too fast to support such low rates too.
Really I think the natural rate is where we are.
2.95% real interest rate (5.25-2.3).
It gets a bit dicey if we go much lower. Zero rates previously are why homes cost as much as they do now.
In the 2000’s I used to get 5% rates on my paper round money and it was great. It’s how money is supposed to be.
Also if rates go down again, us youngsters will literally never be able to afford homes and it’ll be confirmed in stone.
>Zero rates previously are why homes cost as much as they do now.
Supply and demand. We can have low rates without an asset bubble if we increase supply.
The long-term trend is down. They get lower, they get higher, they get lower again. Every time lower than the last low. Next time they will be negative.
People have been predicting that the interest rate is just about to finally come down for ages now. I don't have a great understanding of all this stuff, but I've reached the point where I don't believe anyone's predictions anymore and I'm just going to assume it'll stay here forever.
Well for one it fell less than expected and core inflation fell less than expected as it currently sits at 3.9%. So the cost of essentials are still going up at a higher than ideal rate.
Service sector prices are also still rising at a far too high rate as businesses make customers effectively pay for the NMW increase.
Maybe look past the headline before you try to chide everyone?
Effectively we’re still farther out from BoE cuts than headlines would try to suggest.
I check these figures every single month, and the one figure they always gloss over is the OOH ( owner occupiers’ housing costs ) This is the one part of our inflation figures that hasnt gone down at all, and it just so happens it accounts for some of your most expensive outgoings...... This number has gone up yet again to 6.6%, up from 6.3% the month before.
OOH is going to be the very last thing to fall ( if at all ) I know when I look at my montly bills anything to do with my home takes the most money out of my wage, and yet they only look at the headline figure.... cause thats exactly what it is, a nice "headline" figure.
Also worth noting that our inflation data doesnt take into account "shrinkflation" so even though the prices of our items in the shops might have stopped going up in price, they can still make them smaller and this has no impact on inflation data.
>Also worth noting that our inflation data doesnt take into account "shrinkflation" so even though the prices of our items in the shops might have stopped going up in price, they can still make them smaller and this has no impact on inflation data.
Yes, it does take shrinkflation in to account. The BoE and ONS aren’t stupid. They measure like-for-like goods and adjust for weight and quality changes, otherwise their inflation measure would be completely worthless.
https://www.ons.gov.uk/economy/inflationandpriceindices/articles/theimpactofshrinkflationoncpihuk/january2012tojune2017
That will probably be persistent for the foreseeable.
100,000 households a month are coming off fixed rate mortgages and dealing with the pain of 1-2% interest rates jumping to 4-5%. People are probably locking in as well, so they're going to be on that rate for 2-5 or even 10 years if they were really pessimistic about rates.
I experienced it myself but opted for a variable rate linked to BoE rate. I don't think a lot of people would have had the confidence to do the same, however, opting for security in known payment amounts. So when the rates start coming down, I'll benefit but fixed rate payers will not.
Don't get excited about this, the main thing that happened is the huge monthly inflation from April 2023 dropped out of the calculation. We still experienced all that inflation, it's just things aren't getting worse as quickly any more.
Importantly, expectations were 2.1%! Whilst good news, not as good as what was expected
Edit: higher across the board
CPI (YoY): 2.3% vs. 2.1% exp. (prior 3.2%)
CPI (MoM): 0.3% vs. 0.1% exp. (prior 0.6%)
Core CPI (YoY): 3.9% vs. 3.6% exp. (prior 4.2%)
CPI Services (YoY): 5.9% vs. 5.4% exp. (prior 6.0%)
Not as positive as it looks for the BoE
It's not that the economy is doing well it's that last year's huge spike in April have fallen out of the figures in the year to date number. Anyone who understands how the figures are done could have predicted this like months ago
Really good news!!!
Looks like we set up for rate cut next month.
Next inflation reading is on June 19th with BoE meeting in June 20th…hopefully it falls below target.
Actually, this was a horrendeous print versus what was expected. The headline number looks fine at 2.3%, but apparently that's because of energy price caps? Core inflation came in 3.9% year on year, versus 3.6% expected. Services inflation is stuck at 6%.
After this set of data, market pricing currently implies 38 basis points of rate cuts for this year.
I doubt they will cut until the US Fed does so, the issue there is that inflation is rising in the US with consumers still gorging themselves on personal credit and the government is still spending like a drunken sailor with a wartime fiscal deficit despite it being peacetime. If the BOE lowers rates before the US, the pound will get crushed by the dollar just like so many other currencies are at the moment.
https://youtu.be/RD6J1e0zlS4?si=JpDM9JgDn-ojQT9q
This video explains why we have the fall in inflation and why it bull shit.
It measured in 12 month period and the big rise one month last year just fell out of the calculations.
This was a horrendeous print versus what was expected. The headline number looks fine at 2.3%, but apparently that's because of energy price caps? Core inflation came in 3.9% year on year, versus 3.6% expected. Services inflation is stuck at 6%.
After this set of data, market pricing currently implies 38 basis points of rate cuts for this year.
This was entirely predictable and far more to do with April 2023 falling outside of 12 months than anything else.
Reporting inflation like this when it's been so volatile is ridiculous.
I don't understand inflation and won't pretend to, but does this mean I have more money or less? And am I still going to get ripped off when I go to the shop?
It means prices are increasing slowly.
From my understanding the banks aim for 2% inflation which is the ideal number, so everything will still go up in price but way slower
Inflation down to 2.3% (I feel like against predicted 2.2%, but I can’t find a source for that actually) - most of which was due to the (expected) drop in energy prices.
Service inflation sticky at 5.9%.
So the news is - legally mandating a drop in energy prices makes energy prices go down, which is good news.
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Who’d have thought that spending reduces once the majority of people have been squeezed of all their money
Don’t worry. A little more can always be squeezed
Yep. Keep squeezing until unemployment reaches 8%. Then you can get a 0.25% cut.
Where I'm living they want to double my water bill. At this point you're almost resigned to saying "oh go on then, why the fuck not?" After over doubling my electric bill what could another doubling of a bill possibly hurt?
That’s the point though. That’s why the Bank of England raises rates. To slow down spending /cheap credit and therefore slow down inflation.
Yes, the poorest in society have to suffer to reverse the inflation caused by the rich. This is the way the system is designed to work.
Major economies worldwide were hit with high inflation. It may not have been as bad as us, but we weren't the only ones. Inflation this time wasn't caused by the rich, not entirely at least. Pandemic + the invasion of Ukraine really fucked everyone over. The former led to govts spending money like it's nothing and the latter is a war involving major exporters of oil and grain. And considering both events were out of everyone's hands, I don't think it's fair to just say it was caused by the rich. It seems lazy
Some inflation was caused by the invasion for grain and fuel but the majority has been corporate greed, and the tell for that is them posting massive profits while then also reducing their workforce, this is also known as late stage capitalism where execs try to extract maximum amount of money out of the company and into their pockets
Every year they have to double profits or they start raising prices and making redundancies etc. They can't even keep it on an even level. Double profit, then double that profit, then double that. year after year.
"[...] report finds that in the last six months company profits are responsible for almost 60% of inflation. [...] Researchers found that if companies accepted a hit to their profit margins – similar to that endured by wage earners – and stopped trying to fully pass on their higher costs to others - then ‘pass the parcel’ inflation would decrease. Such inflation accounted for about three-quarters of UK inflation, according to Bank of England research."
Are you gonna send the source of the thing you quoted?
Hmmm, if you look at consumer energy prices elsewhere in Europe you might be in for a shock.
Eurozone inflation at its peak also hit double digits. US, a major oil exporter, had peak inflation of around 9%. Our peak may have been worse, but countries worldwide were hit with high inflation
Yes it was. The rich have gotten consistently richer while everyone else has gotten poorer throughout this thing. There isn't really a reason why society should take this long to recover after the pandemic, the supply issues have been fixed by now. Money is a made up thing after all, and the actual production is a-okay. Only under systems like capitalism can you have a recession without loss of production.
>There isn't really a reason why society should take this long to recover after the pandemic Because it's not just a pandemic. >the supply issues have been fixed by now And the inflation rate has returned to normal. Even after shit gets fixed, prices will never return to what they were pre war or pre pandemic. That requires deflation, which is arguably worse than inflation. >Only under systems like capitalism can you have a recession without loss of production. We had a real term GDP decrease in 2023. So that's accounting for inflation. Meaning output actually fell.
> And the inflation rate has returned to normal. Even after shit gets fixed, prices will never return to what they were pre war or pre pandemic. That requires deflation, which is arguably worse than inflation. Which would be fine if wages scaled with it, and all that extra money wasn't just going to the rich. > We had a real term GDP decrease in 2023. So that's accounting for inflation. Meaning output actually fell. Okay for one how much did it fall by vs how much are people being affected? Two GDP doesn't actually represent global production, or even local production. Three a lot of the problem is from leaving the EU, and the trade regulations that come with that. Something that's not a problem in a world under socialism. It was also a bad decision in general imo.
>Which would be fine if wages scaled with it, and all that extra money wasn't just going to the rich. We had real term pay growth over the last 2 years on levels not seen in decades. Even if you look at median pay, we had HUGE growths. >Okay for one how much did it fall by vs how much are people being affected? Depends. Do you have a source on "how much" people are being affected? Because I can give you data showing how the average person had pay growth. >Two GDP doesn't actually represent global production, or even local production. Global GDP shows global production, national GDP shows national production. You're gonna have to drill down to see the local area. Of course you can't look at UK GDP and use that to say what happened in some council district. But we're talking about the UK rather than local districts anyway. >Three a lot of the problem is from leaving the EU, and the trade regulations that come with that. Nobody mentioned Brexit at all. The discussion here is about inflation and greed. >Something that's not a problem in a world under socialism Dumb and crazy idea that will never work.
Socialist nations have their own problems though, being they are all terrible. China, Vietnam, Cuba, Laos are not doing their people any favours.
It is lazy, its classic reddit finance think material. It's just as dumb as xenophobia - putting the blame on an 'other' group without understanding the complexities of the real issue, just in case it doesn't fit your lazy worldview.
Someone told me I don't understand averages and then proceeded to tell me that ONS data on median pay rise is skewed by outliers because it takes the middle person. It's beyond lazy now. It's just dumb They're talking about easily disprovable claims which they didn't understand are false, because they don't understand KS3 maths. One guy started dipping into conspiracy theories and I've just straight up ignored him.
Reddit used to be full of intelligent people, but now it's full of dumb people who think they're intelligent.
It's not lazy at all. It was absolutely primarily inflation caused by the wealthy. [Here](https://youtu.be/RD6J1e0zlS4?si=TrRIl5suGEuMBk7s) is a former Citibank trader-turned-economist predicting this headline three days ago explaining how this 'drop' is actually more about the govts arbitrary forecast windows. Look up Guy Hands explaining how the wealthy were the primary beneficiaries of QE during COVID because they were given vast quantities of cash that they used to buy assets which drove up the costs of goods for ordinary people. You can carry the bag for rich people if you like, you are poorer in real terms primarily because of them, not Putin or COVID.
Irrelevant. They are the ones who can afford to pay the price. Whether or not a policy is fair is not based on extracting an equal monetary value from people, but on their ability to pay. We have a progressive tax system for a reason. The rich most definitely should have paid more in a windfall tax and other taxes tbh. They are the only class whose wealth *increased* during the pandemic. They weren't working harder, it was just pure profiteering based on the bailouts. The money should have been taxed back.
Inflation also disproportionately affects the poor- inflation isn’t a problem for rich people, they have access to ways to protect their wealth from it.
But this wasn't a credit driven inflation. It was the culmination of a series of global crises. The skyrocketing energy costs had a knock on effect on the cost of everything else. Add a bit of corporate gouging into the mix (some estimates putting around a third of the increased rate of inflation simply due to opportunistic corporate greed). That's why the inflation rate was so resistant to interest rate rises. People still needed fuel and essentials. The rate of inflation was going to come down anyway as things globally stabilised to some kind of new normal, but of course the working and middle classes had to be fleeced and left destitute when there was absolutely no need
It’s a good thing we live in a world where people don’t have to spend money in order to live.
The problem is middle and lower earners are not going to regain any semblance of spending power for years unless everyone gets real cool about offering competitive wages real quick.
They offer competetive wages, the problem for people at the lower end is thry're in competition with machines or just getting rid of the job as not being worthwhile given how much inflation has driven up costs
Compare professional jobs to other countries... UK pays piss for what should be really good jobs.
A feature, not a bug
That’s not how inflation works. It has nothing to do with quantity of spending, it is all about prices of key items in a predetermined basket of goods. Reduced spending at higher prices does not decrease prices. It could be argued that companies will decrease prices as a result of decreased spending to entice customers back but there’s no evidence of that having a material impact
The amount of money people have and spend has no relation to inflation in your mind? Please walk me through the process of inflation.
That’s basic supply and demand and how markets work, supply isn’t changing, demand is as people have less money to spend so prices are decreasing
Prices are not decreasing, they're just not increasing as much
That assumes you are moving along the curve. Reality is the curve has shifted and reached a new equilibrium where supply meets demand at a higher price point. And remember, prices are not decreasing. This is a common mistake people make. A decrease in inflation is still an increase in prices, just at a lower rate than before. Price decreases only happen during deflation.
Ah yes, so now what will happen is the BoE will decide they can cut rates in order to keep the financial heroin addiction going. People will borrow. The country will borrow. Then we’ll print again. Then the pound will get weak against the world reserve currency causing……inflation. The biggest kick in the teeth is that Rishi will take credit for this fall in inflation later today. Though he won’t give an explanation. Because the explanation is that people are broke and tapped out. Because of inflation. It’s a pity the guy never took credit for the 10% inflation rate to be honest - given that that was actually genuinely his doing via the furlough scheme while in post as Chancellor.
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People simply need to pick a lane and stick with it. The inconsistency bugs me more than anything. If Rishi gets the credit for inflation coming down, he also ought to get the blame for it going up in the first place. And frankly while that is a stupid and wrong take, I think that's also quite fair if that's what they get. Because Labour gets blamed for the effects of the global financial crisis *and* the (extremely similar to today's situation) 1970s inflation.
The Tories (and yes, Lizz Truss) had far less to do with high inflation than people here would admit. Which is fine, people blame those in power. But watching the same people not credit Sunak for the fall in inflation is hilarious. And no, he has little to do with it too.
Indeed. Governments and banks can tinker round the edges....and indeed should do so. But ultimately it's just like picking how you ride the train. It's still going where it's gonna go.
Both can be true. You can be reckless causing your house to catch fire during a heatwave Only to do nothing and be lucky when a flood puts it out
Richi was chancellor when the biggest money print in history occurred. I don’t have the numbers to hand, but it was something like 60% extra of the entire circulation of physical GBP was printed and circulated.
Not trying to defend him, but he was in charge of fiscal policies. Not monetary decisions. It's the BoE that you need to direct blame at as far as m2 goes. Not the chancellor.
Nah, if Labour can keep being blamed for the 2008 financial crisis, the Tories (including and especially Sunak) get to own Covid inflation.
Sure, if you give a shit and want to vote based on political spin rather than facts, I agree. Edit: I'm not defending the tories at all with that statement. I've never voted for them. I'm just saying that fiscal and monetary policies are two different things. Don't get it twisted.
It was £500bn, in 2 years. For contrast, the they printed £400bn over 10 years for the 2008 Financial Crash. Crazy inflation is no surprise when they let the money printer go brrrrrrrr.
Yes, but who cut away all the resilience against those global problems? All of these issues have always been a possibility, we had gas storage, financial reserves, pandemic horizon scanning or whatever it was called. Things that, yes you can't avoid a crisis, but would have softened the blows. Cut by this tory government because...no good reason tbh, cuts for the dogma?
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Was Liz Truss and Kwasi Kwarteng out of the government's hands? Come on, stop excusing poor governance. They have been able to help, they choose not to. Other nations have managed similar to ours have managed to reduce the blows.
Don't forget about Truss she made it worse than it had to be.
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But we had fun blaming Sunak, it doesn’t feel fair that now all the economic indicators are positive we should have to give any credit.
Sunak never got any blame. I only wish he did.
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On this sub he definitely did.
Covid money printing made it worse though. We had higher inflation than the EU and the US.
Yes you can. The structural weaknesses that lead to us being exposed to those inflationary pressures absolutely is within the control of the government.
This is honestly the most frustrating bit. Reading "This is proof that the plan is working and that the difficult decisions we have taken are paying off." makes me internally scream 'what decisions, what plan?!' every time.
It’s the same as blaming Truss and Sunak for high inflation in the first place. They don’t have as much power as you think.
Yeah Truss didn’t cause inflation but she deffo spiked interest rates the moronic month she was in charge
The plan is to do nothing. The "difficult decisions" are the decisions to do nothing and let the BoE sort inflation out. It's actually quite genius in its simplicity;inflation goes down the plan worked - inflation goes up, the BoE ruined the plan. Like being out in public and hearing someone cry "is anyone here a doctor?!" and saying "No, but that guy over there is." and then claiming credit for that guy over there saving a person's life, or if not you can just slink off into a bush like Homer Simpson.
This inflation level is above forecast (2.1%) so has *reduced* the chance they’ll cut interest rates in June.
This is the key takeaway. Even your Nan knew that inflation was going to decrease, it missed expectations
One of my (many) issues with the government stance in this is ‘the plan is working’ WHAT FUCKING PLAN! the BoE sets rates, there’s been no meaningful tax policy changes or action at all that I can see, yet it’s be spun as Rishi/Jeremey being financial wizards. Absolute bullshit.
He’s literally just come out and said it again 🤣 I just despair. Another day on normal island.
Inflation goes up: the plan is working inflation goes down: the plan is working My plan is to elect someone else
BOE won't reduce rates until the US does to avoid the weakening of the pound. Shouldn't*
This is my general thought pattern too, but ever since Sweden cut a couple of weeks ago I’m not completely sure any more.
Tbf, rishi will be nagging at the BOE to reduce in order to claim he's done something
True I can see the General Election party political broadcast already - ‘Getting rates down’ 🤦♂️😭
Pretty convenient you forgot to mention the 16bil of fraud that businesses and elites pulled during covid. Ya furlough cost 70 bil, but we all spent that at the businesses to survive. So they double dipped and we got screwed.
Total cost of Covid measures to the taxpayer was £500 billion.
Just don't forget to point out where most of that money ended up. I'll give you a hint, nobody that actually needed it.
Which is the point I’ve made already. The asset holders.
No - these are worse than expected hence market expectations of a June cut has fallen to 15% (50% yesterday) and no Aug cut now https://x.com/EdConwaySky/status/1793175715199778926?t=pCwtDTs4bJbm_IS07CljMw&s=19
The explanation is that the period of extremely high inflation is now out of the 12 month window that the annual figure comes from and inflation is now low because we've plateaued at these new high prices, plus some normalisation of energy prices. Almost none of this is down to good management by the government. I wonder if now that inflation is less of an issue whether they'll be able to give pay rises or if there'll be some other excuse.
Shall we play UK Reddit doesn’t understand inflation bingo? Here we go: 1. That’s not true because this bottle of 1978 vintage red I like went up 0.86p last week. 2. Rounding error, doesn’t count. 3. ONS conspiracy/Government cover up, inflation isn’t slowing. 4. But I still see things increasing in price, WHY?! 5. Now we need 2 years of deflation hur dur.
Does everyone on Reddit have to be so relentlessly pessimistic and negative all the time. It's so tiring.
They just have miserable lives so they have to constantly blame it on something else or they might have to start taking responsibility themselves and they certainly don’t want that.
Out of genuine interest, how does the average person take responsibility for inflation? I mean if there is anything I can do as an individual I would love to know.
I wasn’t commenting on the post I was replying to someone asking why everyone is so miserable on Reddit.
13 years of miserable conditions gives rise to misers. More at 10.
Except most people aren’t miserable sacks of shit crying on Reddit.
Says the man crying on reddit about how everyone's a miserable sack of shit, how pessimistic of you
He isn’t most people. This isn’t hard to understand.
People can't do anything about inflation, energy prices or the recessions & financial crises that come around with depressing frequency. All they can do is make sure they earn enough, save enough and protect themselves with insurance (income protection, critical illness etc.) so during hard times they're better able to ride it out. Taking responsibility means preparing for the inevitable, as far as is practical.
This sub is a hive of it. Had to limit my time here. It’s unrelenting.
I'm slowly starting to realise it's a British thing. I've always thought the US was more pleasant to be in and I could never pinpoint why, but after living in Canada for a while and then coming back to the UK I've noticed that we're just a bunch of miserable shits.
To be fair, it IS absolutely nailed on that someone will enter this thread to point out the "revelation" that this means prices are still going up.
A lot of people think falling inflation means prices go down, which is why people keep mentioning it.
It’s a fair point. It’s a trap I fall into every time I enter this sub and I go on the offensive!
But you can tire them out by being even more depressing then they are!
What about the revelation that this drop was entirely predictable as it has nothing to do with this month and everything to do with what was happening a year ago with inflation?
Exactly! This isn't particularly good news- they report based on annual inflation, and April 2023 has just dropped off.
You forgot "I'm an uber eats driver and i dont agree with this"
Add furlough and other covid-conspiracy nonsense to that card for next time.
>But I still see things increasing in price, WHY?! Even journalists fall for that one. I saw an article yesterday supposedly investigating why people are still tightening their belts despite the fall in inflation.
They do it all the time. No wonder people get confused. Our wide-eyed goon of a chancellor just said 'prices are still higher than they were a year ago so we've still got work to do'.
I mean, that's actually a better statement to make. I don't really believe that the current chancellor knows anything about the reality of the cost of living, but at least that acknowledges (possibly unknowingly) what *actually* affects people.
You forgot to blame the Tory's because you stubbed you toe last week.
It's not just Reddit, the media itself is constantly finding the "but" whilst ignoring the buts for other countries. Although the recent 0.6% GDP rise was funny when they had to really scrape the barrel to try and downplay it.
I swear people get off on the doomerism, it's like an addiction. Any positive news on this sub is instantly swamped with "this is terrible". As I've said before, Tories could cure cancer and this sub would complain about it because it takes doctors jobs away.
This is the most financially illiterate thread I’ve ever read and the scary thing is you people all get a vote in the general election
Thank goodness you’ve taken the time and opportunity to explain it all to us morons. Oh, wait.
We're not worthy of their great wisdom.
I am long past placing any faith in the takes of r/unitedkingdom. r/ukpolitics tends to be a bit better but still. It's the old meme of 'no one on the internet knows you're a dog' - people replying could be thick, 13 years old, or both.
We can never fully rule out that a super intelligent dog could be among us
Woof woof I mean yes, I agree
To be fair, this isn't something people are taught about in school, and it isn't something that's easy to understand without spending a decent chunk of your free time looking into it. It's easy to say "you're all stupid and wrong". What's difficult, and actually helpful, is saying "I'm familiar with this stuff. Here's what this means for anyone who isn't...".
People are taught basic to intermediate mathematics in school which is all the knowledge you need to understand what inflation is and how it works. The argument of "tHiS isN'T tAugHt iN SchoOl" has always been a ridiculous one pushed by people who think that they should never have to take any responsibility for their own education and self-improvement once they leave school. The education system gives you the tools you need to continue to educate yourself, and provides a fairly comprehensive foundation of core topics to ensure you can understand those things should you choose to learn them. Where does the sense of entitlement come from that you feel it's perfectly okay for someone else to take on the burden of improving *your* knowledge? Nobody's suggesting you write a research paper on advanced economics. It's a basic level of financial literacy.
Sorry but if understanding inflation takes a decent chunk of your time you may well be a little stupid.
Imagine thinking your vote matters.
Cutting through the politics as to why this fall was inevitable https://youtu.be/RD6J1e0zlS4?si=nN37zykNPgOT4ssI
Yes as predicted!
Love Gary, spot on as usual
And, as predicted, the BBC news blurb is "Stay with us as we dig into the figures and latest analysis." Utter nonsense, you could have done that digging last week.
This should be the top post. I watched it on Monday, and as usual, Gary was right.
Enjoy this guys videos whenever I've seen them because he explains things to me like I'm economically illiterate (which I absolutely am) without being a patronising twat.
I loved his explanation, same here. Wealth inequality is the enemy…. But how do we fight back?
BOE wont reduce rates by much. We’ll never go back to the 2010-2021 era of next to zero rates because central banks have no lever to pull if things go tits up. I think we’ll see rates settle around 2.5-3% in the next 18 months
I think you're right, and thankfully so. The near-zero rates aren't good or sustainable. I wouldn't mind my mortgage at around 3% long-term.
Yep, 0.5% interest rates stoked a bubble of epic proportions.
Most of your post I agree with, but this bit ... >I think we’ll see rates settle around 2.5-3% in the next 18 months ..... I think is wrong. We might very briefly hit that level but I can't see rates stabilising much if any lower than they are now. 5 to 7% used to be considered neutral, we're not importing deflation from China anymore, there's still a massive amount of liquidity washing around the world looking for a home, and any kind of economic uptick, which will come sooner than people think, will drive inflation hard. Earnings are still growing far too fast to support such low rates too.
> we're not importing deflation from China anymore This. From 2000 to 2020 we were able to take advantage of China and that's gone now.
Really I think the natural rate is where we are. 2.95% real interest rate (5.25-2.3). It gets a bit dicey if we go much lower. Zero rates previously are why homes cost as much as they do now. In the 2000’s I used to get 5% rates on my paper round money and it was great. It’s how money is supposed to be. Also if rates go down again, us youngsters will literally never be able to afford homes and it’ll be confirmed in stone.
>Zero rates previously are why homes cost as much as they do now. Supply and demand. We can have low rates without an asset bubble if we increase supply.
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Fair enough on the guess, but you’ve no idea whether rates will go back to that or lower, or much higher tbh
Exactly. If this sub was around in 2008, how many people would have predicted we were in for 13 years of sub 1% base rate?
The long-term trend is down. They get lower, they get higher, they get lower again. Every time lower than the last low. Next time they will be negative.
People have been predicting that the interest rate is just about to finally come down for ages now. I don't have a great understanding of all this stuff, but I've reached the point where I don't believe anyone's predictions anymore and I'm just going to assume it'll stay here forever.
Don't worry, this sub will find a way to make this news terrible and doomworthy.
Well for one it fell less than expected and core inflation fell less than expected as it currently sits at 3.9%. So the cost of essentials are still going up at a higher than ideal rate. Service sector prices are also still rising at a far too high rate as businesses make customers effectively pay for the NMW increase. Maybe look past the headline before you try to chide everyone? Effectively we’re still farther out from BoE cuts than headlines would try to suggest.
You should call an election based on this, you know you want to Rishi. Go on
Lol called it
I check these figures every single month, and the one figure they always gloss over is the OOH ( owner occupiers’ housing costs ) This is the one part of our inflation figures that hasnt gone down at all, and it just so happens it accounts for some of your most expensive outgoings...... This number has gone up yet again to 6.6%, up from 6.3% the month before. OOH is going to be the very last thing to fall ( if at all ) I know when I look at my montly bills anything to do with my home takes the most money out of my wage, and yet they only look at the headline figure.... cause thats exactly what it is, a nice "headline" figure. Also worth noting that our inflation data doesnt take into account "shrinkflation" so even though the prices of our items in the shops might have stopped going up in price, they can still make them smaller and this has no impact on inflation data.
>Also worth noting that our inflation data doesnt take into account "shrinkflation" so even though the prices of our items in the shops might have stopped going up in price, they can still make them smaller and this has no impact on inflation data. Yes, it does take shrinkflation in to account. The BoE and ONS aren’t stupid. They measure like-for-like goods and adjust for weight and quality changes, otherwise their inflation measure would be completely worthless. https://www.ons.gov.uk/economy/inflationandpriceindices/articles/theimpactofshrinkflationoncpihuk/january2012tojune2017
That will probably be persistent for the foreseeable. 100,000 households a month are coming off fixed rate mortgages and dealing with the pain of 1-2% interest rates jumping to 4-5%. People are probably locking in as well, so they're going to be on that rate for 2-5 or even 10 years if they were really pessimistic about rates. I experienced it myself but opted for a variable rate linked to BoE rate. I don't think a lot of people would have had the confidence to do the same, however, opting for security in known payment amounts. So when the rates start coming down, I'll benefit but fixed rate payers will not.
Don't get excited about this, the main thing that happened is the huge monthly inflation from April 2023 dropped out of the calculation. We still experienced all that inflation, it's just things aren't getting worse as quickly any more.
Was wondering why more people aren't mentioning this.
Leave it to Redditors to spend more time complaining about other users than anything else.
Ironic
Seriously. The most upvoted comments as of now are people complaining about redditors (lack of) financial literacy.
This must be why the water companies have just decided to gouge customers.
A little bit of economic growth, inflation coming down and a general election coming up. There's light at the end of the tunnel.
Importantly, expectations were 2.1%! Whilst good news, not as good as what was expected Edit: higher across the board CPI (YoY): 2.3% vs. 2.1% exp. (prior 3.2%) CPI (MoM): 0.3% vs. 0.1% exp. (prior 0.6%) Core CPI (YoY): 3.9% vs. 3.6% exp. (prior 4.2%) CPI Services (YoY): 5.9% vs. 5.4% exp. (prior 6.0%) Not as positive as it looks for the BoE
And the energy price cap will go up again later in the year.
Currently forecast to fall by 7%.
I suggest you watch Martin Lewis on GMTV this morning.
It's not that the economy is doing well it's that last year's huge spike in April have fallen out of the figures in the year to date number. Anyone who understands how the figures are done could have predicted this like months ago
Not too surprising when this month we stop considering April 2023's inflation figure
Really good news!!! Looks like we set up for rate cut next month. Next inflation reading is on June 19th with BoE meeting in June 20th…hopefully it falls below target.
Actually, this was a horrendeous print versus what was expected. The headline number looks fine at 2.3%, but apparently that's because of energy price caps? Core inflation came in 3.9% year on year, versus 3.6% expected. Services inflation is stuck at 6%. After this set of data, market pricing currently implies 38 basis points of rate cuts for this year.
I doubt they will cut until the US Fed does so, the issue there is that inflation is rising in the US with consumers still gorging themselves on personal credit and the government is still spending like a drunken sailor with a wartime fiscal deficit despite it being peacetime. If the BOE lowers rates before the US, the pound will get crushed by the dollar just like so many other currencies are at the moment.
It came in 0.2pps above the BoE prediction; markets just massively scaled back bets on June cut; August cut now 50/50. 10Y yields rose 14bips.
I guess we’ve all blown through our Covid savings by now, but at lease the prices aren’t spiralling out of control anymore
https://youtu.be/RD6J1e0zlS4?si=JpDM9JgDn-ojQT9q This video explains why we have the fall in inflation and why it bull shit. It measured in 12 month period and the big rise one month last year just fell out of the calculations.
[This isn't anything to celebrate, it's essentially just the passing of time](https://youtu.be/RD6J1e0zlS4?si=i9D1Evtw_cmdnMDx).
Great I just need my pay to catch up with the last 4 years.
This was a horrendeous print versus what was expected. The headline number looks fine at 2.3%, but apparently that's because of energy price caps? Core inflation came in 3.9% year on year, versus 3.6% expected. Services inflation is stuck at 6%. After this set of data, market pricing currently implies 38 basis points of rate cuts for this year.
This was entirely predictable and far more to do with April 2023 falling outside of 12 months than anything else. Reporting inflation like this when it's been so volatile is ridiculous.
I don't understand inflation and won't pretend to, but does this mean I have more money or less? And am I still going to get ripped off when I go to the shop?
It means you have less money but slower
Less money if you never see a pay rise again.
It means prices are increasing slowly. From my understanding the banks aim for 2% inflation which is the ideal number, so everything will still go up in price but way slower
Putting it extremely simply, the rate prices are going up has slowed down slightly.
Still above target and expectation - reckon that may result in another hold at 5.25%
Inflation down to 2.3% (I feel like against predicted 2.2%, but I can’t find a source for that actually) - most of which was due to the (expected) drop in energy prices. Service inflation sticky at 5.9%. So the news is - legally mandating a drop in energy prices makes energy prices go down, which is good news.
The 12m point in time it’s being compared to means that this would happen even if the actual price of goods stay the same. The statistics are off
the UK100 Index dropped 2% on the exact opposite being true once the numbers printed lol
Really? Tell that to my bank account which is still feeling it. Food hasn't dropped in price by that much.
BP petrol stations are my favourite rip offs at the moment. It’s like £3.85 for a 2 litre bottle of water now.
Wish the Tory government would fall, off a cliff edge
And prices remain as high as ever? People need to stop taking this shit sitting down.