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Are you feeling the pinch?

June 17, 2008

pounds-in-hand.jpgAnnual inflation has hit 3.3 percent, its highest level since the Bank of England was given control of interest rates 11 years ago.

But for many their personal inflation rate will be much higher, depending on where they live, and how much of their income is devoted to basics like food and energy costs.

How are rising prices affecting you – have you barely noticed any change, or are you seriously cutting back?

Comments

Fuel and food costs are noticably higher and I definately think twice before jumping in the car these days. However I think inflation is being driven by two very narrow global commodities, i.e food and oil. Consequently fiscal measures will have little impact and there is hardly any extra inflationary risk in reducing interest rates to forestall recession and to keep housing bouyant.

Posted by Steve Bowen | Report as abusive
 

With costs rising so fast in nearly all areas, everyone feels the pinch. Fuel, mortages and food costs are unavoidable for most people but what hurts the most is the level of direct and indirect tax we all pay.

Tax levels are simply crippling us all – and what makes it worse is the level of public waste and corruption within parliament itself. When public officials can lose their jobs for misappropriating public money, it seems strange that MPs hold themselves above meeting the same standards they set for public servants. After all, I thought that what MPs where!

 

it is blindingly obvious that the world has reached global peak oil now.

Keep housing bouyant? who would want to take on a whacking great big home loan knowing that in the next few years we are going to enter a perminent energy decline which will cause untold economic hardship.

Posted by Smiffy | Report as abusive
 

Petrol and general transport costs are pretty insane. It’s always easier to stretch a food budget when need be.

However folks need to accept we are in a cyclical economy. We are currently going through a slowdown due to everyone living off credit for most of the century.

But the cycle will come good again within 10-12 months or so.

Smiffy – don’t see what the relevance is to Peak Oil. This phrase is banded about a lot, but don’t see that it matters. The experts say there is plenty of oil, it’s just a bit harder to extract. A big factor for the high price is the cost of research going into finding and extracting the ‘difficult’ oil.

Posted by Grant | Report as abusive
 

I do not know how the average person will find the money to pay all their bills.

I think a lot of people are in trouble with so many rises on so many fronts and being saddled with a crackpot, dysfunctional government toboot!

The sub-prime fiasco was a generous but rather bizarre gift from our special friends.

Posted by The Truth Is... | Report as abusive
 

peak oil is a bit of a myth as the statistical basis on which oil companies estimate data for shareholders is way more conservative than their actual estimates of oil supply. That’s not to say that oil won’t continue to be a driver of inflation, however in the current climate neither is consumer spending. The current spike in inflation is almost entirely due to shortage of food supplies globally and the price of oil. In those circumstance a bit of cheap credit will not send me running to buy another couple of iPods or an Armani suit. The economy needs some stimulation to avoid recession. Interest rates could fall to achieve this without creating extra inflationary pressure.

Posted by Steve Bowen | Report as abusive
 

Steve,

You ignore a large proportion of the population to whom lower interest rates are a disaster – and that’s folk who have to live on the income from their savings: retired folk.

There is nothing wonderful about lower interest rates – they simply encourage people to borrow more and the whole sad cycle starts again.

And there is nothing wonderful about ‘buoyant house prices’. Houses are overpriced and it’s about time people were honest with themselves about that. There will be a correction – but it won’t be enough.

Posted by Thumper the Rabbit | Report as abusive
 

Thumper

Don’t disagree at all, low interest rates don’t benefit everyone directly or equally. However, industry and employment do benefit directly, the large numbers of house holders benefit directly and others in the economy benfit indirectly when there is sustained (controlled) growth. Recession hurts us all.

Posted by Steve Bowen | Report as abusive
 

This ain’t nuthin’ yet, just wait till you fill your central heating oil tanks. Brown’s pensioners heating subsidy has already been lost for many, through the 10 percent income tax band fiasco. I ride a bike about Town now, in the winter I will put it on axle stands in our lounge and we will take turns to pedal and keep warm!

Posted by William Fowler | Report as abusive
 

Thumper,

Yes – can’t believe no one pounced on Labour at the last election when they were going on about a growing economy and low interest rates etc.

However, it was clear that the cheap credit was funding the expansion as people borrowed more and more.

These low interest rates that were so great have also priced a generation of 20 somethings (soon to be 30 somethings) out of the housing market.

The cycle is a necessary thing and we’ll just need to tighten our belts a little. But a revaluation will be a good thing in the long term.

Posted by Grant | Report as abusive
 

I’ve noticed food bills rising. Some things like long grain rice has incresed from 50p for 1kg to over 1 pound.
I think the weakening pound against the Euro is also having a big impact on price rises its not just energy and transport prices. The exchange rate never seems to be mentioned, though?

Posted by John de Castro | Report as abusive
 

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