The rising cost of living

[Genie]

13 minutes ago, CVByrne said:

Your narrative is nonsense. BoE began raising rates earlier, the Fed later. Fed first rise was in MArch 2022 from 0.25 to 0.5. BoE raised from 0.5 to 0.75 in March. They both raised rates fast. BoE had bigger issues to face than the Fed in 2022 with Energy and Truss. So you can't compare the jobs they did as if they were both working in identical economies with identical objectives.

You can continue with your "captain hindsight" that they should have done it different etc. 

Its not just me, this week:

iNews

Quote

Bank of England Governor Andrew Bailey came under renewed attack from senior Conservatives as he raised interest rates again on Thursday – and as No 10 refused to say whether he was doing a good job.

A No 10 spokesman said after being pressed repeatedly that Mr Bailey “continues to have the Prime Minister’s support”, but did not say Rishi Sunak thought he was doing well.

Several Tories blamed Mr Bailey for failing to act quickly enough to rein in inflation and therefore needing to raise interest rates further to 5 per cent, putting mortgage holders under even greater pressure.

One MP told i the Governor had “presided over incompetent management” of the economy and was “a year behind the curve with interest rates”, arguing faster action could have given people time to plan for increased mortgage costs.

Mr Bailey “looks completely deflated all the time” and should be replaced with an experienced figure like former governor Mervyn King – “a nice safe pair of hands” who “can be trusted” to restore confidence to markets, the MP said.

Other Tories backed the assessment that the Bank had failed to act quickly enough. “If the Bank of England had acted sooner they wouldn’t have to go as far as this,” a former minister said. “The Bank should have seen what was happening.”

I rememeber at the time when Boris was claiming all the glory for the fastest growing economy in the G7 that it was reported we were in the wrong place. 

[Genie]

Went to the local chip shop last night.

Wife and son both wanted a pie, and shared a bag of chips. I went for doner meat and chips in a tray.

The cost, £19.20 WTF  

I couldn’t believe it.

Pies were £3.75 each, chips were £3.20 for a standard bag and the doner meat and chips in a tray was a whopping £8.50!

Absolute piss take. 10% inflation my arse, that must be north of 50%.

[Mozzavfc]

Question for the smart people. Is the main point of interest rate raises supposed to be to raise the rate mortgages cost, in order to cut spending power?

I had a look and home ownership with a mortgage is only 37% in the UK, so these increases to mortgage rates only directly affect the spending of 37% of the population. 

If to bring inflation down, we all need to stop spending as much, wouldn't it make more sense to raise taxes which effect everyone, lowering the spending power across the board? If you're paying for a mortgage surely you'll be contributing a lot less to inflation, as you don't have as much spending money to start with.

I know interest rates also affect the rate at which business can borrow money for investment, but it's the same kind of principle.

[Genie]

Just now, Mozzavfc said:

Question for the smart people. Is the main point of interest rate raises supposed to be to raise the rate mortgages cost, in order to cut spending power?

I had a look and home ownership with a mortgage is only 37% in the UK, so these increases to mortgage rates only directly affect the spending of 37% of the population. 

If to bring inflation down, we all need to stop spending as much, wouldn't it make more sense to raise taxes which effect everyone, lowering the spending power across the board? If you're paying for a mortgage surely you'll be contributing a lot less to inflation, as you don't have as much spending money to start with.

I know interest rates also affect the rate at which business can borrow money for investment, but it's the same kind of principle.

You’re correct and it’s a flawed method of reducing inflation. You also need to factor in that a proportion of the 37% mortgage holders are on fixed deals so are immune to the rate rise in terms of their mortgage payments. In fact, if they have a fixed mortgage and savings the interest rate rise will increase the amount of disposable cash they have to spend.

[Brumstopdogs]

12 hours ago, Genie said:

Went to the local chip shop last night.

Wife and son both wanted a pie, and shared a bag of chips. I went for doner meat and chips in a tray.

The cost, £19.20 WTF  

I couldn’t believe it.

Pies were £3.75 each, chips were £3.20 for a standard bag and the doner meat and chips in a tray was a whopping £8.50!

Absolute piss take. 10% inflation my arse, that must be north of 50%.

That does sound expensive. We went to KFC the other day and we got 4 meals (for 2 adult and 2 kids) and it came to almost £35. As you say more than 10% inflation.

[StefanAVFC]

What's the average income in the UK atm? and average household income?

I can google it but I don't get the feeling it's accurate (the Polish one seems insanely high based on what I know certain jobs make)

[Guest av1]

1 hour ago, StefanAVFC said:

What's the average income in the UK atm? and average household income?

I can google it but I don't get the feeling it's accurate (the Polish one seems insanely high based on what I know certain jobs make)

I don’t know the answer, but I guess very high earners are always going to distort the number. 

[desensitized43]

1 hour ago, StefanAVFC said:

What's the average income in the UK atm? and average household income?

I can google it but I don't get the feeling it's accurate (the Polish one seems insanely high based on what I know certain jobs make)

Last I heard it was somewhere around 28k

Edit: That's average persons salary...no idea about household

Edited June 29, 2023 by desensitized43

[chrisp65]

2 hours ago, StefanAVFC said:

What's the average income in the UK atm? and average household income?

I can google it but I don't get the feeling it's accurate (the Polish one seems insanely high based on what I know certain jobs make)

Mean, median, mode?

I suspect the answer very much depends on what point you are trying to prove.

ONS suggests that in 2022, the rich got richer and the poor got poorer…

Quote

Median household disposable income in the UK was £32,300 in the financial year ending (FYE) 2022, a decrease of 0.6% from FYE 2021, based on estimates from the Office for National Statistics (ONS) Household Finances Survey.

Median disposable income for the poorest fifth of the population decreased by 3.8% to £14,500 in FYE 2022; reductions were also observed in mean original income and cash benefits.

Median disposable income increased by 1.6% to £66,000 for the richest fifth of people; increases were also observed in mean original income where the effect was not offset by the increases in direct taxes.

 

[StefanAVFC]

7 minutes ago, chrisp65 said:

Mean, median, mode?

I suspect the answer very much depends on what point you are trying to prove.

ONS suggests that in 2022, the rich got richer and the poor got poorer…

 

No point proving, I am just curious as I've been away from the UK for 8-9 years, and I rarely go back, so no idea what's a normal salary vs normal costs of things.

 

[Genie]

4 minutes ago, StefanAVFC said:

No point proving, I am just curious as I've been away from the UK for 8-9 years, and I rarely go back, so no idea what's a normal salary vs normal costs of things.

 

Minimum wage for over 23’s is £10.42 per hour so based on a 40 hour week it’s about £21.5k per year.

I’d say average would be somewhere around £30k p/a or £15 p/h at a rough guess.

[tinker]

Thames Water is about to go belly up after paying shareholders £2b a year it finds itself in £10b worth of debt. Who would have thought it. 

[foreveryoung]

3 minutes ago, tinker said:

Thames Water is about to go belly up after paying shareholders £2b a year it finds itself in £10b worth of debt. Who would have thought it. 

There not the only ones, I guess this is half the reason most water companies want another 40% off us, blagging its to deal with the sewage waste.

[bickster]

1 hour ago, foreveryoung said:

There not the only ones, I guess this is half the reason most water companies want another 40% off us, blagging its to deal with the sewage waste.

They're*

[Davkaus]

1 hour ago, foreveryoung said:

There not the only ones, I guess this is half the reason most water companies want another 40% off us, blagging its to deal with the sewage waste.

Well, we don't want turds in the sea, and they need to pay millions in bonuses for a job badly done, something's got to give.

[bickster]

4 minutes ago, Davkaus said:

to pay millions in bonuses for a job badly done

You can get paid millions for the outcome of a night on the Guiness? Where do I sign up?

[Genie]

The BBC has a nice little widget for calculating how much more you’ll pay for your mortgage on different rates

(those aren’t my numbers btw).

[chrisp65]

I say this with no sense of smugness, using the calculator (and it matches others I’ve used), my renewal is due in August and I’ll be £40 a month better off.

You do get to the end of a mortgage eventually kids.

 

 

[Genie]

9 minutes ago, chrisp65 said:

I say this with no sense of smugness, using the calculator (and it matches others I’ve used), my renewal is due in August and I’ll be £40 a month better off.

You do get to the end of a mortgage eventually kids.

 

 

I’m clinging to the hope that at the end of 2025 inflation is through the floor and interest rates are slashed to zero to stimulate the economy. 

 

[Xela]

7 hours ago, tinker said:

Thames Water is about to go belly up after paying shareholders £2b a year it finds itself in £10b worth of debt. Who would have thought it. 

I thought they hadn't paid any dividends in 5 years?

Still shocking the state they find themselves in.