Inflation watch

[UndercoverElephant]

https://www.bbc.co.uk/news/business-58563417

Price rises have seen the biggest jump since records began in 1997 as the economy continued to reopen.

Official figures show that the increase in the cost of living, as measured by the Consumer Prices Index, hit 3.2% in the year to August.

[kenneal - lagger]

Mind you, many wages are going up more than that and a few people have had substantial lump sum retention bonuses.

[UndercoverElephant]

https://www.theguardian.com/business/20 ... -inflation

Soaring prices will have some at the Bank itching to put up interest rates, but others will stress that now is a very bad time

Rock, meet hard place.

For many economists there is a whiff of stagflation in the air...

That is your choice. Put interest rates up and get stagflation. Keep them down and risk hyperinflation.

[UndercoverElephant]

(behind paywall)

https://www.thetimes.co.uk/article/poun ... -8fbnrrgc2

Sterling has dropped to its lowest level against the dollar this year amid fears that Britain is slipping into a high-inflation, low-growth trap that hammers living standards.

As drivers queued for fuel for another day, one City strategist said that the pound was “starting to behave more like an emerging market currency” by depreciating despite expectations of an early interest rate rise.

[UndercoverElephant]

https://www.ft.com/content/323f4d9f-016 ... 2c50c8d9a8

Stagflation fears intensify in signs of slowing growth

Supply chain disruptions sweeping major economies have reawakened an old nemesis for investors: stagflation.

Anxiety over rising inflation has been ever-present in markets this year. But with oil topping $80 a barrel, global food prices a third more expensive than they were a year ago and other commodities at decade highs, investors say a longer-than-expected inflationary surge is coinciding with a slowdown in growth — and making it worse.

Economists and investors play down comparisons with the aftermath of the 1970s oil shock, which gave rise to the term “stagflation”. Then, inflation and interest rates ran into double digits, unemployment soared and GDP recovered only slowly from repeated setbacks.

But with energy bills now rocketing, many worry about a growth slowdown at a time when central banks are edging towards lifting interest rates in a bid to keep a lid on longer-term inflation.

“The conversation around inflation has definitely shifted,” said Seema Shah, chief strategist at Principal Global Investors. “There’s still a broad agreement that a lot of it is transitory, but we still think it will last well into 2022 and really start to hit consumer spending.”

“It’s not the 1970s, but this is modern-day stagflation.”

Note how the narrative is shifting.

"It's temporary." ---> "most of it is short-term" ------> "it's not 1970's stagflation, but it's stagflation" ----->

[UndercoverElephant]

https://www.newstatesman.com/economy/20 ... tagflation

Are we heading for a new era of “stagflation”?

The economic outlook for the future is uniformly grim.

[UndercoverElephant]

https://www.theguardian.com/business/20 ... rew-bailey

The prospect of a pre-Christmas increase in interest rates has loomed larger after the Bank of England governor told MPs he was troubled by the UK’s rising inflation rate.

Giving evidence to the Commons Treasury select committee, Andrew Bailey said he was “very uneasy” about the rising cost of living and had come close to voting for an increase in borrowing costs when Threadneedle Street last met to decide on interest rates earlier this month.

The governor sided with the majority when the Bank’s monetary policy committee (MPC) voted 7-2 to keep rates on hold at 0.1%, but made it clear he could change his mind at the next meeting in December.

So inflation is double the target he's supposed to keep it at, he thinks it is going higher, and yet he's still only thinking about raising interest rates.

I loved this one too...

https://www.bbc.co.uk/news/business-59316544

"Today's inflation data will reinforce the Bank of England's resolve to act," said Yael  Selfin, chief economist at KPMG UK.

It fills me with confidence to know that the BoE's resolve to act has been strengthened. "Act now or it will be too late!!!"

[kenneal - lagger]

.............. It fills me with confidence to know that the BoE's resolve to act has been strengthened. "Act now or it will be too late!!!"

That seems to be the going trait in politics at the moment, especially on climate action.

[UndercoverElephant]

https://www.bloomberg.com/opinion/artic ... ng-markets

Powell's 'Transitory' Retreat Is Just the Beginning

The Fed chair finally retired a phrase that had become increasingly meaningless. Now he has to manage the communication and policy challenges of the late wake-up call on inflation.

[BritDownUnder]

Something talked about on the surprisingly interesting Reddit collapse forums is the concept of "Shrinkflation" where weights or volumes of packages of a measure of a product are reducing while there is simultaneously an increase in price.

[clv101]

That's been going on for a long time!

Partly driven in the UK by no single serving of snack items like Mars bars being over 250kcal, no more king sized bars!

[kenneal - lagger]

I noticed shrinkflation in supermarket corned beef. They were always 10 slice packs but the number of slices gradually reduced to 5 slices per pack but at the same cost. You can now get 10 slice packs again now but at a much higher cost than before.

[UndercoverElephant]

https://www.theguardian.com/business/20 ... nion-warns

Logistics workers vote for pre-Christmas strike at four UK depots unless firm raises offer to keep up with inflation

If the company does not improve its offer, Unite said warehouse workers and HGV drivers at depots in Doncaster, Didcot, Belfast and Antrim would start a series of rolling strikes from 16 December.

A further nine warehouses could be affected, depending on the outcome of a separate vote on industrial action by the Usdaw shop workers’ union, which closes on Monday.

Any industrial action is likely to cause disruption to deliveries to Tesco stores around the country in the run-up to Christmas.

This is interesting. We now have unionised staff rejecting 4.1% pay offers because they are below the rate of inflation, and in a situation where the company in question is already facing problems recruiting enough staff. This is starting to feel like 1970s stagflation. Very interesting to see who wins the dispute.

[BritDownUnder]

It is good to see the great British working class not suffering from money illusion.
Interestingly the school teachers in New South Wales, along with bus and train drivers went on strike yesterday too.

[kenneal - lagger]

The bosses have been doing very well for forty years so maybe the workers are now after their share too. Top end wage/remuneration rises have been driving the increase in the average wage for that forty years. Maybe now the bosses ought to give some back to the people who really earn the money for the company.