UK Inflation is destroying the UK Economy. This week the UK inflation rate was reported at 7.9%, a drop from 8.7% from the prior month. This means consumer prices are still up 7.9% from last year and WAY above the Bank of England target inflation rate of 2%. In conjunction with this, the Bank of England have hiked interest rates to 5%, up from the 0.1% they were just a couple of years ago, putting ever more financial stress on the UK public and taking the cost of living crisis to another level. Here are my thoughts on this latest piece of economic data and what I think the UK government and Bank of England should do about it…
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#Inflation #InterestRates #BankofEngland
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Title: Inflation Is DESTROYING The UK!
Introduction:
In recent years, the United Kingdom has been grappling with a significant economic challenge – the destructive impact of inflation. Fueling the rise in prices, inflation erodes the purchasing power of individuals, threatens economic stability, and poses a severe risk to the nation’s financial well-being. In this article, we explore the detrimental effects of inflation on the UK, discussing its causes, consequences, and potential solutions.
Understanding Inflation:
Inflation is an economic phenomenon characterized by a sustained increase in the general price level of goods and services within an economy. Though mild inflation is considered normal and even necessary for economic growth, excessive and uncontrolled inflation can be catastrophic. In the UK, this alarming trend has resulted in various negative consequences on citizens, the business sector, and the overall economy.
Causes of Inflation in the UK:
Several factors contribute to the rising inflation in the UK. Firstly, increased global commodity prices, such as oil, gas, and food, have impacted consumer prices. Additionally, shifts in government policy, such as changes in tax rates, interest rates, or regulations, can also influence inflation levels. Furthermore, fluctuations in exchange rates and changes in global economic conditions can contribute to inflationary pressures.
Consequences of Inflation:
The impact of inflation stretches far and wide across different sectors of the UK economy. Perhaps the most significant consequence experienced by individuals is the erosion of their purchasing power. As prices rise, people can buy fewer goods and services for the same amount of money, leading to a reduced standard of living. Additionally, inflation intensifies income inequality, as the burden of rising prices disproportionately affects lower-income households.
Furthermore, inflation presents challenges for businesses, who must grapple with increased input costs, making it more difficult to remain competitive. As a result, businesses may be forced to cut jobs, reduce investment, or even close down operations, leading to rising unemployment and economic instability.
Addressing Inflation:
To mitigate the devastating effects of inflation, policymakers and central banks can implement several strategies. Firstly, they can adopt monetary policies that aim to control inflation, such as increasing interest rates to curb spending, thus reducing aggregate demand. Central banks can also implement measures to stabilize exchange rates to limit currency depreciation.
Additionally, governments may consider implementing fiscal policies, such as controlling public spending and reducing budget deficits, in an attempt to relieve inflationary pressures. Tightened regulations and price controls targeting key sectors experiencing excessive price hikes can also be employed to safeguard consumers’ interests.
Conclusion:
It is undeniable that inflation is wreaking havoc on the UK economy, significantly impacting citizens, businesses, and overall economic stability. The rising prices squeeze households and threaten businesses’ ability to survive and grow. By implementing appropriate monetary and fiscal policies, alongside targeted regulations, the UK can potentially mitigate the destructive impact of inflation, allowing for sustained economic growth, stability, and an improved quality of life for its citizens.
I think it's going to be very different this time. They want you out of property ownership so you'll be forced to be a rent slave. Low hanging fruit first of course.
it could be argued that consumer purchasing of goods and services fuels inflation, i remeber when garage forecourts were charging a kidney for a full tank around feb/march last year, consumer spending on public transport increased and subsequently led to improvements in that infrastructure the following year, we now have hydrogen powered busses in our town. some things you can't opt out of, i.e you can't default on your mortgage, but the consumer has the power to take their money elsewhere, or not spend it at all. they don't need to be responsible for the governments borrowing decisions, especially if they aren't able to cosign on them.
You are absolutely spot on. The top 1% are raking it in, while the rest of us are being gouged. Something needs to change.
I'm so exhausted of trying to cut back, to invest, save for a house, feed the family. I have to think about everything I spend money on. Prices are going up, price rises aren't happening or if they are it's not enough to bridge the gap. It's just a dark dark world right now and I'm struggling to find the optimism I once had.
You miss the main reason being the ridiculous lockdowns/response to covid and chucking billions of extra cash into the economy
Can't see me staying in the UK much longer. Seems like a controlled collapse. It's vile what they're doing.
Fighting inflation caused by external forces by punishing a small amount of households! good work BoE and Gov! They don't know what they are doing!
Mate 6-8% interest rates are not astronomical; there NORMAL !!!!
inflation yes, but also the islamification, people abusing the council and benefits system, illegal migration and boats… so many things are ruining the UK. our taxes are going straight to the destruction of this country and one of the worlds best capital cities!
good view on the fact it's a profiteering crisis rather than a cost of living one. am having that one
Very pragmatic approach. Hope the government and BoE will take this kind of measures on board.
Not content with squashing the working classes into serfdom, the 'middle classes' are next, being bombarded with propaganda that 'less is more' and we are all lucky to enjoy 'simple pleasures' like a fish and chips take-away once a month or that cheese is a luxury item. It isn't.
Try 8%
Good vid man, the idea of 6-12 month mortgages certainly makes more sense than just offering something like a 'interest only' term were we'd just be kicking the can down the road further. BOE need to wise up and grasp the problem isn't as basic as just raising an interest rate, its never been a problem of mass spending and it's just gonna kill the finances of many paying for a roof over the head.
The government don't care about us peasants.
Fuel prices are always relatively stable with the Downstream Energy companies, it more the retails, supermarkets etc who bump up the prices significantly
Worth purchasing a buy to let if a decent BMV deal pops up?
High inflation is what happens when the Bank of England goes on a massive money-printing spree. During lockdown, everybody was happy for it to happen, and Sunak was happy to take all the plaudits for handing out furlough payments left, right and centre as Chancellor. Not so happy now as it comes back to bite him in the backside.
Absolutely correct. Wages have not gone up in real terms in decades.
This is not a cost of living crisis it’s a cost of profiteering crisis.
The government and uk media are simply feeding people a line the the majority of the population just have to accept they are going to be much poorer.
The problems we have today were caused by lowering interest rates to 0.1% in the first place, they should never have fallen below 4.0%. Many people borrowed as much as they could while the rate was 0.1% without stress testing their finances for higher interest rates. Painful as it is inflation has to be lowered down to at least 2% and the only way to do that is by raising interest rates. The headline rate of inflation is just one problem, core inflation is even stickier, that may mean that interest rates could as some economists think have to go in excess of 6% with some saying 7% plus. Ask those in the previous generation before you and they will tell you Mortgage rates in the 1980's were at nearly 18%, let's hope they don't need to go that high again.
If the rate of CPI does not fall more rapidly soon then there is blatant profiteering going on. Producer input prices were -2.7% in the year to June, so this needs to be passed on to the consumer.
That’s because the interest rates were kept so low for so long.
This is why I prioritised paying my mortgage off before anything else. I’m now mortgage free and interest rates no longer scare me
This sounds daft but….
Why they can't just get up and explain basic economics like, spend less, stick an extra 10-20% in savings, for those who can to take money out the economy or we will take it off u by interest and taxes is beyond me. AND given most people are on fixed borrowing rates the impact will be individually shocking but collectively take years yo be felt why they didn't increase vat or tax is beyond me. Tax increases are nearly instant, interest isn't.
it's like Blackadder when they are going to walk slowly towards the machine guns. "Precisely, doing what we did the last 13 times is the last thing they will be expecting so it's bound to work this time"
Yes. Stop people buying food, clothes and paying for shelter.
It's a great way to stop inflation driven by rising production costs, mass profiteering and market collusion. Well done BoE. Well done government.
my god how i wish i had your intelligence and knowledge when i was younger..for an old guy i sit and listen to you in awe