Just seen it’s gone up from 1.25% to 1.75%, usually a good thing in what is really a recession with high inflation, but will this actually work when the reality is that most of the inflation increases we’re seeing are linked to things that most people are already trying to limit, and using only through necessity.

It just has the feel of squeezing people at both ends now, i’m not seeing a rush for energy suppliers, fuel or other to lower their prices, even though there is the ability too?

Its not just about retraining consumer spending. For example, if the Fed and the ECB are putting rates up but the BOE doesn’t that will reduce the value of sterling, putting our rates up should keep sterling a bit higher which will help a bit with fuel costs etc, oil mostly being prices in dollars.

It just has the feel of squeezing people at both ends now

It’s only squeezing people at one end as far as I can see. The problem is that the people at the top are profiteering at the cost of everyone else. Until we take those profits off them and redistribute to working people nothing will change.

In no way is it a good thing.

1) It will not make energy cheaper
2) Or provide more food and supplies.

It bears no logic to fighting current inflation. But we all knew this.

They are driving us in to the ground with monetary policy here.

Andrew Bailey is on 575,000 a year and asks workers/business to calm pay rises.

They’re off their heads.

putting our rates up should keep sterling a bit higher which will help a bit with fuel costs etc

Ha ha ha

We won’t benefit from that – ever. More than offset with the cost of mortgage rises.

Andrew Bailey is on 575,000 a year and asks workers/business to calm pay rises.

Thing is doubling his salary would have no effect on inflation, whereas upping several million public service workers by, say 10%, will have a measurable effect.

Not advocating any judgement to either, but if your “mission” is to control inflation you can see his point of view.

It’s only squeezing people at one end as far as I can see. The problem is that the people at the top are profiteering at the cost of everyone else. Until we take those profits off them and redistribute to working people nothing will change.

What has that got to do with inflation or the current situation. Inflation is rising in more equitable countries eg Sweden (although for some reason Japan is having a much easier time).

uk banks are all down now, were up this morning.

The next few years are going to be terrifying for people on lower wages with interest rate rises (so more expensive mortgages, personal loans, credit cards, store cards etc) coupled with soaring energy and food costs. I have no idea what is meant to be done but this is going to cripple huge numbers of people.

I could have fixed for 10yrs at 1.5% 18months ago 🙁

i’m not seeing a rush for energy suppliers, fuel or other to lower their prices, even though there is the ability too?

Why? they’re having the time of their lives 🙂

Thing is doubling his salary would have no effect on inflation, whereas upping several million public service workers by, say 10%, will have a measurable effect.

Nonsense.

If we’re going to pick on wages they surely those that have had it good at the the top end of wage spectrum have driven inflation to where it is today? Whereas those at the lower end have not had wage rise in years.

There is no growth in the economy – people’s wages are way way behind inflation so it’s a technical impossiblity for their wages to drive inflation.

The inflation we’ve got is not being driven by too much money floating about. Because there is no growth.

Have you been to the Ann Widdecombe school of economics – as she is currently citing wage price spiral.

Here’s the thing if you lift the lower waged they will spend it on the utility bill because they have to, which is way above inflation – sucking up that extra cash, just to survive. Whereas a wealthy person will take their surplus money and buy a 2nd house or Porsche depriving us of resources and pushing inflation upwards.

Also Andrew Bailey is utter shit and doesn’t contribue anything useful to society. It takes 9 people on the MPC to come to this decision. Four of them appointed by the Chancellor. Sack the lot.

Maybe we could avoid this getting personal and focus on the interesting topic (no pun intended) of how the current pending interest rises will impact the people and economy of the UK.

Why? they’re having the time of their lives

Unfortunately this is true – the capitalist business owners and managers have shown themselves to be massively successful in the revenue growth stakes perhaps in some part gifted by Putin. And, if you work for Shell below the executive level you’ll have received news of an 8% pay increase – even that is below inflation.

It’s only squeezing people at one end as far as I can see. The problem is that the people at the top are profiteering at the cost of everyone else. Until we take those profits off them and redistribute to working people nothing will change.

Ah, i just meant the same people at the bottom and middle, the top always tend to enjoy a good recession and higher inflation, as it’s a good time to buy.

will a 0.5% base rate moving to a massive 1.75%
have any impact on Credit Card rates

my amex is 25.7% as it is , thats a simple monthly rate of 1.92% ;0)
and surprisingly my barclaycard is 12.48%

cant see 1/2% making a difference to cc, and with mortgages people coming out of fixes are gonna have higher rates than they have been used to in the last decade.

Between my wife and I we have a good income, certainly above average. Even in this fortunate position, I am really nervous about the next 5 years or so. I can’t even begin to imagine how people / families on lower incomes are going to cope. It really is scary time ahead.

cant see 1/2% making a difference to cc, and with mortgages people coming out of fixes are gonna have higher rates than they have been used to in the last decade.

In the UK a lot of people are going from pay packet to pay packet, 0.5% on an average mortgage is about 50 quid a month more i believe, factor in all the other rises and it could be £100 a month more to find, or more likely, £100 more to find in your current outgoings, that’s not pennies!

What has that got to do with inflation or the current situation.

Everything. Energy costs (roughly) the same to produce today as it did a year ago. The price of oil is similar to what it was after the 2008 crisis. Oil and energy companies are making hundreds of billions at the cost of everyone else. And now the f***** bank of england is punishing mortgage holders because the government refuses to step in to stop the energy and oil companies ripping everyone off. The problem is the market has ceased to function in anyone’s interests other than a tiny few people who hold shares in oil and energy companies. The rest of the economy, and more importantly millions of people’s lives are being sacrificed at the altar of market fundamentalism.

Nonsense.

It’s just maths, it will have a measurable impact – whether than matters or is a bad thing is a separate issue.

Have you been to the Ann Widdecombe school of economics – as she is currently citing wage price spiral.

You clearly didn’t read my post – I don’t have any judgement about it, it’s just maths.

I don’t disagree that public servants should be paid more.

The problem is the market has ceased to function in anyone’s interests other than a tiny few people who hold shares in oil and energy companies Tory party donors

FIFY

If the UK was self sufficient in gas then you could nationalise the industry / regulate the price and have cheap gas etc. However, as we’re not and therefore have to interact with a global market, you don’t have any choice but to pay more for gas whilst demand exceeds supply.

Or just stop using it..

majority of folk with a private pension will have bp and shell shares indirectly, increased divs and share price is good for us.

unfortunately increased global market prices on oil negate this small benefit.

majority of folk with a private pension will have bp and shell shares indirectly, increased divs and share price is good for us.

unfortunately increased global market prices on oil negate this small benefit.

Or, more importantly, overall inflation. It’s no use your pension increasing by 5% in value when day to day costs of everything in supermarkets is up 10%.

If the UK was self sufficient in gas then you could nationalise the industry / regulate the price and have cheap gas etc. However, as we’re not and therefore have to interact with a global market, you don’t have any choice but to pay more for gas whilst demand exceeds supply.

Or just stop using it..

Yeah, that was a missed trick by the UK, instead of just issuing licenses we should have been doing the same as Norway with the oil and gas, we’re an island that is influenced by many things, having that ability to have energy security for the future would have been nice!

Thing is doubling his salary would have no effect on inflation, whereas upping several million public service workers by, say 10%, will have a measurable effect.

But his salary was doubled, over the previous incumbent, and inflation has increased during his time – so that kinda blows your ‘theory’ out of the water 🙂

majority of folk with a private pension will have bp and shell shares indirectly, increased divs and share price is good for us.

Whoopy-do! I’ll celebrate in twenty years time when I retire. Honestly this sort of defence is ridiculous. Firstly not everyone has a private pension fund. Secondly it’s not certain they’ll hold shares in these companies and even if they do it will only be a few. Will my pension shareholding compensate for the extra £300 (more like £500 after october) a month I’m paying for utilities, and then the tripling in mortgage rates on a 100k mortgage in 18 months time when the discounted rate expires?

Fundamentally the economy is ****. There are all sorts of factors contributing to inflation – supply issue for goods as a hangover from Covid and currently from Ukraine war pushing up prices. Labour shortage as a result of Brexit means workers have more power to demand bigger wage rises (totally justified to meet inflationary costs). A completely unbalanced personal wealth position, even with lots of people in increasing degrees of financial difficulty on one hand, there are a significant number of others that are sat on significant wealth (ie potential spending) not consumed during Covid period which keeps up demand. To name but a few factors.

BoE only have one lever to pull and it’s not sufficient

What is required is an emergency budget – but the government is non-functioning whilst the ruling party goes through a bizarre process of increasingly rabid debate to announce the idiot (who has already won) as the next PM

majority of folk with a private pension will have bp and shell shares indirectly, increased divs and share price is good for us.

unfortunately increased global market prices on oil negate this small benefit.

I don’t think I have to contact an IFA to do the maths around whether the increase in my pension / ISA will offset the circa £300 extra a month I need to pay my bills compared to this time last year! I think its a fairly safe ‘Loss’

Yeah, that was a missed trick by the UK, instead of just issuing licenses we should have been doing the same as Norway with the oil and gas, we’re an island that is influenced by many things, having that ability to have energy security for the future would have been nice!

It was more a point to those saying BP is evil etc, if you choose to buy commodities in a market, then don’t be surprised if someone profits from that market.

CEO of Brewdog posted yesterday about the true extent of price increases affecting their operation:

https://www.linkedin.com/posts/james-watt-21a5a912b_the-inflation-numbers-are-lying-to-us-activity-6960531883411546112-zg6y

TLDR it’s 25%. Obviously that doesn’t mean it 25% at a national level. But BoE talking about 13% seems on the optimistic side. In my industry costs are easily 20% up on pre-COVID.

Also bear in mind BoE won’t stop at 1.75%. We were at ~5% pre-2008 and what 10% in the early ’90’s?

I’m not relishing renewing my mortgage in 3 years time, let alone in the next 18 months. It’s really really really bleak and those living month to month are going to truly suffer. Also consider that due to the decade of austerity we have less of a welfare structure than ever so further for people to fall.

my amex is 25.7% as it is

Arguably, that card is really designed to be a payment and reward card… if you are borrowing on it, and paying those rates, you are in big trouble. But to answer your question, yes, the base rate rise will mean higher rates for loans and card debts. Expect them to rise by more than and faster than base rate rises, now the trajectory has been set.

I’m in the print trade – paper prices for small-time printers like me have risen over 80% in the past year.

Then we get this email from our main supplier yesterday…

To ensure sustainable levels of supply Antalis will be increasing the prices of the majority of its products from Monday 5th September’22. We expect these increases to be within a range of 8-20% but it is becoming likely that some increases may exceed this level in some areas.

@kelvin, yes i get 1% cashback on amex, so APR is irrelevant, not paid credit card interest since i was a student in 90s.

@johndoe yes well aware we will all be far worse off with oil prices/food inflation. it was always gonna happen, coming out of the covid lockdown, smaller workforce (retirees, kids staying on at college, and Brexit), demand for goods and raw material, china still not back upto production capacity, cargo shipping pricing 10x etc.
I was more pointing out Shell/bp are circa 8-12% of FTSE100. ie big players for pension trusts who like (Qtrly) dividends.

@dazH did you miss my second comment, “negate this small benefit” :0)

@scruff9252 yep, who knows were our investments will be in XX years time when we retire, mine will need to be in safer investments. no denying we are all gonna get shafted short to medium term.

The scary part of these rises is that for a lot of households the effects on their mortgage payments won’t be felt for a few years when their current deal runs out. If we get back up to the level of 5-6% that we ran at pre-financial crisis then that’s going to be one hell of a hit to take in one lump. I’m personally more worried about what effect it’s going to have on rent prices as landlords will want to keep their profit margins plus a lot will sell up if they can’t, further restricting supply. I don’t have any debts so it won’t effect me that way but it really does feel like the decade of sub 2% base rates is going to bite us all really hard in the next year or so.

@the-muffin-man – it’s scary how much paper has gone up in the last 18 months. How you smaller operations are managing to keep afloat amazes me. I know of three now in my area who are on the brink of shutting up completely and that’s before the price rises due in the next few weeks from all the suppliers. Good luck riding through it all.

TLDR it’s 25%. Obviously that doesn’t mean it 25% at a national level. But BoE talking about 13% seems on the optimistic side. In my industry costs are easily 20% up on pre-COVID.

My personal inflation rate is well above 20% in the last 2 years, it’s only going to get worse.

The Bank of England’s going to increase interest rates today. It may be by 0.25%. It could be by 0.5%. But the question is, why are they choosing to increase the price of money when we already have an inflation problem? A thread to explain…..

— Richard Murphy (@RichardJMurphy) August 4, 2022

Long thread.

The scary part of these rises is that for a lot of households the effects on their mortgage payments won’t be felt for a few years when their current deal runs out.

I am sure I read (but cannot find the article) that suggested 2m borrowers would come off fixed rates in the next year or two, and that anyone ending next September was likely to see the biggest difference in rates between when they borrowed 2-5 years ago and what rates will be in 2023…

Once again, it feels like a ‘if you think it is painful now, wait until what is around the corner’ for many.

Of course I could also suggest that this is the risk that so many people take – borrow more, ‘upgrade’ the house, play the house price rise game and hope for low interest rates to fuel that…

@reluctantjumper

Somehow we struggle on! There’s just me and the dog so we don’t need much and I we live a lavish lifestyle.

I know another one man band operation in my area who is thinking of giving up his unit and going back to broking. He’s the old school printer running a single colour GTO type who we are losing all the time.

Housing Association I work for are planning to put up rents as kitchens, bathrooms, materials are up something like 20% not to mention fuel, van prices. Bad news for 15000+ households and us on the tools as well get all the grief for it. Tough times ahead.

Just applied for a mortgage yesterday, the best rate for a 2 year fixed was 3.89%, up from 3.15% the previous week (the banks knew what the increase was), for the small amount extra we want to borrow. Thankfully we have the biggest part of the mortgage on 1.59% for another 2 years.

That was a very interesting Twitter thread posted above.

The real danger in the medium-long term is deflation not inflation. I don’t know about anyone else but apart from every day living costs and socialising I’ve completely stopped any spending on consumer goods and stuff I don’t need to spend money on, including bikes and after this summer, holidays too. My car use has also plummeted, a day in wales or the lakes mountain biking is just not justifiable any more when I can ride locally. If I’m typical then the shock to businesses over the next 12 months is going to be catastrophic. Any that survive the initial rise in costs and interest rates are then going to be hammered by plummeting sales and prices. Then the mass redundancies, bankruptcies and repossessions will kick in to make it worse. The rebound from the current inflationary position is going to be spectacular.