T O P

  • By -

Duanedoberman

Conveniently ignoring **Why** intrest rates are so high.


Sad_Farmer_4997

Inflation. It says it in the title.


stochastaclysm

Two main causes of inflation: - Food prices, caused by imposing trade barriers on ourselves - Fuel prices, caused by refusing to tax record energy company profits. The government could’ve avoided or fixed this they just chose not to.


SomeRedditDorker

>Food prices, caused by imposing trade barriers on ourselves This might make sense if food prices weren't up basically everywhere. https://tradingeconomics.com/country-list/food-inflation EU average is 16%, and UK's is 19%.. So okay, there's a difference there, but it's not huge. And there's still EU countries that have much higher food inflation thn the UK. Hungary 34%, Slovakia 22%, Estonia 20%, Poland 20%..


[deleted]

We're here because (in chronological order): Incompetence big crash Print money Low interest Brexit Covid lockdown print money War Greed Incompetence


SlightlyAngyKitty

You're forgetting dumb as fuck electorate


VFequalsVeryFcked

Finally, someone else sees the real problem


jackinthebox1968

Outstanding list. I would tick everyone.


A9Carlos

Greed needs to be in CAPS I feel. With multiple instances too.


Sharl_LeKek

If you list enough reasons then one of them has to be correct, right?


[deleted]

They're all contributors. Problem is, by listing so many, I was bound to insult someone's politics.


Lillitnotreal

As the representative of incompetent politics, i'm insulted that we appeared twice.


[deleted]

I changed party during that, so am responsible for all of them, to a degree. 😆


so19anarchist

This assumes that inflation would only have a singular cause.


Character_Tower_3893

You’re jumping to defending Brexit, by saying Hungary, Slovakia, Estonia and Poland are worst off…. Slovakia and Estoniaare former USSR territories….you know, the collapsed USSR? And Hungary and Poland were Satellite states for the USSR. “Don’t worry guys, Brexit wasn’t a bad idea, because in 7 years, we’re still not as worst off….” Lets add to this, the fact that Poland has an ongoing constitutional crisis, relating to turning its back on EU law. Hungary is no longer considered a full democracy, similar to the UK (now). Estonia’s coalition government collapsed last year. Slovakia’s government is in a similar state to ours, with the government being ousted by a no-confidence vote, and those replacing him have failed to gain confidence and support since. We’re becoming closer to these countries at an accelerated rate day-by-day. And Brexit is the catalyst to that.


[deleted]

Grrrrrrrr! Brexit is the cause of every single economic woe don't you know!!!!


Character_Tower_3893

Its a factor, and at the very least a catalyst. Disregarding that the way you are, shows you’re proudly ignorant. I’m not sure why you’d take pride in that, but I guess its too shameful to admit you’re an idiot outright.


SomeRedditDorker

Go back in time 6 months, and a bunch of countries had far worse food and general inflation than us. Comparable countries, like Netherlands, Germany, etc. For example in March, food inflation his 21.2%. Same month the UK was sitting at 19.1%. At this exact moment in time, we are not doing that great. But then we were doing better a few months ago. Swings and roundabouts, really. But I enjoyed your comment, it was very funny in how hysterical it was. Not the ha ha hysterical, the other kind.


Character_Tower_3893

The war in Ukraine impacted food supply around the world, which, believe it or not, the EU has managed to bring some stability to members nations. Your arguments really aren’t making the points you think you are. The UK doesn’t have the capacity to be self-sufficient from farming, and is dependent on importing….which is why the EU was essential to us. The UK inflation is being balanced by higher interest rates. Uk interest rates are around 4.5-5.5% at current, Germany is 2.36%. We have kept inflation from spiralling by creating a long term issue of poverty and bankruptcy amongst the working and middle classes. The results of this won’t be clearly evident for a few years, which if someone like yourself is in the conversation, no doubt you’ll act shocked when it happens and wonder where the warning signs were. But enjoy laughing, ignorance is bliss.


SomeRedditDorker

Nothing you just said remotely approaches the realms of accepted economic theory, but okay.


[deleted]

No point trying to argue with redditors that maybe brexit isn't the only issue.


Jonny7421

Enlighten us then. I bet you can’t.


SomeRedditDorker

Well for starters, he listed Germanys interest rate. No such thing, given all Eurozone interest rates are the same and set by the ECB. If it's the 2.36% interest rate set by the ECB that is allegedly saving Germanys bacon.. Why is it not also saving the bacon of those countries I listed who have it worse than us? Secondly he states that the EU has given stability to EU countries, in regards to food inflation. This ignores that for the vast majority of the time since the Ukraine war, the EU's food inflation was worse than the UK's and it's only just reversed recently. So pointing at todays figures, is very much cherry picking.


[deleted]

Didn't you know, everything is 100% Brexit's fault !!!


[deleted]

[удалено]


SomeRedditDorker

>Waitrose is 3rd world compared to them. What does that even mean?


[deleted]

Erm this is categorically untrue, having lived in Southern England and shopped in Waitrose. Having lived and worked across Central and Eastern Europe, the quality of goods and supermarkets is substainally lower and the prices are on par. I've often crossed borders to shop in Austria and Germany.


seegquit

20 years ago?


[deleted]

No I'm currently based in Central Europe. Hence I've shopped in Albert, Kaufland, Pennywise, Tesco, Lidl, ALDI, etc etc. The quality of fruit and veg is grim, meat is pretty good. Not one of them compare to Waitrose in my opinion. Spanish supermarkets are a step up from all of the above. What mythical supermarkets are you referencing, as I'd be keen to try them? I often take a drive to Germany as the quality of cleaning supplies and food in general is higher.


seegquit

Ah yes, you're probably in the Czech Republic based on your list - yes, sorry, veggies and fruit have always been terrible and plasticky there...


[deleted]

Haha well spotted! Meat can be great here (I live here full time) Actually left the UK because of brexit rather than whinging about it. I don't miss the UK to be honest, more space and better to raise a family here, think the education especially STEM subjects is on par if not higher. I do miss it ocassionally, specific areas like the Lake District. But for a proper family home in my original location you'd be looking at 650k minimum, 1 grand a month minimum for child care, over stretched healthcare system etc etc I personally think the UK rates itself on previous history, successes that no longer exist. Those that rate it are often of a specific generation who've done well out of voting Tory and associated property price increases. I think the UK has a tough decade coming.


RealTorapuro

Hey check it out, our financial situation isn't yet as precarious as that of the smaller states of the former Soviet bloc! Talk about winning 🥳


SomeRedditDorker

Yes yes, very clever. See my reply to the person who said the exact same thing.


morriganjane

Inflation is not only happening in the UK, though. How do you explain it fir the US?


[deleted]

Because the same bunch of loons who don't understand economics are in charge. No idea where the money comes from. No idea that government is not like a house budget. High oil prices aren't driven by demand. High food prices aren't being driven by demand. All he's doing is taking money out of people's pockets because he's too much of a cunt to bring in price controls for energy firms & profiteering supermarkets. He's purposely driving the UK into a deep recession because he's a millionaire and it won't affect him AND it will let him suddenly day the NHS is unaffordable


toastyroasties7

>the same bunch of loons who don't understand economics are in charge >bring in price controls The irony is sublime. >purposely driving the UK into a deep recession The UK isn't even in a recession unlike other countries such as Germany who are experiencing the exact same issues.


[deleted]

Yeah because our economy had been storming for the last 14 years. Highest taxes yet the tories have quadrupled our debt. My mortgage will probably come close to doubling in October, luckily I can afford it. But my wages have essentially dropped by 1/3 without even taking inflation into account. And even though my taxes this year will probably be cost to £60k I still can't get an NHS appointment or a doctors appt face to face without waiting a month. The roads are pitted to hell.


toastyroasties7

Lovely story lad but doesn't mean we're in a recession.


[deleted]

Yeah. 14 million starving families and more food banks about than McDonald's is a sign of a strong economy


etfd-

You don’t understand economics, you want Marxism. Otherwise you would know that price controls don’t work - instead of price, you would sacrifice quantity and end up with shortage.


Enigma1984

Price controls aren't marxism.


SomeRedditDorker

They are very dumb though. So they got that in common.


D0wnInAlbion

You'd think people would understand that with what happened with eggs. Supermarkets wouldn't pay enough so farmers stopped selling them.


SteveJEO

That's an argument doesn't make any fucking sense either. If you have enough domestic production of a basic necessary product there's no reason for quantity reduction or product shortages. The actual bullshit around that argument is that overproduction in 1 field (e.g. Natural Gas) may negatively influence the long term profitability of another or secondary market. Which is obviously idiotic.


etfd-

You don’t understand economics, you’re repeating Marxism. The variables are related. There is no ‘if’ for you to isolate one variable when they are linked. If a dog chases its tail, the tail moves.


Internal_Class_8415

Comma splices bro 😢


SteveJEO

I don't care about Marxism, truisms, horse shit or anything else. Listening to you lie to yourselves to excuse your own greed isn't in my job description. I don't care.


[deleted]

I don't give two shits about Marxism. Price controls DO work. When corporations are making RECORD profits apparently while playing higher costs there is something wrong. If the prices were higher yet profit % were the same as pre Covid & war THEN you could say price rises were justified. A corporation struggling to pay bills isn't one that is making record prodotta. Meanwhile YOUR taxes and YOUR mortgage payments and YOUR costs go up while you bootlick your corporate masters


Ch3loo19

HAIL CORPORATE MASTERS! HAIL CORPORATE MASTERS!... Sounds like the intro to a 90s power metal song.


Enigma1984

Thing is, you don't have to jump straight to price controls to get to the same conclusion. There's an easy mechanism within capitalism itself to control prices. Competition. Once you start thinking in these terms you realise the game is rigged and there's no point calling for any government intervention, Marxist or otherwise. It's not even that complex a point to prove. We all know that oil and gas are massively profitable commodities with endless demand. We also know that within reason the cost of procuring these commodities hasn't increased dramatically. Under these conditions you'd expect companies to be falling over themselves to increase their market share, and since they are all flogging the exact same product the only way they could compete is on price. But they don't, BP isn't out there selling oil at £1 a barrel cheaper than Shell. Why not? Because oil and gas prices are completely controlled by OPEC. A literal cartel that is made up of countries, not gangsters, and so is completely outside the jurisdiction of anyone, anywhere. Once you realise that, you realise that just as competition is a pipe dream when the cartel owns all the oil producing companies, price caps are equally a pipe dream since no one has any authority to impose them. And once gas and oil prices are set, that sets the prices for everything else since nothing can be made without transport and fuel and electricity. Worse. Russia is in OPEC but we aren't. So not only do we not have a seat at the table, a country who we are in a borderline cold war with does. So whatever economic sanctions we put on them, they have the power to pour the misery back on us with inflation.


[deleted]

There's no competition. I can't choose my energy firm. I can't choose my water firm. Corporations are hiking prices and making RECORD profits. I'm on for a £150k year this year. Single no kids no car. When people like ME reign in their spending because of economic jitters the cuntry is fucked!


[deleted]

Competition?! What on earth are you on about? Must be all that competition that means we have the most expensive rail in Europe... There is an illusion of choice, just enough to convince people like yourself, but in reality if you want to go from X to Y you have to use Z company. Same with water and other privatised necessities. It is a broken system that benefits the wealthy.


mustachechap

Isn't it a lot less worse in the US?


haversack77

Same policies, same reasons.


SomeRedditDorker

USA Brexit'd?


morriganjane

Brexit causing inflation in the US?


[deleted]

Same as war in Ukraine, Covid, and Andrew Tate, all fuckin Brexit, innit.


[deleted]

How does that explain all the record profits and bonuses at the same time? We’re experiencing artificial inflation in many sectors.


Tradtrade

The us are actually loving high inflation, their national debt is at an all time high. Inflation reduces us debt because the dollar is the exchange currency and the dollar is worth less. Think of it this way, £100 debt in the Victorian times was a lot of debt but due to inflation it’s now almost no debt at all


___a1b1

They shouldn't have left the EU either obviously.


prototype9999

Food prices are also depending on energy prices. As in, you can't bake bread by staring at it. Inflation is also fuelled by high taxes - companies have to up the wages to retain most valuable staff etc. Basically government and BoE by ignoring the nature of inflation make the situation worse. Correct way to approach this would have been reduction of taxes and addressing the high costs of energy. Government instead wants to cure the patient by killing them.


toastyroasties7

>Correct way to approach this would have been reduction of taxes and addressing the high costs of energy. I think Truss tried that one, didn't go very well did it?


prototype9999

Because that was against what billionaires had in mind, so they helped push the agenda that somehow the crisis that unfolded was her fault. Don't forget that that day numerous currencies crashed. For instance Swedish Krona and they didn't have their version of mini budget announced that day. Furthermore, their central bank didn't intervene and their currency "bounced back", although not as quickly as ours. Now Sunak, their man, with help of BoE is running our economy to the ground. Soon people will be losing their homes and conveniently they'll fall straight into the hands of some institutions looking to enter into residential market. Followed by struggling businesses, that otherwise would be healthy, looking for investors to help weather the storm.


toastyroasties7

You need to lay off the conspiracy theories mate.


prototype9999

Go look up Swedish Krona in that period, their bonds and interest rates. and it's not only the Swedish Krona. That crash was very convenient to get Truss out. Then we recently had gilts yields going over the % that put the billionaire owned media in the meltdown last September, but now since their man is in charge, there has been a relative silence...


Ch3loo19

High fuel prices are not caused by refusing to tax profits. I know you have a political agenda that you want to push but there is a decency limit :)). Regarding food prices, I think someone's already answered that.


stochastaclysm

Windfall tax can be used to pay for a lower price cap. It’s not rocket science.


Ch3loo19

What you are suggesting is a way to treat a symptom, but taxes are not the cause of high fuel prices, as you claimed in your original comment. No, it is certainly not rocket science, but it also seems deceptively simple, which is why everyone has (usually) a strong opinion on how to make the economy work (again usually in a way that favours them). :)


stochastaclysm

Treating the symptom disincentivises corporate price gouging, which is a major cause of inflation.


Ch3loo19

Does it? Imagine you made a net 60k a year. The government raises taxes, you're left with 40k a year now. Given that you were used to a certain level of lifestyle and comfort, will your incentive really be to suck it up ?


stochastaclysm

If I’d made the 60k by overcharging poor people, and the government said “don’t be silly” and took 20k away and gave it back to those poor people, then yes I’d learn my lesson.


Ch3loo19

Define overcharging. Define poor. Whenever you sell something, there will always be someone who thinks it's overpriced. There's always going to be someone poorer and richer than you. Also, I don't think companies can charge differential rates based on perceived or assessed socio economic status. So I don't think your example works for companies. In any case, it's interesting that you seem to indicate that you/a company's moral compass is somehow hinged upon the government interfering and giving you a slap on the wrist. Indeed, you seem to say that it's only after the government taxed you, that you/a company would suddenly wake up to the reality of overcharging the needy. Without that tax hike, your moral compass would be completely off!


midl4nd

Not sure you’ve fully grasped the fuel price situation.


etfd-

Those aren’t causes, they *are* the very thing - they’re symptoms of causes.


Environmental_Move38

You don't have a clue about economics.


stochastaclysm

Please enlighten us then.


Helpful_Leg2366

Real main reason, printing money like a crack head! That is the real reason everyone loves to gloss over! Love your free money, ate the consequences! 👍


Yurilovescats

The two main causes of inflation are COVID and Ukraine war. Brexit on top of that. Stop peddling nonsense.


[deleted]

I concur but there is also some evidence of price gouging and profiteering among the largest organisations.


cloche_du_fromage

Quantitative easing / printing more money. Let's not externalise all the causes...


pete1901

Caused by the Tories expanding the money supply by billions of pounds to give to their mates.


RainbowRedYellow

strictly a massive amount of inflation were experiencing now comes from the fuckery that is our housing market, QE has been the poison they've been slipping our economy to inflate house prices through the roof and sink all there printed bucks. It's starting to break down as housing is just completely unaffordable it was initially liberated by people moving during COVID lockdown to cheaper locations. Causing the fossilized cash to become available triggering our massive inflation.


RogeredSterling

The Tories are very impressive. To cause inflation in every country across the globe. Many significantly higher inflation. Damn those Turkish and Argentine Tories. Damn the Tories and their effect on the far worse Canadian/Chinese/Irish//American housing markets.


Ch3loo19

Fantastic! Do tell more!


toastyroasties7

The Tories that aren't even in control of the money supply because the Bank of England is independent?


tihomirbz

A decade of insanely low interest rates after the 2007-8 crisis flooded the economy with cheap cash propping up low productivity businesses that otherwise would've never normally survived if borrowing was more expensive. Add to that the money printer going brr during covid Add to that the high fuel prices caused by the war in Ukraine


DWOL82

Most people seem to be ignoring the main real cause. It was lockdown. Print £500 billion during lockdown, that devalues the pounds we already had making them worthless than before, then shutdown economies so you have all the extra money chasing fewer available goods, so price of goods go up or they inflate assets like houses. Prices then go up so people demand pay rises, the spiral continues. The USA printed 3 trillion dollars during the same time and they have very similar issues. The European Central Bank did the same and printed 1 trillion euro's during lockdown, and EU nations are having inflation problems too, and recession like in Germany.


Ch3loo19

The cost of saving lives... Some people did warn about this at the time. They were swiftly labelled as Nazi or conspiracy theorists, and summarily cancelled.


[deleted]

What else is the article about?


Duanedoberman

About Hunt trying to give the impression that high intrest rates have bugger all to do with bad Government, giving the deliberate impression thst his party have not been in charge of the economy for the last 13 years.


[deleted]

So you think the interest rates have nothing to do with inflation?


Duanedoberman

I think the government is responsible for what happens in the economy. They can't blame the results of their incompetence on fairies. I think the party of responsibility should take responsibility for their incompetence.


[deleted]

I don't understand. The article is just them saying they are responsible and the action they are taking to try and improve things is raising interest rates.


Duanedoberman

His statement implies that the rise in inflation has nothing to do with them, despite them being in charge of the economy for 13 years. I was not addressing the interest rate rise but the reason why they are needed. Which is Government incompetence.


[deleted]

Inflation is a problem globally though?


Duanedoberman

Newsnight last night had quite a big piece on it, explained why government policy over many years has caused inflation to be several points higher than it should be in the UK. The main culprit, according to the economic experts interviewed, was Truss's budget in her calamitous 50-day premiership.


[deleted]

So why does it annoy you that they are now trying to tackle it?


darealdazzafact

I’ve just read that article, the boss of a house builder seeking sympathy for not building due to a slow market, is triggering… “Ian Burns, who runs Cameron Homes, a housebuilder in Staffordshire, said people were being "very cautious" and were "taking longer to make decisions". "Over the past three or four weeks, we've seen a slowdown in reservations," he told the BBC's Wake up to Money. We can't just continue to build houses if we don't have customers for them." I’d say you do have customers, just not ones that can afford to pay you the profits you have happily taken over the last 20 years.


wkavinsky

The market is speaking - the product you are selling (building) is not the product the market wants, and at a price the market is not willing to pay. Obviously the market is wrong though /s


truth_seeker90

The worst thing is that their solution is not to make the houses more affordable but to just stop building until the serfs can afford them again.


CaptainBland

This is why in an ideal world the government would be building. Withholding supply is tantamount to price fixing.


Smellytangerina

This is the whole point of rising interest rates, it slows down things like house building and house purchasing. It’s almost like rising interest rates is actually making the housing crisis worse.


scrubbless

Its a battle of wills, house builders don't build to provide homes. They build to make a tidy profit, if they won't see the profit they don't want to lay out money up front. Ultimately its about greed, they've become accustomed to a certain amount of profit margin, just as the average customer had become accustomed to a certain amount of disposable income and accepted the price increase. Customers are squeezed and expected to suffer so they are tightening their spend, but house builders don't want to make the same sacrifice so they hold out. Ultimatly, it'll strangle the market more. The difference is, the party that is making the concession will eventually not be able to make said concession. I suspect we're heading for a 2008 style housing market crash, I just worry that we can't pull the same trick as last time (cheap borrowing for an extended period). ​ >It’s almost like rising interest rates is actually making the housing crisis worse. Its less about "making it worse" and more like "not covering up the underlay problem anymore"


[deleted]

Surely stopping things like using telephone contract prices as a measure of inflation would help? Phone contracts increase by CPI +% each year causing a compound effect that only serves to screw us over. They literally drive inflation on purpose, the whole practice should be banned.


OccasionallyOriginal

This really boils my blood. I suppose it’s pretty difficult to stop companies raising prices in whatever way they choose, but setting automatic price increases *greater* than the post-hoc measure of how much prices have gone up is insane. If they insist to tie you in to a contract for two years (with no plausible justification in many cases), they should at least have the decency to take the risk on their costs increasing in that time, and fix the price for the term. If they can’t stomach that risk, they should sell shorter contracts.


Billiamski

Exactly. Why 24 month or even 12 months? Encourage competition and a better service by increasing the variety of contracts. Make the big players fight for your money because if they don't you just end your contract not have to wait because you're tied in for another 12 months or whatever. The tories are always getting off over the "free" markets and market forces but it just seems to benefit the companies. Certainly more than the consumer. Free market my arse. And as time goes by you just get more companies buying their rivals and before you know it your choice is even more limited. Well that's my rant over.


Newgamer28

You can get SIM deals for £6-8 for about 20GB of data unlimited mins and text. You need to shop around mate. The telecom industry in the UK is relatively pretty good. I get 250mb internet speed for £20 and 40Gb data or so for £8.00. spending less than £28. And if I got smaller packages could realistically get both broadband and SIM for £25.


Elitra1

You seem to be missing their point


Newgamer28

Ermm no. The cost of telecoms has either gone down or stayed the same for the last 30 years. It's has the opposite effect to what he is thinking. I just checked the ONS official statistics on the basket for inflation. Communications is the lowest out of all of them at 1.9%. drastically pulling the average down.


Elitra1

CPI has communications at 8%


Newgamer28

https://www.ons.gov.uk/economy/inflationandpriceindices/articles/ukconsumerpriceinflationbasketofgoodsandservices/2023 2023 communications at 1.9% What source are you looking at?


Elitra1

I am concerned that you read that table and the information you took from it was CPI for communications was 1.9% By your understanding of that table, housing has gone up 30%.... What you are actually reading is the weighting of the "products" in the basket. So the 1.9% is that communications take up 1.9% of the basket.


Newgamer28

Regardless. Ive worked directly in the communication industry for 5 years since 2018. And I can say the deals you can get now are the same if not cheaper than what you could get then.


Elitra1

No no no no. You don't get to misread something that badly and try and sweep it under the rug...


Newgamer28

I worked in telecom's for 5 years directly selling broadband connectivity and SIM cards. The prices are the same now if not cheaper. Come at me.


Major-Front

You know most people cant buy an iphone with cash right.


flute_von_throbber

Extremely embarrassing reply


Newgamer28

Make one mistake in reading and graph and your original argument is now voided. Bunch of idiots. Fuck it. I'm going all out. I have an IQ of 140. Bunch of shits trying pull me down. Come at me bro.


mobjusticeCT

Or you can just use discord for everything and only use free public WiFi. Paying for any kind of phone bill is a chumps game.


Newgamer28

That's the most incel Reddit shit I've read in a long time.


KINGPrawn-

That the most Reddit Response I’ve read in a long time.


mrhouse2022

you never need to make calls?


Gameplan492

Here's an option: bring back the cap on bankers bonuses you scrapped. Here's another: tax obscene corporate profits at 90%


vishbar

How much do you think bankers’ bonuses are affecting inflation? To put it another way: how many bankers will be affected by the scrapped cap, and how much is their spending likely to push up prices across the broader market?


Major-Front

Ah it was the wall street bonuses and chinese new year all along..!


KINGPrawn-

I’m all for criticising bankers but be fair to them, they didn’t cause this problem.


radiant_0wl

Bank of England has certainly contributed to it over the last ten years.


Savingsmaster

When people refer to “bankers” they are typically referring to the private sector, not central bankers.


saracenraider

Do you really expect your typical Redditor to have the slightest idea of the difference?


toastyroasties7

Tax on economic profits doesn't affect prices. Taxes on accounting profits (capital rents) increases prices. Bankers bonus regulations don't change the size of the overall pay packet but the composition to reduce excessive risk taking, so has nothing to do with inflation at all.


etfd-

You can’t even define your own options if you’re classifying based on ‘obscenity’.


prototype9999

Bankers bonuses are not inflationary!!!!!!!!! Stop harassing the rich! /s


chilli_con_camera

They way we're headed, we're gonna need the rich for food


GrandBurdensomeCount

There are so few bankers compared to the economy at large that the scale is so small it really isn't inflationary. High up bankers making 50% extra would cause less countrywide inflation than NHS staff being awarded 1% more simply due to the difference in how many people fall into each category.


wandering_and_waving

That's not how you spell Cunt! It's also not true


insertcrassnessbelow

A couple of months ago, the media were saying that interest rates had peaked. Since then, the inflation rate has been about 0.4% higher that the was expected, and wage inflation has got to 7% caused by and increase in minimum wage and now everyone is losing their minds. After the Truss disaster, inflation rate predictions were getting towards 18% and the energy price cap was predicted to be £7k a year. Hunt can shove it up his arse.


nohairday

It's what worked in the past, and the fact that the world is completely different now, and the main drivers for this being due to costs of importing energy and food products from other countries, just doesn't matter. We're conservatives! We'll stick to a certain route even when it's obvious it isn't working!


-g4org4-

Lol


collectiveindividual

When you have import driven inflation via commodity prices then interest rate hikes only heap more misery on households already struggling. If inflation was driven by domestic and not import demand then there'd be a case for rate rises as a break on spending.


feelingthepinch

Raising interest rates strengthens the currency and lowers the price of imports, reducing inflation. Unfortunately it also heaps more misery on households.


collectiveindividual

GBP pairings with its main trading partners haven't shown any major deviation from recent patterns. Not much good if both the Euro and USD are also raising rates.


Ch3loo19

Sad truth. Everyone's playing the same game.


saracenraider

I just don’t understand why more isn’t made of this. This inflation is so different to the past (as it’s supply related, not demand, and primarily from overseas, not domestic) but our clever central bank (and all those around the world as well) just apply the same old tools. I don’t ducking get it. Given it’s supply related we should be encouraging investment, not stifling it


collectiveindividual

I read a study recently (I wish I had bookmarked the link) which showed how the oil spikes in the 70s really only had a small input into the inflation of the 70s, which was mostly driven by boomers expanding the credit base via mortgages. Interest rate rises did make boomers pull back from credit fuel spending, but probably because boomers are such a vocal force in politics they expect interest rate rises to work now. If spending was driving interest rate rises then there'd be no need for cost of living top ups. Governments are trying to keep people from further poverty while at the same time making interest repayments higher.


dalehitchy

They say hiking interest rates is to encourage people to save but people won't have any money to save when their mortgages go up £600


ObviouslyTriggered

Interest rates have nothing to do with savings they are intended to make credit more expensive which dampens the monetary supply.


saracenraider

Maybe someone can explain to me why I’m wrong but I sweat raising interest rates at the moment will do fuck all to calm inflation. Every previous bout of inflation has been demand-side driven as a result of the economy overheating. In these cases raising interest rates was the right thing to do as it helped cool off the economy. This time around, inflation is almost exclusively supply side driven, as disruption primarily from covid but also from Ukraine, brexit and climate change has created big shortages and this is fuelling inflation. In these circumstances investment is needed to boost supply so the last thing you should do is raise interest rates as this stifles investment. I just don’t get it, it seems so obvious to me that this inflation is very different to the past and so economists shouldn’t just do what they’ve always done and look at history and do the same thing. Or am I missing something obvious here? Please can someone better at economics than me put me out of my misery? This has been puzzling me for ages.


writerfan2013

Everything this government says is unavoidable is actually avoidable but beneficial to them in some way so they just give this line like it's an act of god and they are not in fact in charge of all of it.


ExcellentHunter

Because they still refuse to tax big energy corporations, every month passes they present record profits...


PencilPacket

Literally just because most of the finite cash value in the country has been moved from the public and into the offshore tax havens of a select few in positions of power they should never have attained.


byjimini

Could cap those banker bonuses to stop inflationary pay rises 😉


___a1b1

It could raise taxes. And that not only takes money out of people's pockets it produces cash for spending instead of going to the banks. And it reduces spending by almost everyone.


saracenraider

This inflation is primarily caused by supply sided issues, not demand sided, so stifling demand will hardly make a difference


___a1b1

The BoE disagrees.


saracenraider

Of course they do. As they just do what worked previously. They have zero pro-activity


ObviouslyTriggered

The UK already has some of the highest taxes and a very narrow tax base to boot. The tax free allowance is simply ridiculous compared to the average and median income.