Inflation

[Yorick]

Unless they raise interest rates by at least five more points this year then it's not going to get better, and even then it's only going to slow it.
I've had to hedge and if the bull run continues then it'll make up for inflation, but what an insane policy.

Not sure that is going to help much. Most of the inflation seems to be supply-side, so damping down consumer demand won't do much good, and will make things worse for many. Personally I would love Bank Rate to go up to about 10-12%, but I am not typical.

*waves*

[Bike Breaker]

Just had an email telling me that what I'm paying on something will increase...

"The increase will rise in line with the 7.8% Retail Price Index (RPI) rate of inflation, announced in February."

The Fed, The Bank of England, etc, should be prosecuted for what they're doing to the economy.
Unless you've had a pay rise this year of at least 7.8% then you're being rinsed by an insane policy.

I don't know what the private sector pay rises are calculated on but, in the UK, public sector pay and pensions were changed some years back from the RPI to the CPI, which is lower. I expect private sector rises (if they get any) will be in line with the CPI or below. The good news is that when the index is a minus number, the employers haven't yet got round to reducing the pay.

[Count Steer]

Unless they raise interest rates by at least five more points this year then it's not going to get better, and even then it's only going to slow it.
I've had to hedge and if the bull run continues then it'll make up for inflation, but what an insane policy.

Not sure that is going to help much. Most of the inflation seems to be supply-side, so damping down consumer demand won't do much good, and will make things worse for many. Personally I would love Bank Rate to go up to about 10-12%, but I am not typical.

LOL. If the Bank Rate hits 10-12% what do you think the inflation rate will be? Fine if you don't have to buy anything like food, petrol, gas, electricity, mortgage etc but you'll still be surrounded by a population that's skint, so you'll probably have to pay to beef up your security.
Companies will need to up their dividend and borrow less. That won't end well and pension funds will have a tough time.

Remember last time this happened? It wasn't generally regarded as a good time.

[Cousin Jack]

I am not suggesting it as a policy, I just meant I might get a reasonable return on my cash. I will settle for any rate higher than inflation, but ultra low rates have damaged savers without much benefit to anyone except the banks.

[Pirahna]

Personally I would love Bank Rate to go up to about 10-12%, but I am not typical.

Yes please, higher if possible.

[Cousin Jack]

If I had a money printing machine the motorcycle industry would experience a small boom. And local house prices would go up a bit more.

I am well aware of what inflation does, and have a good idea of the things that cause it. The real problem is that economics is not a very precise science, and the Law of Unintended Consequences kicks in far too often. That, and politicians usually thinking about the next election rather than anything else.

[wheelnut]

If I had a money printing machine the motorcycle industry would experience a small boom. And local house prices would go up a bit more.

I am well aware of what inflation does, and have a good idea of the things that cause it. The real problem is that economics is not a very precise science, and the Law of Unintended Consequences kicks in far too often. That, and politicians usually thinking about the next election rather than anything else.

Yeah, politicians always want people to save money. Just do it when the next person is in office.

[JackyJoll]

If I had a money printing machine the motorcycle industry would experience a small boom. And local house prices would go up a bit more.

Hook and cokers!

[Cousin Jack]

Hook and cokers!

I don't do drugs, and at my age the spirit is willing but the flesh is tending towards weakness.

Besides, Mrs CJ wouldn't let me!

[David]

Steady on folks....you ain't seen nothing yet.......

[weeksy]

I'm sure all you doom mongers will tell us though...

[weeksy]

I can't live like that, just taking what comes without any sort of active management of it.

How would the average bloke on the street actively manage the rise in infalation apart from maybe trying to be a bit more frugal ? He's not going to have savings as such, his van/car will still need fuel, the wife and kids still need to eat and be clothed.

You'd be amazed how few people have any contingency for any of this, let alone a plan.

[Supermofo]

I try and plan for the future but a lot of this is well out of my hands. As far as I can see certainly short term but maybe medium term too things are gonna be a bit rubbish.

I've not bought a bike for example for 2 years longer than I wanted, not cos I couldn't afford it but because I wanted to make sure financially it all made sense ie my wife's job looked iffy so I wasn't gonna spend a lot of money in that situation. Things looked decent on that front so I went and bought a bike in spite of the inflation we already had. But now Putin's fooked it even more. I could have bought the bike cash but a loan at 2.8% made more sense to me as I'd rather have ready available cash if needed and a bike could be sold.

On the savings front I have a decent amount in my offset, more than half the value of the remaining mortgage. But for the moment that's probably working as best it can for me as it saves me around £100 a month in interest. I'm painfully aware though that not insignificant amount is losing value with all the inflation but equally I guess my mortgage is too at the same rate. Not sure what I can do about that though other than invest elsewhere but doubt I'd get the value that the £100 a month saving is giving me and investments don't look good either.

Pension wise I still have probably 15-20 years to go and a reasonable projected value but that'll be taking a hit right now but again not a huge amount I see I can do about that I don't think and this far out lots will change in that time.

So like Weeksy I guess I'm seeing especially the short term being a bit of munching my way through the shit sandwich and try not to get too down about it. Like with the Covid news I'm feeling more and more like I need to stop reading it. My mate text me yesterday to say his energy bill has gone up by £189 a month! And petrol is now at £1.57 in most places my way. Bloody sucks but other than getting cold or not driving its suck it up time.

[Supermofo]

Bloody sucks but other than getting cold or not driving its suck it up time.

In the short term it is, and in the longer term you're already better prepared than many.

I didn't even consider any sort of long term financial planning until I was forty, until then I didn't properly consider it and it was more of an accident that I had a company pension, I didn't look into what it meant or what I could do with it - and any sort of proper private financial planning was only an occasional thought.

There is always a balance between enjoying today and saving tomorrow, but if I'd have had parents that understood finance and really explained things properly then I'd have been a lot wiser. It's not like I'd have been slamming big chunks of money away, I mostly didn't really have it, but over the years I'd have been able to make small amounts work a lot better for me.

In terms of how does the "doom mongering" help - well if the average bloke that doesn't do much in the way of savings gets to know that lean times are coming then it can change behaviours and might make a difference. I've struggled at times and if I'd had someone tipping me the wink that things will get tough in six months (or whenever) then I'd have tried to plan for it.

As I get older and more boring I also find the markets and finance interesting, global and national finance is like a decent board game, but unfortunately with real money not with Monopoly money.

Absolutely. I look at some people I know who are my age or older with 0 savings and or massive mortgages and live month to month and it would scare the crap outta me!

Whereas I worry about buying a bike I can easily afford!

Still on balance I think I'd rather be in my shoes.

[Count Steer]

I'm not a doom monger, but I am old enough to know shit always happens. Every time someone says or behaves like 'this time it's different' ie low interest rates are here forever, or tech stocks aren't overvalued because 'this time it's different' you just have to shrug.

Every time things have seemed peachy, something comes along eventually, recession, covid. Russia, Bay of Pigs, global warming, OPEC, housing or stock market collapse whatever.

So you either are surprised when everything goes south or you try and prepare for it (without digging a bunker in the back garden or living like a hermit). It would be nice to be a Panglossian and assume everything happens for the best but they make special white coats where the arms tie across the front for them, which don't suit my complexion.

[irie]

If world and national events were like widgets, a constant flow of them over time, then it would be far easier to (sort of) forecast the future. However, these events arrive as random huge disturbances making it impossible to forecast the future other than saying that the future is uncertain. Plus ça change.

[weeksy]

I'd only add that whilst non of us have a crystal ball, if there is a situation like high inflation (which to be fair was predictable - I did it) and it's not actively managed to bring it down, then it will remain or get worse.

I was reading yesterday and some analysts are saying that in real terms it's at 10% now.
That's great for the government because it means that their debt is 10% less, but it's not great for the average man in the street.

My point is still, what can the average guy do ? He's got £300 a month disposable income, that covers EVERYTHING, from treating the wife, to taking the kids to days out, feeding the family dog and covering little things. He's already doing his best to clear debts but overpaying the mortgage simply isn't an option for him. Whilst he can be aware of it, i don't really see what he can do about it, plan for it or ease the pain. His fuel costs have now gone up by £75 a month due to rises, so he's already struggling even more.

It can be as predictable as it wants, but most people are not in a position where they can influence it in any way.

[JackyJoll]

My point is still, what can the average guy do ? He's got £300 a month disposable income, that covers EVERYTHING, from treating the wife, to taking the kids to days out, feeding the family dog and covering little things. He's already doing his best to clear debts but overpaying the mortgage simply isn't an option for him. Whilst he can be aware of it, i don't really see what he can do about it, plan for it or ease the pain. His fuel costs have now gone up by £75 a month due to rises, so he's already struggling even more.

It can be as predictable as it wants, but most people are not in a position where they can influence it in any way.

Yes, that is scary. It does look like a lot of people are going to seriously suffer.

[Yorick]

Lots of folk say they are skint. They could get evening or weekend work.
Most choose not to.

Hmmm.

[weeksy]

It’s impossible for me to give out tailored solutions.

If you’re not really bothered then you won’t change anything but if you’re bothered then you will. There are unlimited personal solutions, you can literally do anything you want, save more, get a better paying job, get professional advice, tighten your belt, change habits, etc.

The only wrong thing is not to do anything - unless it really doesn’t matter to you.

SAve more, with no disposable income....
Better job, oh yeah the bloke with no qualifications and lets just say not the brightest isn't going to get offered double his wage from his job in the packing factory stuffing boxes for 12 hours a day on minimum wage.

It's all so so easy to suggest it from a position of middle class happiness, but the reality is a lot harder.

You may tell me how you did rubbish at school and are now a well paid super whatever, but i don't think that's reality for many. For every one of you, there are many hundreds of thousands who cannot and will not ever amount to much more than 'family bloke getting by'. They've got a minimal pension, minimal income and maximum outgoings.

You often tell us about the shit state of the UK, well, these people you say are the shit state, they're the normal. Their treat is a £20 fish and chip take away on a Friday evening with a 4 pack of Carlsberg... not because they don't WANT the better lifestyle, but because that's what the universe has dealt them. They're 45-55, they're going nowhere...

But you know what... they're doing OK They're average Joe....