Inflation - when is this going to end?

[mat]

My rent has just gone up just over a tenner a week. Doesn't sound much but for a single dad that's quite a lot.

I feel your pain. Landlords are taking the piss as usual.

 

[metalblue]

Increasing the minimum wage just causes wage inflation across the whole of the economy, from the low paid right up to those in the higher echelons.
To me, the solution and I said it before is to increase taxation on those earning over £70-80k per year using the same sliding scale that already exists for people earning 125k, downwards. Also increase capital gains tax which predominantly only affects the wealthy.

With the tax revenue gained from this you use it to supplement salaries as an additional benefit which may well equate to £15 per hour.

This doesn’t make sense mate. You’re saying don’t increase minimum wage as it increases inflation but to increase working tax credits? How would that not have the same inflationary outcome? And before you say it results in less money in the wealthiest pockets you have to think about how people spend disposable income - it’s not by stockpiling essentials but by frivolous spending on spenny wine or clothes.

I disagree it would be inflationary anyway - a redistribution of wealth wouldn’t be a bad policy so I don’t disagree with your thought process only your reasoning.

 

[Stoned Rose]

A union pipe dream, that would just lead to much higher inflation to pay for it.

How so mate?

 

[Kompany Car]

This doesn’t make sense mate. You’re saying don’t increase minimum wage as it increases inflation but to increase working tax credits? How would that not have the same inflationary outcome? And before you say it results in less money in the wealthiest pockets you have to think about how people spend disposable income - it’s not by stockpiling essentials but by frivolous spending on spenny wine or clothes.

I disagree it would be inflationary anyway - a redistribution of wealth wouldn’t be a bad policy so I don’t disagree with your thought process only your reasoning.

It’s the concept of a minimum guaranteed household income. Its aim is to keep peoples heads above water not to provide a surplus in peoples pockets to the extent that you can spend to your heart’s content. Do it right and you keep money flowing around the system, which is essential for businesses but also allows enough for people to survive. Just putting the minimum wage up doesn’t take into account the wider picture of household finances.

What happens for instance where you have someone earning a six figure salary with a wife that earns minimum wage. You may think that’s an odd situation but it’s not that uncommon. It will just become more surplus money in the wealthy household. You could be financially secure, have lots of investments but are at the end of your working life doing a bit of work at B&Q to stop yourself being bored, again it becomes surplus cash.

There is then the knock on effect to others who are employed. People with better skill sets and more experience will demand more money fuelling inflation, this group is often the highly skilled, key people, that businesses need to retain. This effect of demanding rises, you would see for around 90% of the workforce right up through the pay scales, whereas the changes in tax would only impact the top 10% who are more than likely squirrelling away money into their pensions so they can have a nice comfortable retirement and to reduce their tax burden.

 

[inbetween]

It’s the concept of a minimum guaranteed household income. Its aim is to keep peoples heads above water not to provide a surplus in peoples pockets to the extent that you can spend to your heart’s content. Do it right and you keep money flowing around the system, which is essential for businesses but also allows enough for people to survive. Just putting the minimum wage up doesn’t take into account the wider picture of household finances.

What happens for instance where you have someone earning a six figure salary with a wife that earns minimum wage. You may think that’s an odd situation but it’s not that uncommon. It will just become more surplus money in the wealthy household. You could be financially secure, have lots of investments but are at the end of your working life doing a bit of work at B&Q to stop yourself being bored, again it becomes surplus cash.

There is then the knock on effect to others who are employed. People with better skill sets and more experience will demand more money fuelling inflation, this group is often the highly skilled, key people, that businesses need to retain. This effect of demanding rises, you would see for around 90% of the workforce right up through the pay scales, whereas the changes in tax would only impact the top 10% who are more than likely squirrelling away money into their pensions so they can have a nice comfortable retirement and to reduce their tax burden.

It won't be inflationary at the minute because people are cutting down and not spending. It's highly unlikely that people will get a maximum 5-7% payrise and then spend it on a far more expensive new car (car sales are down 10% on last year). The average household income is something like £32k so even a 10% rise on that isn't going to change much because that barely matches the price increases of everything.

We've just had a 6.75% rise at my place however some of my bills have gone up by 100% in 6 months so we certainly aren't going to buy a yacht with the surplus.... I don't predict that we'll struggle but just in case we're definitely being more careful with our spend.

The biggest hit we'll take is when our fixed rate mortgage runs out in a few years because god knows what interest rates and everything else will be like then.

 

[ChicagoBlue]

One solution is not putting the interest rates up every month, slow down the economy ? Fuck its at a snails pace...

Most countries, when faced with raising interest rates to tackle inflation, go from raising them to immediately cutting them when inflation reaches their target, because they’ve driven the economy into recession to rein in the inflation!!

Perhaps this chart will help?
You can see that while GDP MAY have stalled in Q2, it’s historically still very high.

 

[M18CTID]

I understand it's important for people but seeing this as a profit problem is the wrong way to look at it. I'm not bothered either way and I'd rather of course people keep their money but it's just not reasonable to expect gas prices to cost for example as they were in 2019. The price of gas has increased by 400-500% in one year so the pub analogy is correct either way, it's the government that has to step in to solve the problem of whether people can heat their homes.

The way these companies make profit has nothing to do with your bill, it's everything to do with getting the price right when the gas is bought months in advance. Don't forget that bills are capped so to make any profit the energy company has to supply you at a price that is less than that cap or else they're bankrupt. An energy company that makes a lot of profit did well at controlling costs, it didn't do well at charging people because it has no control over what it charges people.

This is the stupidity of those who want to both pay less (reduce the cap) and tax energy company profits to pay for it.... If you reduce the cap then profits are reduced and the result is you can't tax profits that don't exist.

Yeah, I get what you're saying mate. I'm not expecting us all to be paying 2019 prices - that's a pipe dream - but we have an issue here where millions simply won't be able to afford to pay 3, 4, or 5 times what they paid a short while ago so something needs to be done that's more meaningful than the £400 the government are currently offering. If it means spreading out the payments so nobody pays the eye-watering figures we're seeing then so be it. Otherwise the remaining energy companies will be going bust.

And I'll make it clear that I'm not averse to any company making a profit but why, for energy companies, does it have to be £10 billion profit with hundreds of millions in dividends and bonuses? Why can't it be half that? And millions of EDF customers in the UK are effectively subsidising the energy bills of French residents!

 

[Deleted member 77198]

Is there not enough energy to go around?
Why is it so expensive?

Each hour, 430 quintillion Joules of energy from the Sun hits the Earth.

The total amount of energy that all humans use in a year is 410 quintillion Joules.

A year’s worth of energy from the Sun would power the Earth for nearly 9,000 years.

Yet we don’t harness that free energy.

 

[ChicagoBlue]

Each hour, 430 quintillion Joules of energy from the Sun hits the Earth.

The total amount of energy that all humans use in a year is 410 quintillion Joules.

A year’s worth of energy from the Sun would power the Earth for nearly 9,000 years.

Yet we don’t harness that free energy.

As I mentioned previously, I’m actively looking into going “off grid” solar for both home and autos. We are tired of being beholden to the oil companies and local utilities, which have been our 2 largest bills after the mortgage. I’m also interested in a home wind turbine, given we live on the east side of a 24 acre park, which gives us ready access to the prevailing winds from the west (and even both north & south).

A good Govt policy would be large wind & solar household incentives across Europe, as they provide THREE important positives:

1) Relatively inexpensive personal energy production
2) Reduced need for future large scale energy projects no-one wants in their backyard
3) Meaningful, permanent emissions reductions

Fossil fuels will always be needed by industry, but if we can remove homes and autos from needing them, we would be well on the way to fixing two of our biggest future concerns: energy & climate issues

 

[Blue Maverick]

Each hour, 430 quintillion Joules of energy from the Sun hits the Earth.

The total amount of energy that all humans use in a year is 410 quintillion Joules.

A year’s worth of energy from the Sun would power the Earth for nearly 9,000 years.

Yet we don’t harness that free energy.

Still don’t understand why every house built does not have solar panels on them. Ye they may not all be south facing but something is better than nothing.