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Inflation, does it matter?


Dave225

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The inflation figures for July have just been announced. RPI is up to 3.2% and CPI is 2.6%. Are they important? Well, the RPI will be used to justify rail fare increases of RPI +3% in England and RPI + 1% in Scotland, so your season ticket in England will rise by up to 6.2%, or possibly more. 11% is being bandied about. Before anyone jumps up and down about ‘bl...y Scots’ this was part of the Devolution Settlement agreed by Westminster as we have a larger land mass per population. In addition our ‘cuddly’ parliament in Edinburgh is arguing that RPI +1% is better than England, so that is all right. Idiots the lot of them. It still means extra hardship for many commuters who are trying to work. Will the Government(s) reverse them? We shall wait and see.

 

What did amuse me in a bizarre fashion was the comment that these inflation rises were ‘just a blip’ and they will fall again in August. How many ‘blips’ have we had recently?? So, the so called isolated month when the RPI (the higher figure) rises higher than expected just happened to be the month fares rise, but the following months will see a fall in CPI (the lower figure) which will define pension and probably salary rises. So, no matter that inflation will fall, we have already had the price rises, but your salary/pension increase will be at the lower end. Sounds good if you are a boss with a bonus depending on this. Not so good if you are trying to pay the things. It was the same earlier in the year when energy prices rose dramatically, ‘due to wholesale prices rising’. But very shortly after the wholesale price fell dramatically, but......no drop in retail prices. A bit like snakes and ladders but the board has no ladders.

 

The other ‘amusing’ thing was the claim that fuel prices are falling. Well, around here they have increased by a penny per day for the last 3 days. Don’t really know why. I suppose if I stand upside down then yes, they have fallen. The schools go back next week, so when else would you increase fuel prices?

 

Similarly, a cut in interest rates to 0.25% and more QE is forecast for September or October so that will make us all feel much better. All that will happen is that the banks borrow from the BoE at the lower rate and then deposit it with the ECB, at a higher rate, and sit back and watch the money roll in. As a consequence of all these ‘panic measures’ effectively in the last 5 years the Pound has been devalued by 40% against most non euro countries. I laughed at one article that proudly stated that the Pound had risen by 26% against the Brazilian Real so tourists for the next Olympics would get more money. Yes, it has risen in the last 6 months but over the last 5 years it has dropped by 37% including the recent rise. One would have thought that people would be manning the barricades at such covert action, but No, they all sit back and take it. At these exchange rates we should have an economy booming like China’s who also have a low value currency, yet our trade deficit is widening.

 

They really must think we are dumb. Probably they are absolutely right. But then again we have a ‘feel good’ factor to live on. Wonder if you can cook it for tea? Also went to buy an article for my car and it had increased 40% since last year. Now that is inflation at ground level. My plan?? Going back to Spain to buy some whisky as I cannot afford it here and get drunk, then it will all make sense.

 

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Inflation is only an issue for me when I have a flat tyre!

 

In other words why worry about something over which you have no control or influence?

 

Life's too short!

 

Apart from that as a road user we have been subsidising the railways for years - isn't it about time that rail passengers subsidised their chosen form of travel?

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Inflation can be usefull

 

Buy a house for £30,000 in 1982 with a £25,000 (83.3% LTV) mortgage and 30 years later the house is worth £300,000 but even with an interest only mortgage the LTV is now 10%.

 

America has been using inflation to reduce its budget deficit for years.

 

But inflation is not so good when you are a saver relying on reasonable interest rates or pension fund holders relying on annuity rates. No - here inflation is not good at all.

 

The issue now is not really inflation because what we have now is something else entirely - we have Governments printing money to get them out of a hole.

 

Whenever this has happened in the past it has been the precursor to economic disaster.

 

The knock on effect(s) of QE will make worrying about 4% pa inflation look vary small beer indeed.

 

 

 

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I see absolutely no reason why rail travellers should not pay what it costs to travel on the train. Why should the taxpayer subsidise the commuter who, generally, has either got a much better paid job at the end of the commute OR they have moved out of town to a cheaper area to live and made money that way.

 

Personally I object to my taxes being used to subsidise others travelling expenses.

 

Bas

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Hmmm! You are not really looking at the whole picture. In days of old when railways were nationalised then each year huge sums of taxpayer money was used to keep them afloat, often paying for very inefficient operations and good old 'Spanish Practices' Privatisation ended a lot of that but the new and better services attracted more customers and so congestion became a problem so more stock was required etc etc. As fuel prices rise more and more people will look for an alternative.

 

Commuters may have moved because they could not get a mortgage to buy in town, so have little choice, or would you rather they just quit work and be a burden on the taxpayer? If the commuters all stop commuting then industry grinds to a halt and then what? Also, your road is subsidised by everyone who does not have a car, which is a significant portion of the population. Do you want tolls to be introduced for many roads, as some in Government would love to do.

 

An Intercity train can carry around 500 passengers, that would equate to a lot of cars.

 

As an integrated democratic society we all pay for things we do not actually use. That is life I am afraid.

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Thats interesting, this thread had me searching around t'internet, result? well it seems since privatisation public subsides of rail network has increased from £1bn to £4bn.

As for pensions, well a few years back they where set by RPI, but there where lots of complaints that wages where rising faster than RPI so pensions should be set by CPI which has happened.

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Dave225 - 2012-08-16 8:02 PM

 

Hmmm! You are not really looking at the whole picture. In days of old when railways were nationalised then each year huge sums of taxpayer money was used to keep them afloat, often paying for very inefficient operations and good old 'Spanish Practices' Privatisation ended a lot of that but the new and better services attracted more customers and so congestion became a problem so more stock was required etc etc. As fuel prices rise more and more people will look for an alternative.

 

Commuters may have moved because they could not get a mortgage to buy in town, so have little choice, or would you rather they just quit work and be a burden on the taxpayer? If the commuters all stop commuting then industry grinds to a halt and then what? Also, your road is subsidised by everyone who does not have a car, which is a significant portion of the population. Do you want tolls to be introduced for many roads, as some in Government would love to do.

 

An Intercity train can carry around 500 passengers, that would equate to a lot of cars.

 

As an integrated democratic society we all pay for things we do not actually use. That is life I am afraid.

 

I believe am looking at the whole picture, but really, really wonder about yourself. The taxpayer subsidises the rail user, end of! Taxation on cars is mainly used to subsidise other tax burdens, not the motorist being subsidised by others, full stop! Me thinks you are living in cloud cookoo land!!

The tax burden on the railways since privatisation has gone up fourfold, and we are paying it, some private enterprise that!! A private enterprise should be what it says, private, paid for by the consumers of the product, i.e. rail travellers. I live in a commuter area, I know and see every day the people that commute and most have not moved out because 'they couldn't get a mortgage' but because they have sold their houses in the city at a vastly inflated price and then bought in this area as cash buyers, with no mortgage, so pushing up the prices here and forcing local young people out to cheaper areas whilst having an improved lifestyle themselves subsidised by the less fortunate.

 

The old Nationalised Railways were only nationalised because private enterprise could not run them any more efficiently and there was a danger that they would collapse, so nationalisation was the only way to keep them going. After that you had the Tories of the time with interests in the Road Haulage business employing Beeching to carve up the railways to improve the Road Haulage companies interests and profits and that is the real reason for the rail 'service' you have now.

 

I believe and always have, as I have said on these forums before, that we should be taxed from the area that that taxation is being used for, i.e. VED to be spent only on roads, national insurance only on pensions etc. and other taxations for whatever it is spent on, not put into one big pot and divided out where the politico's decide it is going to be spent. The problem with that is, like us subsidising people travelling into work by train, we would all know what and where it is being spent and all these subsidised lifstyles would be open for all to see.

 

 

Bas

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