Saturday, 21 August 2010

Soaring energy and food prices this winter

The Glasgow Herald reports on the ending of cheap energy deals as the energy companies prepare for a winter of soaring gas and electricity prices; elsewhere, food cost inflation of 30% over the past 3 years is being widely reported, with more to come as manufacturers and brewers take advantage of a tiny blip in world grain prices to push margins. VAT is set to rise. Vehicle fuel prices could rise by 8% by the start of 2011. All in all, it's hard to see how either the RPI or CPI can stay anywhere close to the Treasury target of 2% - but equally hard to see how an increase in the base rate could help restrain this inflation. A report this morning on R4 suggests we have reduced our savings deposits by £60bn over the past year as the elderly and retired dip into their pots.

Those on the margin - in work, but with little income headroom to absorb price shocks - will be hard hit. Pressure for wage increases will grow. Those on benefits will suffer. As a nation, we don't yet know the meaning of the word 'austerity' but I've a feeling we will.

There will be two groups of people walking on eggshells. First, the financial sector, and the announcement of City bonuses before Christmas. Secondly the rich class, the new Kulaks. Earning over £100k these days is deeply unfashionable and as the pain bites the wise will disguise their wealth, trade down their cars and shun conspicuous consumption.

All in all, not a happy prospect.

10 comments:

Elby the Beserk said...

It is my belief that the true rate of inflation for most of us - those who can't afford much more than the basics, i.e. food, fuel & energy is in fact in the region of 10%.

Trouble ahead...

Demetrius said...

I know the meaning of austerity and recall the 1940's all to well. We have seen many of costs go up sharply recently and our spend pattern has adjusted accordingly. When I look at all the junk in other peoples supermarket trolleys there is a huge amount they do not need. There is way to go yet before we hit real austerity.

Anonymous said...

Demitrius is right, yet there is more long term trouble in store as a result of Labour.

1) We are depleting our savings, choosing to enjoy the money now.

2) We aren't saving in pensions - and why would you with a government that steals from them.

3) This country cannot afford old age pensions - at least not until age 72.

4) All of the above means that the next generation will not earn enough, therefore will not pay any where near as much tax - yet there will be more of them...

5) This country's impending bankruptcy may be further away, but catastrophic on its arrival.

Conet Island

Anonymous said...

I must agree with Demetrius and say that even in the 1960's a lot of people were still poor, my family included.

We had only enough coal for 2-3 hours in the evening. The larder was empty a couple of days after the weekly shop. I had one pair of leather shoes for school and one pair of plimsoles for play - all year round.

I was hungry and cold most of the winter, but my goodness we were all a lot happier in those days. We still had proper communities where people looked out for one another. No theft, no anti-social behaviour and the roads were empty by 8pm. Working class folk were in bed by 11pm simply because they were knackered.

The police did what they are supposed to do and society was mostly self-regulating - I remember an instance when a bloke cheated on his wife and the women on my council estate went round his house and humiliated him. Another was a pushbike went missing and it was back the same day with an apology from the father of the boy that nicked it.

Christmas at junior school in 1967 and all us children were gathered in the school hall to see Father Christmas - aka the headmaster dressed in red, glossy belt with a big silver buckle and wearing a huge white beard. He was also a veteran of the Battle of Britain.

He began by wishing us Happy Christmas and an even happier New year. Then he said something that has stayed with me all my life. He said our "great strength as a nation is because we have one culture, we work together because we are together and as a young man flying Hurricanes and Spitfires I witnessed that fact every day throughout the war. May it remain ever so and may God bless you all."

He'd be vilified and sacked if he said that nowadays.

I still live on a council estate, but it may as well be a foreign country as the difference between life now and in '67 is huge. At war's end Britain had one of the most cohered societies in the world. Not any more. Although I've been an engineering craftsman and a soldier neither pays but I'm still happy being working class - something the socialists will never understand is we can't all be rich.

England and the English, that is my wealth.

(sorry if I went on a bit)

Steve

Anonymous said...

Throw in Katla explosion (Icelandic volcano), European Soverign debt and subsequent Euro collapse, a severe winter due to La Nina and we really will see an interesting mix. Time to bury those cans of baked beans in the garden !

talwin said...

Steve.

'No anti-social behaviour in the 60s'. Hmmm, clearly you never walked down Bonney Steet in Blackpool during Glasgow fortnight.

Anonymous said...

Did you live everywhere then talwin?

Were the elderly beaten for their pension money in the '60's? Did the poor steal from the poor? Not where I live and furthermore we had not one murder in my home town for 19 straight years

Certainly small areas in some cities had trouble talwin, but that was the exception and I'm talking about the whole of society.

I know which society I'd like to live in and it isn't the one the political elite are shoving down our throats. Like I said, England and the English is all that matters to me.

Steve

Anonymous said...

Steve - I don't usually post twice on one topic - but I'm with you!

Coney Island

Anonymous said...

Thank you Coney Island, and you Raedwald: for the opportunity to say something I've wanted to say for a long time.

Steve

talwin said...

Steve, 20.46, 21st.

Next time a make a tongue-in-cheek comment I'll first flag it up as such so as not to unintentially raise anyone's blood pressure.