Things that make you go What the F**k?

[seafoid]

11.1% inflation.

Highest since the 70s.

It's depressing.

What's even more depressing, according to Martin Lewis - and I never really thought of it like this, reducing inflation doesnt reduce prices.
Lets say inflation reduces to 5% next year.
Something that cost £100 last year, costs £111.10 this year.
@5% inflation next year that same item will cost £116.65.
So costs are going to keep going up.

Think I asked that question a few months back here, i.e. does 'deflation' ever happen?

It happened for most of the last decade

[GiveItToTheShooters]

11.1% inflation.

Highest since the 70s.

It's depressing.

What's even more depressing, according to Martin Lewis - and I never really thought of it like this, reducing inflation doesnt reduce prices.
Lets say inflation reduces to 5% next year.
Something that cost £100 last year, costs £111.10 this year.
@5% inflation next year that same item will cost £116.65.
So costs are going to keep going up.

Think I asked that question a few months back here, i.e. does 'deflation' ever happen?

It happened for most of the last decade

Any examples to back that up?

[johnnycool]

11.1% inflation.

Highest since the 70s.

It's depressing.

What's even more depressing, according to Martin Lewis - and I never really thought of it like this, reducing inflation doesnt reduce prices.
Lets say inflation reduces to 5% next year.
Something that cost £100 last year, costs £111.10 this year.
@5% inflation next year that same item will cost £116.65.
So costs are going to keep going up.

If we keep increasing the wages the prices will go up to match that also

No they won't.

This inflation is not due to excess demand, it's due to material sourcing costs rising AND getting ripped off by the BP's of the world.

Don't buy the lie.

Not sure I follow your thinking there.  Increased wages are an increased cost to suppliers/retailers.  An increased cost that will most likely be passed on to consumers by increased prices??  Thereby fuelling further inflation.

Yes, if the original reason for the inflation was excessive demand in the economy, but this wasn't the case this time round, it was a huge increase in cost of resources, i,e, gas/oil coupled by corporate greed.

There have been no pay rises in real terms in the public sector for near on 10 years, and the private sector has hardly raced ahead either so it wasn't huge pay rises that caused inflation to hit 11%, so what was it in your opinion?

[mackers]

I agree that the reasons for this inflation spike are not borne out of wage increases but that doesn't matter.  MR2 cited increasing wages as a problem going forward and he's right.  If wages start to increase excessively then it will lead to a bigger problem as it will lead to further inflation for longer.  It's called the wage-price spiral.

[Baile Brigín 2]

I agree that the reasons for this inflation spike are not borne out of wage increases but that doesn't matter.  MR2 cited increasing wages as a problem going forward and he's right.  If wages start to increase excessively then it will lead to a bigger problem as it will lead to further inflation for longer.  It's called the wage-price spiral.

Has that theory not been entirely disproven?

[johnnycool]

I agree that the reasons for this inflation spike are not borne out of wage increases but that doesn't matter.  MR2 cited increasing wages as a problem going forward and he's right.  If wages start to increase excessively then it will lead to a bigger problem as it will lead to further inflation for longer.  It's called the wage-price spiral.

There's the key word and with current inflation at 11% an excessive wage increase would be north of that and that's not going to happen in a significant number.

Anything less than 11% is a pay cut in real terms.

[imtommygunn]

A wage increase of less than inflation is not really a wage increase though.

[seafoid]

I agree that the reasons for this inflation spike are not borne out of wage increases but that doesn't matter.  MR2 cited increasing wages as a problem going forward and he's right.  If wages start to increase excessively then it will lead to a bigger problem as it will lead to further inflation for longer.  It's called the wage-price spiral.

There were 3 separate wage-price inflation spikes in the late 70s. That is what Central Bankers are worried about. 
They are prepared to crash the economy to prevent it happening again.

[mackers]

I agree that the reasons for this inflation spike are not borne out of wage increases but that doesn't matter.  MR2 cited increasing wages as a problem going forward and he's right.  If wages start to increase excessively then it will lead to a bigger problem as it will lead to further inflation for longer.  It's called the wage-price spiral.

Has that theory not been entirely disproven?

Source?
It's common sense.  If overheads go up (with wages being the biggest expense in most businesses) then these will be passed on to the consumer at least in part.

[mackers]

I agree that the reasons for this inflation spike are not borne out of wage increases but that doesn't matter.  MR2 cited increasing wages as a problem going forward and he's right.  If wages start to increase excessively then it will lead to a bigger problem as it will lead to further inflation for longer.  It's called the wage-price spiral.

There's the key word and with current inflation at 11% an excessive wage increase would be north of that and that's not going to happen in a significant number.

Anything less than 11% is a pay cut in real terms.

It is the key word though the bigger the wage increases the more risk that the economy spirals out of control.  It's a very tricky time for everyone concerned. You're looking at it at on a personal level which is perfectly understandable but it does have an effect on a macro-economic level.  That's what central banks and governments are worried about.

[Armagh18]

I agree that the reasons for this inflation spike are not borne out of wage increases but that doesn't matter.  MR2 cited increasing wages as a problem going forward and he's right.  If wages start to increase excessively then it will lead to a bigger problem as it will lead to further inflation for longer.  It's called the wage-price spiral.

There were 3 separate wage-price inflation spikes in the late 70s. That is what Central Bankers are worried about. 
They are prepared to crash the economy to prevent it happening again.

Theres a reason the collective term for a group of bankers is a "wunch"

[GiveItToTheShooters]

11.1% inflation.

Highest since the 70s.

It's depressing.

What's even more depressing, according to Martin Lewis - and I never really thought of it like this, reducing inflation doesnt reduce prices.
Lets say inflation reduces to 5% next year.
Something that cost £100 last year, costs £111.10 this year.
@5% inflation next year that same item will cost £116.65.
So costs are going to keep going up.

Think I asked that question a few months back here, i.e. does 'deflation' ever happen?

It happened for most of the last decade

Any examples to back that up?

Nothing, just as I thought.

[Armagh18]

I think it was said on here that deflation never really happens and if it did, it would be disastrous. Who is gonna buy something if they know the price is going yo keep going down and down? 

[Tyrdub]

https://www.rte.ie/news/ireland/2022/1117/1336621-tolls-ireland/

Am I wrong in thinking that the original premise for the Tolls was to pay off the Contractor's costs in installing/ upgrading the roads? When will this be cleared?

[seafoid]

11.1% inflation.

Highest since the 70s.

It's depressing.

What's even more depressing, according to Martin Lewis - and I never really thought of it like this, reducing inflation doesnt reduce prices.
Lets say inflation reduces to 5% next year.
Something that cost £100 last year, costs £111.10 this year.
@5% inflation next year that same item will cost £116.65.
So costs are going to keep going up.

Think I asked that question a few months back here, i.e. does 'deflation' ever happen?

It happened for most of the last decade

Any examples to back that up?

Negative yield bonds in many countries.