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Is rising inflation looming?

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anon155742
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Re: Is rising inflation looming?

#319761

Postby anon155742 » June 19th, 2020, 1:32 pm

https://www.dailymail.co.uk/money/pensi ... falls.html

It looks like the triple lock pension will have to be abandoned

Alaric
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Re: Is rising inflation looming?

#319762

Postby Alaric » June 19th, 2020, 1:36 pm

anon155742 wrote:It looks like the triple lock pension will have to be abandoned


There's a likely statistical anomaly because Average Earnings will probably fall this year and recover next. The triple lock would ignore the fall and only be triggered by the rise. Another mehod would be to base the Earnings comparison on a two year or more period.

tjh290633
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Re: Is rising inflation looming?

#319882

Postby tjh290633 » June 19th, 2020, 8:27 pm

Alaric wrote:
anon155742 wrote:It looks like the triple lock pension will have to be abandoned


There's a likely statistical anomaly because Average Earnings will probably fall this year and recover next. The triple lock would ignore the fall and only be triggered by the rise. Another mehod would be to base the Earnings comparison on a two year or more period.

That is not how it has worked in the past. The pensions remained the same with a fall in the relevant index, and increased when that index rose above the previous maximum. That is certainly what happened with my annuity in 2009, which is an LPI type.

TJH

ursaminortaur
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Re: Is rising inflation looming?

#319973

Postby ursaminortaur » June 20th, 2020, 11:06 am

tjh290633 wrote:
Alaric wrote:
anon155742 wrote:It looks like the triple lock pension will have to be abandoned


There's a likely statistical anomaly because Average Earnings will probably fall this year and recover next. The triple lock would ignore the fall and only be triggered by the rise. Another mehod would be to base the Earnings comparison on a two year or more period.

That is not how it has worked in the past. The pensions remained the same with a fall in the relevant index, and increased when that index rose above the previous maximum. That is certainly what happened with my annuity in 2009, which is an LPI type.

TJH


The problem is just with the state pension triple lock. You are correct that with an indexed annuity if the index falls you would either receive a cut in income or in many cases the contract you have will mean that you will just not receive any increase. With the triple lock though there is a guaranteed 2.5% increase even if both CPI and earnings are below that figure. Then next year if there is a recovery in earnings pensioners will then receive that increase despite not having suffered the fall. The problem is that they are treating the furlough amount as earnings rather than it being treated as a government grant of 80% of the person's earnings when calculating the figures for the annual increase in earnings.

TheMotorcycleBoy
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Re: Is rising inflation looming?

#320368

Postby TheMotorcycleBoy » June 22nd, 2020, 8:15 am

I've not fully parsed this as yet

https://uk.reuters.com/article/uk-healt ... KKBN23S09C

but the source is reuters, which is usually sane.

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Re: Is rising inflation looming?

#320404

Postby ursaminortaur » June 22nd, 2020, 10:53 am

TheMotorcycleBoy wrote:I've not fully parsed this as yet

https://uk.reuters.com/article/uk-healt ... KKBN23S09C

but the source is reuters, which is usually sane.


Even the goldbug there thinks it will 3-5 years before the inflation dog starts barking.

So if inflation really is, as the IMF put it in 2013, “the dog that didn’t bark”, failing to respond to all the central bank money-printing unleashed in the wake of the 2008-9 crisis, why should investors prepare for it now, especially as demographics and technology are also conspiring to tamp down inflation across the developed world?

The answer is that some think the dog really will bark this time, partly because - unlike in the post-2008 years - governments around the world have also been rolling out massive spending packages, in a bid to limit the impact of the coronavirus pandemic.

“We will be pushing, pushing, pushing on the string and dropping our guard, then 3-5 years from now...that’s when the (inflation) dog will start barking,” said PineBridge Investments’ head of multi-asset Mike Kelly, who has been buying gold on that view.

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Re: Is rising inflation looming?

#334276

Postby dealtn » August 19th, 2020, 8:48 am

Latest set of numbers higher than expected.

https://www.bbc.co.uk/news/business-53831815

The number of "unavailable numbers" has fallen to 12 (from 90 to 74 to 67), so we are at a point I would say where the number is meaningfully accurate once more. So some of that rise could be due to the more accurate measurement that wasn't available in previous months, or it could be a genuine jump. Whether this marks the start of a trend, following the extraordinary liquidity added to the market or not we don't yet know, and that will of course be interesting to discover.

With furlough type schemes unwinding there will likely be less consumer demand, but the offset is increasing demand from all those "forced savers" benefitting from accumulating funds from wages (furlough or not) that had few outlets for spending as society "locked down", that are now less restricted in their consumption with lockdown unwinding.

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Re: Is rising inflation looming?

#375434

Postby Laughton » January 10th, 2021, 11:44 am

Apologies if already covered as I haven't read all the previous posts on this thread - but "hidden" inflation definitely making an appearance in our supermarket.

Anyone else noticed how those cardboard centres in toilet rolls have suddenly become much bigger? :shock:

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Re: Is rising inflation looming?

#375440

Postby Arborbridge » January 10th, 2021, 12:15 pm

Laughton wrote:Apologies if already covered as I haven't read all the previous posts on this thread - but "hidden" inflation definitely making an appearance in our supermarket.

Anyone else noticed how those cardboard centres in toilet rolls have suddenly become much bigger? :shock:


This has been going on for many years: usually called "shrinkflation". It's also seen in services or subscriptions where the fee only rises slowly (about which they boast) but some fringes benefits are axed simultaneously.

Arb.

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Re: Is rising inflation looming?

#375447

Postby mark88man » January 10th, 2021, 12:28 pm

I would be fascinated to see some analysis of the inflation position now, if those posters who have previously done so thought that to be a good use of their time.

Thanks in advance for any contributions (and in arrears for an interesting thread to date)

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Re: Is rising inflation looming?

#375792

Postby 88V8 » January 11th, 2021, 11:03 am

The cardboard centres.... no no no that's a benefit of Brexit, we've gone back to imperial measurements, no more of this foreign muck.

Inflation was a great friend in the 70s, our mortgage borrowing evaporated... although so did our salaries as we struggled with 15% interest rates.

Currently I don't see inflation expectations in the market. My Fixed Interest is not falling in price, quite the opposite.
Depends on horizons of course. Beyond 24 months I find it hard to believe that anyone really knows anything.

This morning, I heard interviewees advocating the postponement of Council Tax rises, at a time when the Govt needs every penny of tax revenue.... are they mad... otoh, the Govt needs voters, sorry, consumers ....consumers to feel well-off so they resume trashing the planet by flying everywhere and buying unnecessary stuff... glad I don't have to balance these policy decisions.

Afterthought... if/when the govt puts up tax rates especially on the 'rich' is that inflation?

V8

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Re: Is rising inflation looming?

#375805

Postby dealtn » January 11th, 2021, 11:24 am

88V8 wrote:Afterthought... if/when the govt puts up tax rates especially on the 'rich' is that inflation?

V8


It depends how they do it.

You don't say, but I think implicit in your phrasing, you expect this to be via direct taxation, in which case it will likely be deflationary through a demand drop. Were it to be via indirect taxation such as VAT hikes, that by definition will be inflationary (at least in the short term as that is how it is measured as a price change).

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Re: Is rising inflation looming?

#375809

Postby Mike4 » January 11th, 2021, 11:34 am

88V8 wrote:The cardboard centres.... no no no that's a benefit of Brexit, we've gone back to imperial measurements, no more of this foreign muck.

Inflation was a great friend in the 70s, our mortgage borrowing evaporated... although so did our salaries as we struggled with 15% interest rates.

Currently I don't see inflation expectations in the market. My Fixed Interest is not falling in price, quite the opposite.
Depends on horizons of course. Beyond 24 months I find it hard to believe that anyone really knows anything.

This morning, I heard interviewees advocating the postponement of Council Tax rises, at a time when the Govt needs every penny of tax revenue.... are they mad... otoh, the Govt needs voters, sorry, consumers ....consumers to feel well-off so they resume trashing the planet by flying everywhere and buying unnecessary stuff... glad I don't have to balance these policy decisions.

Afterthought... if/when the govt puts up tax rates especially on the 'rich' is that inflation?

V8


Yes I keep hearing airline bosses on the wireless whining about their businesses being trashed with no help from the govt, and never mind all that lovely tax-free fuel they've been burning for decades and polluting our planet with.

Is it just me who feels the warm glow of schadenfreude inside, every time I hear of an airline going bust?

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Re: Is rising inflation looming?

#375889

Postby Bubblesofearth » January 11th, 2021, 3:09 pm

Mike4 wrote:
Yes I keep hearing airline bosses on the wireless whining about their businesses being trashed with no help from the govt, and never mind all that lovely tax-free fuel they've been burning for decades and polluting our planet with.

Is it just me who feels the warm glow of schadenfreude inside, every time I hear of an airline going bust?


I'm assuming you don't fly anywhere?

BoE

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Re: Is rising inflation looming?

#375913

Postby NeilW » January 11th, 2021, 3:49 pm

88V8 wrote:at a time when the Govt needs every penny of tax revenue


If a government spends it will get back what it spends for any positive tax rate - unless somebody keeps saving that Sterling rather than spending it.

Government has no need of anybody's tax revenue for fiscal reasons. (It just orders the Bank of England to pay people by virtue of section 15(3) of the Exchequer and Audit Department Act 1866. The bank has no legal ability to refuse that order). Tax is raised for other reasons - largely to stop you buying things the government wants to buy.

if/when the govt puts up tax rates especially on the 'rich' is that inflation?

V8


Government has no need to do that either. When the savings are eventually spent, the tax shows up as normal.

The actual issue, if there is one, is whether there will be any businesses left after all this to spend the savings with.

The Ying/Yang of the UK sectoral flows are here: https://new-wayland.com/blog/uk-sectoral-balances/

Finance all adds up to zero. Always has, always will.

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Re: Is rising inflation looming?

#375977

Postby 88V8 » January 11th, 2021, 5:42 pm

NeilW wrote:The Ying/Yang of the UK sectoral flows are here: https://new-wayland.com/blog/uk-sectoral-balances/
Finance all adds up to zero. Always has, always will.

That reminds me of my Spirograph.

Parachute money.
Reaganism.
Those were the days.

So when Rishi increases dividend tax, CGT rates, lowers higher-rate thresholds, it will all be a swizz......
Hmmm.

But what about inflation. Perhaps we should have a poll.

V8

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Re: Is rising inflation looming?

#377625

Postby tikunetih » January 15th, 2021, 8:12 pm

tikunetih wrote:Hoisington Q1 review:

Not Different This Time (my title)

I began reading Lacy Hunt and Van Hoisington's Quarterlies at the tail end of t
zhe GFC. They've been positioned towards the long end of the Treasury curve since ~1990, rejected claims from the inflationistas that post-GFC QE would spell the end of the Long Bond secular bull market and would instead prove to be disinflationary with long term economic growth being further subdued.

The above note explains why they remain positioned where they are.

^ the above from 9 months ago...


Another interesting quarterly update from Hoisington, Q4 2020:
https://hoisington.com/pdf/HIM2020Q4NP.pdf

Still Bullish

"In sum, considering economic destruction placed on individuals and small businesses by the virus and its resultant shutdowns, the fact that fiscal expenditures have a negative multiplier on macroeconomic conditions, the debilitating impact on growth of excessive debt and the restriction of the zero bound on monetary stimulus, a secular inflation cycle is not at hand. Since inflation is the primary determinate of the yield on long dated U.S. government debt, it remains our judgement that the bull run in 30-year U.S. Treasurys is continuing."


Well, they've been correct about the long bond bull market for nigh on 30 years, cogently arguing their case along the way, and have been proven right again for a further year. And they remain bullish Treasuries based on their view of there being no lasting inflationary consequences of the unprecedented US monetary & fiscal Covid policy responses to date.

In terms of wider asset pricing, a great deal rides on whether their view prevails or not.

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Re: Is rising inflation looming?

#377788

Postby Bubblesofearth » January 16th, 2021, 1:53 pm

tikunetih wrote:"In sum, considering economic destruction placed on individuals and small businesses by the virus and its resultant shutdowns, the fact that fiscal expenditures have a negative multiplier on macroeconomic conditions, the debilitating impact on growth of excessive debt and the restriction of the zero bound on monetary stimulus, a secular inflation cycle is not at hand.




Could someone translate this into English for me please?

Thanks

BoE

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Re: Is rising inflation looming?

#377793

Postby tikunetih » January 16th, 2021, 2:07 pm

Bubblesofearth wrote:Could someone translate this into English for me please?


"Translate" it yourself by reading the article from which the quote was taken.

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Re: Is rising inflation looming?

#377837

Postby TheMotorcycleBoy » January 16th, 2021, 4:35 pm

Bubblesofearth wrote:
tikunetih wrote:"In sum, considering economic destruction placed on individuals and small businesses by the virus and its resultant shutdowns, the fact that fiscal expenditures have a negative multiplier on macroeconomic conditions, the debilitating impact on growth of excessive debt and the restriction of the zero bound on monetary stimulus, a secular inflation cycle is not at hand.




Could someone translate this into English for me please?

Thanks

BoE

I *think* what this is about, is that bond yields are positively correlated to bank rates, and rates themselves are to inflation.

Hence if inflation stays low so do yields, hence money keeps pouring into equity hence asset prices rise.

Without following that link I'm guessing this is what tik is trying to tell us.

?


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