Inflation Forecasts Were Wrong…
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- Опубліковано 2 чер 2024
- Today we received the latest inflation data, which surprised many experts. Let's look at what the numbers say.
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I've had to stop drinking olive oil and move to whiskey instead.
🤣
It's important to know what's going on, so thank you for the nice overview. My lesson to most people is this though. I'm 50 now and there's always been some crisis, some uncertainty, some wars, always something to mess with stability. What I've learnt is to not worry about it. It's not something that we as individuals can influence, so please don't have sleepless nights over it. Just never waste your money.
Thank you, it's nice to get reassurance with what can feel like constant doom
Thank you for sticking with these videos Damien! Top man
Everyone said they wanted them so I’m not going to stop!
The 2023 olive harvest in the south of europe has been deemed the worst in history. I expect the price of olive oil to deflate next year.
But yeah, inflation doesn't help.
Also... As the olive oil expert in the room. I warn you that watering down oil can be challenging.
Yeah I heard that it was down to the absolutely oven-like temperatures last year. I went to Rome in the summer. I’ve never known heat like it.
Several years of drought in southern Europe, especially in Spain.
What goes up, must come down. Except prices... they never come back down!
@@nah88 You can expect some products to have lower prices in the future due to favorable harvests. Right now olive oil, cocoa and coffee are on the rise. But we should expect a price cut after a good harvest. I am sure olive oil will be cheaper next year.
You and Sasha have been pointing this out for a long time .. shame that everyone else seems to ignore it
Savings invested in banks,bonds etc. resulting from hard work will never be encouraged if interest rates are below inflation.
Paying tax on interest when the value of your savings are actually going down is an additional kick in the teeth, and feels like theft.
Politicians do not understand reality.
Which results in people liquifying fiat into tangible goods (stocks, gold, chickens) and having the bare minimum in the bank.
At least we understand the intrinsic value of a chicken, £1 seems to vary in value a lot more. what cost £2 in 2009 now costs £3 (BOE inflation calculator)and that was only 15 years ago, but a chicken is always a chicken.
Politicians fully understand. They just don’t care.
Housing costs should absolutely be included in the inflation figure; any figure without it is false. That said, current interest rates arent particularly high by historic standards; i would guess they are pretty close to average. Problem is, and this goes back to the first point, housing costs are totally distorted in respect to every other aspect of the cost of living.
In the mid 90s Crest were selling two brand new bed houses near me for £70K. I just checked on Rightmove and one is on the market for £300K. According to the BoE inflation calculator it should be £139K.
If they look at CIPH, interest rates isn't coming down anytime soon, so they ignore the largest segment of the UK economy the housing sector.
Please continue with these videos, they help me understand inflation "news" that is often reported based on the headline CPI numbers alone and I don't have the time, energy, financial understanding or inclination to go digging for the information you explain so well.
Love this analytical and down to business style of video
Another great video, thanks for sticking with it 👍
People still believe that 2% inflation, and using "CPI" in general, is "an OK number".
And then they wonder why they are getting poorer.
Using interest rates to curb the inflation we are currently experiencing is economically illiterate. Inflation has not been caused by people spending too much in the economy. It's been caused by supply chains and mostly profits i.e British gas 1,000% increase in profits. They are squeezing the public when they have nothing to do with inflation. Even this idea of a wage inflation spiral was utter bullsh*t. The highest increase in wages at 8% was followed by inflation dropping.
The IMF agrees. They published a working paper at the end of 2022 on the effect of alleged wage-price spirals from the mid-1970s. Their conclusion was that the effect of wage rises in response to inflation were minimal. At most the economic effect of wages increases during inflationary periods were slight, and disappeared within a year or two of inflation receding. The Wage-Price Spiral is a myth.
Inflation is always a monetary phenomenon.
Whatever argument you're making here is pointless.
There's only government deficitspending and central banker policies that are to blame.
It's not that hard.
The root cause is that all the people who took out Liar loans or 125% LTV Nortern Rock mortgages (no lying required to get one) got bailed out in 2008. Instead of gradually raising rates back to a sensible level they left them ultra low to continue the boom.
Despite what Federal Reserve Chair William McChesney Martin Jr said, recent policy has been to keep topping up the punch bowl to keep the party going until all credit at the liquor store is exhausted.
@harryireland1935 nice to see someone understand that CPI rising is a symptom and measure of inflation. Not the cause itself .
@@harryireland1935 so you are saying that when olive oil increased in price that was government deficitspending and central bank policies and not a bad harvest...
Really appreciate you doing these updates. Thanks!
You are welcome!
An actual down to earth explanation of what is going on without media bias👍
A major part driving inflation is excess profits being taken by large companies. But that is what is driving the stock markets and all those ISAs and pension gains.
Take a look at the Nestle share price. They have publicly increased prices a number of times over the last couple of years, blamed supplier & wage costs for their reasoning. The share price has absolutely tonked over that period of time.They’ve also slashed costs via redundancies and factory closures. It’s not driven by anything, other than unadulterated greed.
Thank you for making your content, I've used over the last year or so plus. Now I've no debts, an isa, junior isa, junior sipp and a normal sipp away from works one
Thanks for continuing these videos! Very informative!
This recession seems worse than 08/09 since I can't remember having a cost of living crisis during that time while house prices are dropping in both cases
Unfortunately the masters are talking up the economy how wonderful it is now😡
They only call this a cost of living crisis because the Tories are in charge and the media hate them. In 08/09 the crisis was far far worse but Labour was in charge so it was all okay then.
@@darrena5384 it’s easier to call it cost of living crises as it only affects % population? I would disagree that the media hate them they are in the Tories pockets and are controlled how well the economy is performing.
@@aerial558 every day the Tories are slaughtered. Every panel on every show on every news channel other than that GB news are 100% labour or Lib Dem. If you’re suggesting the media have a love fest for Tories then you’re incredibly deluded. The media despise the Tories and are running the campaign for Labour.
The supermarkets are having a laugh. My father-in-law‘s response to that is that we should stop buying things and voting with our wallets. He seems to be forgetting the fact that food is pretty price inelastic and, yknow, we gotta eat.
I have cut out anything that was a luxury (e.g chocolate, sweet stuff, crisps), so I guess others will be doing the same. I also shop much more often at budget supermarkets - especially as Sainsbury's now stocks very low quality veg and fruit. Since Brexit it's often pretty mouldy, so may as well go to Aldi! I've also cut out coffee (when I am out), not that I drunk much, but not paying £3.50!
His message is still there though, grow your own if you can. Many Brits in the 50s grew a lot as they had the war mentality still. They also had the mentality of rations in their minds and had a very scarce diet in comparison to today. Even the 70s. Look at the photos, no fat people really. But obesity aside, that is more to the content of what we eat rather than the price we pay…
If you look at Sainsbury's and Tesco's financial results you can see how much money they actually make. Net profit margin is 0.9% for Sainsbury's and about 2% for Tesco - so if they were selling the goods 2% cheaper across the board they'd be making a loss or making no money. So the supermarkets are definitely not having a laugh, they're just passing on the increased costs that they're seeing. Aldi and Lidl are well worth a look if you're looking to save money however, because their stuff is generally all own-brand and they have a lot of efficiencies in their businesses that help to keep prices down, compared to Sainsbury's, Tesco, Morrisons, Asda etc.
I’ve ditched the soulless supermarkets, shop local and fresh and batch cook
@@neilspencer6843seeds are expensive, so is compost, the space to grow things, and the time to manage it all. pests can also ruin thing quite easily. veg would have to get pretty expensive to make it worthwhile.
Damian, thanks for this video, I love how you analyse the data. Much appreciated. ❤
Thanks Damien on the update!
Thanks for this update and clear insight. Learnt a couple of things from this.
Fantastic video as ever, keep up the solid work mate 👍
Great inflation videos, it must require a lot of work but they are very good. Please keep with them. Cheers
Nice one Damien for covering CPIH something most overlook!
Yeah not sure why when it is the real story.
Thanks Damo, another great video breakdown on this subject. Very informative, and much appreciated!
Really appreciate you taking the time to comment and watch thank you
Great info as usual. Supermarket profits are criminally large.
Thanks for the update Damo 👍🏻
No problem 👍
An excellent and succinct explanation of the state of out finances.
Get the feeling things are about to get way worse for everyone with oil shocks to worry about now
Olive oil shocks?
😢😢
Yep. I dont see how the UK is going to grow. What do we produce? Not much.
Going to £120 per barrel I've heard, and not from a YTer. From someone in the UK oil industry, but secondhand from a relative.
Even if you disregard inflation and cost of living, you have to look at the USA economy and more specifically the amount of federal debt. It is at astronomical levels and servicing that debt is becoming increasingly hard. A hard recession is expected in 25/26, even BlackRock have discussed it.
Another brilliant video - thanks Damo
Thank you so much!
Glad to see you stuck with it. It's really helpful to get a simple view of the numbers and explain some of the data behind them.
Financial people keep saying that the Bank of England is independent. So why do they care about elections?
Love these videos Damian is the man
Your content is the best Damien!! You fit so much in one video and go into detail that other youtubers stay away from, your the best! Content is useful and topical, keep it coming, thank you!
Does inflation falling really mean anything, when supermarkets don't bother to put their prices back down and just try to price-gouge us all, while reaping record profits?
Falling inflation is not deflation and its effect is permanent. Prices won’t come back down unless there is deflation and that’s not likely to be pleasant either. It’s perfectly normal if unhelpful for the public to not completely understand inflation, it isn’t taught in schools but for the government and the bank it’s catastrophic.
Hi Damien, great vlog. It still surprises me economists are still predicting 3 rate cuts of 0.25 this year.
Add in April being the UK's 'month of increases' as utilities (council tax, mobile & broadband, etc), rent/mortgage, motor insurance and oil (geopolitical issues) will come into play and impact inflation (or certainly impact consumers pockets).
Great video. BoE will be cautious with tensions in the middle east and the sticky data. Realistically the rates will always come down a lot slower than they went up unless something really bad happens like a new financial crisis.
Damien - excellent as ever - keep up the great work.
fantastic video
Excellent !!!!!! Thank you VERY MUCH . Total brilliant, FUN / Educational ! and a difficult subject simplified .Amazing shows 💪💪💪💪
Lovely feedback thank you
Tks damo. another good vid
Thank you as always!
Started to notice Damien carefully positioning himself for a spin-off cooking channel past few videos.
It's time for Damien Does Cooking
@@askindale4943I’m here for it 😂
I will just chime in with the thank you and say keep them coming.
Thanks Damien!
@Damian, as far as understand it, mortgage interest payments are NOT actually measured in CPIH, but instead ONR uses some sort of rent-equivalence, attempting to put a rental cost on an owned (mortgaged) property. This obvs (in my view) rather conveniently hides the crazy interest cost hikes of recent, as a property’s rent potential has f-all to do with how the owner financed it. So even though you may pay £3k in mortgage interests per month, the ONR rent-equivalent could be £1100.
In my view CPIH has been tampered with and now shows nothing of value.
In the last couple of weeks I have been looking around for a new savings account, as the one I got last year will expire soon. What I noticed is that savings rates are less generous that 2023, either with lower rates or more strict conditions. Last year I got 5.2%, now the best is, perhaps 5%, and I will need to change bank and triple check the T&C. Same for the cash ISA.
Overall, seems to me that, even if BoE rate Is stable, banks have been extremely quick to cut interest rates for savings. But, obviously, taking their time to do it for mortgages.
Wicked! Thanks, Damien! We haven't seen Cobweb much recently...🐈😀?
They’ve just given that figure because it’s the time of year when companies decide their yearly pay increases… and they can fob all the workers off with a 3% raise… when real world inflation is way more than that
Keep the analysis coming please Damien, unlike the mainstream media you make it understandable and I believe what you are saying. Enjoy the watered down olive oil!
Thank you Peter! Lovely feedback
I'm curious why no one until recently has done a study of correlating inflation to company profits. The US and EU, did some recently and found out that, that was the case, the majority of inflation in the past few years was primarily profits, as in blatant profiteering at the expense of the rest of society. I fully expect nothing to be done and the country to be buried in permanent high interest rates and inflation.
Good video but how do you water down olive oil??
not sure we'll get service inflation lower with interest rate hikes; people who can't pay their mortgages are often motivated to seek a pay rise.
Great summary.
I wonder how much service and core inflation is due to workers demanding higher wages due to increased mortgage and rent costs?
In the real world prices are still incredibly expensive. Big ticket costs like Mortgages and rents, house and car insurance are all destroying household budgets.
Wages are also getting big increases
Wage rise over the next 24 months are going to be interesting because if they aren't substantial then living standards going to spiral downward.
25% of our income (post tax, obviously) goes straight out on child care. Then another 25% is mortgage and council tax. We have no consumer debt, no car finance, and we have two people earning U.K. average salary and we have extremely little spare money at the end of the month.
I read that line about olive oil this week. You must be a Gardian reader Damien.
You can't water down olive oil. A bit like government policy and common sense, they don't mix.
Look forward to the inflation hike again in a couple of months due to the nearly 8% mobile phone hikes in the UK.
Would this service inflation number tank when people who are in higher end contracts, taken out a 12-18 months ago, sign up for new contracts with lower offers? For example, seeking out lower insurances from comparison sites, or newer and cheaper broadband and phone deals. Sooner or later, the service industry will start losing customers on those higher end deals.
It's a spike on inflation spiking on the shoulders of the past century's worth of inflation.
The Bank of England will not cut interest rates soon as it is quantitative tightening to undoing the quantitative easing of the past and it can not do this if interest rates come down
My mortgage jumped by £150 a month this month. My family food bill has probably gone up by a similar amount.
Yay.
It's all just making me more focused to get my house fully in order financially.
Working a second job sucks though!
Hi Damien, just wondering, do you use an autocue to read your scripts or do you just memorise chunks to speak to camera?
I use an autocue yes. Can you tell?
@@DamienTalksMoney No can’t tell at all, it seems really professional. I have just heard you mention that you script things and wondered. I just struggle filming off the cuff and so I script too but then it’s hard to do long chunks at once.
It’s a long road to recovery, there are far too many factors keeping and driving prices higher…… an economy so intent on growth funded by debt is always going to struggle to recover quickly, when the only chosen method of restricting inflation is interest rates……growth is no longer possible as the cost of debt is too restrictive.
Great video. Would be good to see a video on gold. This has gone through the roof recently. A very good ROI for those who purchased before 6 months ago.
Gold price is volatile like crypto and other commodities. It's price is fuelled by geopolitical uncertainty and governments (recently the Chinese) buying the stuff. There is a relatively finite amount of the stuff in circulation which gives peace of mind. Its also revered especially in Asia eg India where it is liked in jewellery etc. Like any other stat, a trend is only a trend, then it stops. I was telling my mates in the pub 3 years ago to buy the stuff, sadly I didn't follow my own advice
It is strange that people with mortgages are described as home owners and not house borrowers!
This gives the impression they are harder done to than in reality.
Mortgage = to death
@@Black-Circle Not sure what you mean but Mortgage = dead pledge.
This means the deal dies when the debt is paid. (as per google)
It does not refer to the death of the borrower. 🤔
@@lenb9037 it does. Now go away and learn etymology
@@lenb9037 Google lol
@@Black-Circle I am not going anywhere. You poked your nose in. Did you learn etymology from the Beano?
I fully understand why income tax isn't counted as part of CPI/RPI/RPIX/etc. as my tax bill has changed hardly at all in recent years.
if Israel decide to react to Iran then no doubt oil will go up when the Iranians decide to block the red sea oil coming our way and to East coast. Ask yourself this while did gold pump yet no other assets have, typically gold is the safe haven during uncertain times. Fingers crossed inflation does come down and Israel can keep calm.
It’s already going up? 3p increase at my petrol station in my area and in sum cases they don’t even display the price on their forecourt’s?
They would try to block the gulf of oman not the red sea As ships can always go around the cape and the only way to block the red sea is using the houthies. whos missile supplies are not without limits The whole thing is now a big tinderbox
With the potential for large scale fighting on multiple fronts .
As some one trying to save money in an cash Isa im worried what would happen if they cut interest rates, and why are saving and mortgages linked in this way when lending isn't
Sense talked consistently. Right here.
Thank you!
@DamienTalksMoney I did get some bogus messages when I first replied on this thread. Some scumbag trying to scam your viewers methinks.
Can you even water down olive oil? Oil and water don’t mix 😅
whats with the floating laptop, I missed half the video because I was trying to work if it was suspended or superposed on because he'd left something on the desk and wanted to conceal it.
it's on a laptop stand mate, get a grip
Energy costs determine everything.
Inflation can be brought online by reducing them
I'm happy to have higher savings rates, when the crash happened in 2009 I was on a 10 year fixed mortgage rate at 8 % only to see the mortgages getting lowered to 0.10%. I was gutted watching others benefiting from the lower rate. Now mortgage free I now taking advantage of the higher savings rate..
I think olive oil is a bogus example. Olive oil price has increased everywhere by this staggering amount because very hot summers have meant olive harvests have been very low. And other factors like a pest problem in Italy.
We never thought interest rates could stay at near 0% for nearly 15 years whose to say interest rates can't say at a normal level for the next decade or more
Because we need growth
@@ZZZ333 last time I checked, most GDPs are still growing at these 'high' rates
That's the thing with inflation, its cumulative. It could go to zero and the government would be crowing about what a good job they had done, but... you're Olive oil is still going to be £16.
Shrinkflation has never been more prevalent than it is now in the service industry. The only answer is to build more homes, increase immigration, get them hooked into loans, mortgages and the promise of a comfortable retirement.
Love love love your videos. I’d love if you could do something on how to manage finances when you’re self employed or have unpredictable income that fluctuates or you can’t rely on long term 🙏
A video on the best finance books would be great!
Inflation aka greed.
It absolutely boggles my mind that the state targets inflation. In a healthy economy we would have mild price deflation. So that more people could buy more stuff (not less) with their money. Like we had in the period between 1800 to 1900.
Having a central bank and coming off the gold standard was utter folly. And we have been worse off for it ever since.
We have had massive deflation in some things. When this house was built (in 1974) it cost the same as fifty 21" colour TVs. A bigger, better, TV costs less in actual £s than it did then.
Add phones, air travel, and computers to the list.
@@MrDunclbut they aren’t necessities
Damien, have you ever considered buying vegetable oil?
How much of this is actual inflation and how much is it supermarkets etc price gouging?
Tail that wags the dog, no escape from US. UK 51st State
Don't you dare hurt my British pride! We are still an empire!
Reality is Britain does what USA tells it to.
Yes, we do. And America does what Israel tells it to do.
The UK will need several years of above inflation pay rises to counter the last few years of inflation. Will we get them, I doubt it.
Increasing pay only works if you get an increase in productivity. Paying your TFL workers more when service continues to get worse only leads to a poorer country overall.
Alright... So I shouldn't hope for much of a decrease of interest rates for mortgages by the end of the year, when my fixed deal ends, and I should plan with that in mind.
As someone who is betting it will be closer to 2026 before rates might come down a bit but I suspect not much, then you certainly be planning for rates to stay the same as today.
The system is on its last legs. It’s all planned. a spiral effect has started. You will own nothing and be happy…. CBDC coming and they are not for our benefit. If people believe this is random or you can vote your way out of this your going to lose
The poverty line reflecting the cost of living with wages-
18.7% in UK
14.1 % in India
Implying there are higher perventage of the population in poverty in the Uk when compared to India
That’s absolute horse shit by the way those figures. Over 60% of Indians live on less than $3.10 a DAY.
So please don’t talk shite
Damo lad... It's "aitch"
Great video as always Damo, thanks for your efforts and insights 👍 With the stunning rise of Olive Oil, are we set to see Olive Oil Bros buying it up to cash in for Lambos next year? 😂
The problem is a flawed method of measuring inflation. Damien makes a big fuss about Olive oil going up £9 yet when when houses go up £90K in a year it is portrayed as great news and a sign of a successful economy.
Including a decent amount of house in the inflation basket would work both ways. When they were soaring rates should have been increased. If they started to drop like in the 90s a cut would be sensible.
He doesn’t make a big fuss about the price of olive oil. If you watch the whole video he immediately says that food inflation is not an important factor and we shouldn’t focus on it.
@@a1white Fair enough, but people thinking they are rich because their houses have soared in price fuels inflation.
p.s If you are wondering I do have a house but am still bitter about missing out on the mad gains of the noughties.
Where is your shirt from please?!
His wardrobe. 😅
Why is deflation bad? Surely our money would go further than it does atm? (Genuinely asking)
The entire financial system relies on inflation at a slow/steady growth. While yes, to the individual it would feel better to get deflation/prices down, it doesn't work long term for the currency we all use. The moment we no longer had dollars backed by anything, we were doomed to inflation. More dollars must be created out of thin air to pay the interest on current dollars in circulation. It's done partly by inflation but also by reserve requirements at a bank. Terrifying when you think about this simple example. I have $1,000. I put it into a bank, and they are required to keep 10% on hand for me - $10 (or less now). They loan out the other $90 or invest it to make a return on it, that money can then be invested by that new person, and so on and so forth down the line. Ultimately "creating money", that cannot be repaid back to me physically as it is on loan out to multiple parties and doesn't exist at the bank anymore other than FDIC guaranteed insurance which states I will be paid back. A dollar no longer means a dollar, and instead of getting our budgets in line where our spending matches our tax collected, we must inflate to pay the debt as well, because the political will to cut programs is not there. Easier to spread the invisible tax upon the whole population. This is just my experience - coming from the US - just love watching these videos.
Interest to be paid on every dollar in existence can't stop or the whole system will collapse !
Ask a Tesla employee. Related to that, even if you thought Tesla was the best car on the market would you rush out and buy one if you thought Elon was going to make another big price cut next month ?
Gary & Damo talk more sense than the BOE.
Inflation is always monetary
Who's gonna tell him watering down olive oil ain't gonna do anything? 😂
HL’s ISA fees aren’t the best, but their Lifetime ISA (with a 0.25% account fee and free fund buying and selling) is really competitive, especially as few other companies offer it. Also, the wealth of analysis and information are really worth a lot too.
Today, mortgage lenders suggesting 0.45% hike. Inflating rates so that they can present a fake interest rate cut before the GE?
Central banks have a history of being behind the curve when cutting rates and this time will be no different.
This time I suspect they bang on the money.
They will start to cut when the Fed does. Watch and learn.
@@rogernewton7831 That is rather what I said…they are waiting for the Fed.