8 ms·

As a person living in the UK, I have definitely noticed a considerable rise in unit prices. One of many examples is that a loaf of my favourite bread increased

• Mountain_Skies 4y ago
  [flagged]
  • foldr 4y ago
    I think you've got the wrong end of the stick. We're in this mess because of Thatcher, Reagan and TINA. Almost everyone now believes in capitalism in the same way that medieval peasants believed in the feudal system. That is, while they don't necessarily like it, they see no viable alternative.
• martinald 4y ago
  Assets are deflating at the moment though. S&P500 is down, property prices are down, etc. Asset prices are highly inversely correlated to interest rates, so for a 'rich' person you are actually much better off without inflation, as interest rates are lower and asset prices rise faster.
  • robjan 4y ago
    [deleted]
    • ivalm 4y ago
      Even nominal profits are down, so not true.
    • zhte415 4y ago
      The interest rate is the discount facter. Low asset prices may not be equivalently low.
      • giantg2 4y ago
        Unless you're rich and make a cash offer.
        • zhte415 4y ago
          Then you lose the opportunity cost. No difference.
          • giantg2 4y ago
            I think that's impossible to say without know what the other opportunities are, or what the person's strategy is.
    • bko 4y ago
      Higher prices don't mean more profit. People adjust their behavior and retailers eat some of the costs of higher prices. They'll sell a lot less. Their revenue might not even go up necessarily
  • MrGilbert 4y ago
    > "property prices are down, etc" Well, idk about your area, but property prices in northern Germany are still well above the 2020 mark.
• skybrian 4y ago
  > In an inflationary economy, the winners are rich who have valuable assets whose value skyrocket - think real estate, businesses, etc. On the other hand, rising interest rates causes all assets to decline in value, and the decline is worse depending on how far away the "maturity date" is. It looks like the UK has been raising rates, similar to the US. [1] [1] https://www.bankofengland.co.uk/boeapps/database/Bank-Rate.asp https://www.bankofengland.co.uk/boeapps/database/Bank-Rate.a...
• tacker2000 4y ago
  You are talking like inflation is some conspiracy wielded by “the rich” (who are they? Are they all friends with each other and plan all their schemes together?) against the “others”. Fact is the inflation we are seeing here is caused by the after effects of Covid, the Energy price surges caused by the Ukraine war and in the special case of UK - Brexit, which has lead to huge import shortages due to increased bureaucracy at the border, etc… So please stop this conspiracy talk about the “rich” creating inflation to disown the “poor”.
  • SubiculumCode 4y ago
    i would add climate change to the mix as impacting agriculture
    • pacija 4y ago
      I would also add bunch of people in IT working primarily on peddling ads and developing total surveillance tools for years instead of doing something that produces real value.
  • schrectacular 4y ago
    Did they? I saw them say "wittingly or not".
  • elevenoh4 4y ago
    https://cloudfront-us-east-2.images.arcpublishing.com/reuters/ZB6FSECCTJPR5CPUO6TM3BATYQ.png https://cloudfront-us-east-2.images.arcpublishing.com/reuter... You do not get it. This inflation is due to insiders (central bankers) printing money. Covid & ukraine are convenient excuses. Look up where this money ended up.
    • jldugger 4y ago
      > https://cloudfront-us-east-2.images.arcpublishing.com/reuter https://cloudfront-us-east-2.images.arcpublishing.com/reuter... Help me understand: is this a stacked chart? Why does a chart that ends in 2021 show inflation in 2022 and 2023? > This inflation is due to insiders (central bankers) printing money. If this is about the money supply, why is food more affected than other products? IMO everything is a factor, and there is no one culprit, and therefore no one easy fix.
• dt3ft 4y ago
  > It's the dark, sinister side of inflation You mean dark, sinister side of capitalism, right?
  • christophilus 4y ago
    No. Of fractional reserve banking. Capitalism is not the same thing as a monetary regime.
  • jupp0r 4y ago
    Can you name non-capitalism societies that have had more success dealing with inflation?
    • ROTMetro 4y ago
      I can think of other societies whose solution is more humane than 'drive up unemployment and make remaining workers so afraid they stop purchasing'.
      • jupp0r 4y ago
        Real existing ones? Who exactly?
  • sparrish 4y ago
    You think inflation can't happen in non-capitalistic economies?
• jupp0r 4y ago
  Tragically (and perhaps comically) it's the blue collar class that is the cause of all of this by voting for Brexit.
  • dukeyukey 4y ago
    German food inflation is running at 22%. Whatever the UK's issue is, it's Europe-wide.
  • benjaminwootton 4y ago
    Definitely Brexit and not the half a £trillion we printed to fund Covid handouts.
    • jupp0r 4y ago
      Food prices were rising a lot in 2021 already. Here's a study that links Brexit consequences to food price increases. https://www.lse.ac.uk/News/Latest-news-from-LSE/2022/l-December-22/By-the-end-of-2021-Brexit-had-already-cost-UK-households-a-total-of-5.8-billion-in-higher-food-bills-%E2%80%93-new-LSE-research https://www.lse.ac.uk/News/Latest-news-from-LSE/2022/l-Decem...
    • pjc50 4y ago
      It would have been better to do that through tax rather than printing, but that was never going to happen. Obliterating the entire hospitality and entertainment industry without compensation would have been .. unpopular.
  • arrow7000 4y ago
    Although greatly spurred on by many in the upper classes
• dclowd9901 4y ago
  > A sad thought I have about inflation is the fact that it is, wittingly or not, a weapon wielded by the rich against the middle and lower classes. I think you have it backward. I think the inflation is the byproduct of their ability to own and hoard assets like land and labor, and reap the most value from those things, while everyone else is unable to get a foothold. Inflation is happening because everyone is making more money, and everyone got a bunch of during covid, and now a lot of people are having large swaths of debt cut from their lives (college loan forgiveness program), not because rich people own stuff. But poorer people also can’t get ahead because rich people own everything. This is a capitalism problem more specifically than it is a rich v. poor problem. Make it illegal to own more than one property and you will instantly give the lower and middle classes a chance.
  • pjc50 4y ago
    > (college loan forgiveness program) Not in the UK.
  • ajmurmann 4y ago
    > everyone got a bunch of during covid Is this true? It seems like poor people got checks over a few hundred bucks whereas businesses got millions.
  • sammalloy 4y ago
    > Inflation is happening because everyone is making more money Real average weekly and hourly earnings have decreased. > and everyone got a bunch of during covid Several thousand dollars is more money? That’s one rent or mortgage payment. > and now a lot of people are having large swaths of debt cut from their lives Where?
• lifty 4y ago
  Tell that to the economists, who predominantly say that inflation helps the poor, supposedly because they have loans.
  • rm_-rf_slash 4y ago
    Less helpful for holders of credit card debt as their costs increase alongside their APR…
  • sidewndr46 4y ago
    For some reason when I hear people saying this I just picture them as thinking of the poor as having a mortgage on their second summer home or something like that.
    • hutzlibu 4y ago
      ... while being not creative enough, to eat cake, when out of bread.
  • ajmurmann 4y ago
    That can also be true if you have sufficient loans. It's really a balance between how long your comp takes to catch up with inflation and loans vs cash. That said, I think better off people generally might have leveraged their assets even more, getting the double whammy of the mortgage becoming cheaper while the underlying asset goes up in value. Credit card debt also becomes less meaningful though... It all depends (just like in software engineering).
  • rajin444 4y ago
    Do those loans have interest on them? Many major religions banned usury because it’s primarily a way for the haves to keep from the have nots. The alternative where the rich are sitting on piles of money because they can’t profit off loaning would quickly make apparent how they’re leaching off the labor of the people.
  • kzrdude 4y ago
    I think inflation can be a force that equalizes between high and low wealth groups, but that's only if it includes wage inflation. Inflating wages makes wages relatively more important than existing assets.
• simonh 4y ago
  Hope you don't mind me re-posting this from another comment of mine, but since you specifically raise the UK it's actually more relevant here. In the UK it doesn't look like gouging is the issue: https://www.grocerygazette.co.uk/2023/01/31/food-companies-profit-warnings/ https://www.grocerygazette.co.uk/2023/01/31/food-companies-p... Honestly you're right that inflation can benefit the well off, but I don't buy the conspiracy theory angle. "The Establishment" has been holding inflation rates at historically unprecedented lows for the last generation. It's been the number 1 priority for central banks since the early 90s. The last time the UK inflation rate was above 4% was over 20 years ago. https://www.macrotrends.net/countries/GBR/united-kingdom/inflation-rate-cpi https://www.macrotrends.net/countries/GBR/united-kingdom/inf...
  • wahnfrieden 4y ago
    Why doesn’t 4% count as weaponized? That’s higher than typical annual raises, not to mention non workers
    • justsocrateasin 4y ago
      IIRC deflation and inflation are equally as bad. If 'inflation' rates are negative, the economy grinds to a halt. Having an inflation rate of ~2% is widely considered to be beneficially for everyone, since it's in a 'goldilocks' zone, it creates stability. Inflation of 4% sure isn't as good as 2%, but generally speaking the inflation rate in the UK appears to hover around 2-3% during "stable" periods. https://www.macrotrends.net/countries/GBR/united-kingdom/inflation-rate-cpi https://www.macrotrends.net/countries/GBR/united-kingdom/inf...
      • Mizoguchi 4y ago
        With lack of fundamentals in economics this is very counterintuitive. Japan is a good example of the negative consequences of zero or negative inflation. https://asia.nikkei.com/Economy/After-20-years-Japan-still-stuck-in-deflationary-mindset-Kuroda2 https://asia.nikkei.com/Economy/After-20-years-Japan-still-s...
      • 4y ago
• RC_ITR 4y ago
  It’s hard to grok but inflation is just the “price of money” in terms of goods and services. (I.e. I can ‘buy’ one pound with X good) Inflation only negatively affects the poor in that their wages are sticky and do not adjust in time (so in effect, their wages in goods and services terms declines) The same thing happens to rich people, it’s actually a “capital owner vs salary man” divide. (A small building owner is impacted less than a very wealthy athlete for example, since one can raise rent yearly and the other is in a long term salary contract).
  • ajmurmann 4y ago
    I first really liked the athlete example, but now think that that also depends on where the athlete is in their career and what they have done with their past income. A athlete a little bit later in their career, should have substantial investments unless that more than make up for the inflation impacting the value of their current salary. They probably also have a steady stream of sponsorship deals that get (re-)negotiated more frequently than salary at McDonald's Very similar dynamics probably hold almost by definition for anyone who is wealthy.
    • RC_ITR 4y ago
      >A athlete a little bit later in their career, should have substantial investments Yes, that makes them a capital owner, but it's hard to make a metaphor where people aren't allowed to buy stocks with their excess money. >They probably also have a steady stream of sponsorship deals that get (re-)negotiated more frequently than salary at McDonald's Sure, but that still makes them worse off than a capital owner. >Very similar dynamics probably hold almost by definition for anyone who is wealthy. Sure, but a relatively low-wealth landlord is hurt less than a wealthy banker who consumes most of their salary. That's the only point- that it's more than rich/poor, even if the true nuance is correlated to rich/poor.
• SuoDuanDao 4y ago
  I don't think it's that simple - inflation is also especially beneficial to debtors which is more of an upper middle class or professional/managerial phenomenon. The truly rich would likely have a cash buffer that gets eroded by inflation same as the typical person's wage.
• tantalor 4y ago
  > the lower class suffers by far the most This is a tautology. The lower class is defined that way. If they didn't suffer the most, they wouldn't be lower class.
  • anonymouskimmer 4y ago
    The "proportionately" is assumed. It's possible to imagine circumstances in which the upper classes suffer proportionately more than the lower classes. We have, in fact, had these circumstances. Such as the impact of transition from land wealth to industrial wealth during the first couple of industrial revolutions that saw various nobles having to sell their ancestral estates and belongings. Meanwhile the lower classes gained jobs that allowed them to afford more than they could before.
  • gizajob 4y ago
    It’s not exactly a tautology, technically.
  • mitthrowaway2 4y ago
    Your comment is saying "suffer(poor) > suffer(rich)" is true by definition. But the article is saying "d suffer(poor) / d(inflation) > d suffer(rich) / d(inflation)", the truth of which is not immediately obvious.
• nradov 4y ago
  Despite being a net food importer, the UK continues to allow relatively high levels of immigration. While there are multiple causes for food price inflation, having more people living there certainly causes some upward pressure on prices. https://migrationobservatory.ox.ac.uk/resources/briefings/long-term-international-migration-flows-to-and-from-the-uk/ https://migrationobservatory.ox.ac.uk/resources/briefings/lo...
  • madaxe_again 4y ago
    That’s not so - were it the case, food would be more expensive in more populous countries, and this is demonstrably not the case. If anything, a larger consumer base allows greater economies of scale. This is a supply side issue, a labour issue, a border issue, and a stagnant economy issue. Productivity in the U.K. flatlined years ago, with the 2008 recession, and what is being experienced there remains the after effects of the bungled policy decisions at the time.
    • nradov 4y ago
      It's not the absolute population size that matters but rather the rate of increase and the proportion of imported food.
• emodendroket 4y ago
  I'm not so sure I would say that. Inflation is more harmful to those with assets, it generally accompanies a strong labor market, and the means central banks use to fight it amount to deliberately increasing unemployment.
  • mitthrowaway2 4y ago
    We can say that inflation is good for those with assets, and interest rate hikes are harmful to those with assets, and the two tend to go together -- but not always; that's mainly up to the central bank.
    • emodendroket 4y ago
      > We can say that inflation is good for those with assets If the assets are liquid ones not really; that's one of the reasons asset-holders start to clamor for the Fed to do something when inflation is high. I read the introduction of Secrets of the Temple, which is kind of a counter-conventional wisdom explanation of how higher rates of inflation were salutary for regular people at the expense of the ruling class, and it was pretty compelling.
• varispeed 4y ago
  Also the rich who lives off capital gains pay much less tax than people earning their income from work. For instance our PM Rishi Sunak has paid 24% tax on his £1.9m income last year, while the tax man takes 39% from my wage. This should be fixed, but Sunak who was pushing for higher taxes on the workers, would never do that. This is absolute scandal the rich can avoid paying their fair share this way.
• dfxm12 4y ago
  pass down wholesale price increases, etc. I think it is very important to note that when it comes to grocery price increases, even if suppliers are raising their prices (and this isn't always the case), groceries stores aren't just passing down wholesale price increases, they're raising prices even further. For grocery stores, this isn't an issue with (unqualified) "inflation", it's an issue of price gouging. https://www.dailymail.co.uk/news/article-11668863/Supermarkets-not-suppliers-unfair-food-price-hikes-shelves-insiders-claim.html https://www.dailymail.co.uk/news/article-11668863/Supermarke...
  • mhb 4y ago
    If only there was some mechanism to mediate that. Maybe competition.
  • 0xffff2 4y ago
    If you want to credibly make that claim, you're going to need a much better source than the Daily Mail.
  • junofan 4y ago
    These are like 1–2% margin businesses. How much gouging could they be doing?
  • dannyobrien 4y ago
    What you'll note from this article (from the Daily Mail, but the quotes seem legit) is the source of the price rises is contested. The grocery store management said -- somewhat vaguely, after being questioned about it -- that, yes, suppliers could be raising prices excessively. Then an "insider" said that actually it was the groceries that were doing it. The whole point with inflation is that nobody knows what future price-levels are going to be, so there's upward price instability. Everyone is trying to gauge how much to raise things -- and of course, they tend to overshoot, which leads to a higher rate of inflation. That's what makes inflation so pernicious, and hard to eradicate. It's not so much that a constant rate of inflation is damaging, but when increase become noticeable, people begin trying to anticipate it, and that increases the rate of change. You'll also see this in pay negotiations: you'll see more strikes over pay raises, but it'll be very hard for unions or companies to accurate gauge what the pay rate rise should be. It's not that unions are trying to "gouge" management -- it's that the consequences of demanding too small a pay rise is the same as accepting a pay cut. So labour demands more than inflation, which in turn tends to push up the inflation rate.
• notShabu 4y ago
  There is a counter-argument (which I don't necessarily agree with, but is interesting to note) where the ability to accumulate assets that keep pace with inflation is the only thing that motivate extra work. e.g. the ability to accumulate "Tokens of Power" (vs the equivalent of arcade game tokens for commodities) is what motivates the Steve Jobs and Elon Musks to do their universe denting. This is quite different than say tribal societies where extra resources do not maintain their value across time. An abundance of meat and other resources can only be transmuted into common cultural power via Feasts and Festivals. Metaphorically, "gold" creates "dragons" because it allows immortal hoarding. Dragons are the only thing with influenceable agency that can reshape "nature". Controlling dragons allows this dominance (for better or for worse) at the cost of dragon externalities (burned towns, randomly devoured livestock)
• 2b3a51 4y ago
  "[snip]...endless blue-collar UK worker union strikes, riots, protests, etc" Ummm... nothing like the 70s/80s (I'm old). Seriously I think that the younger people in the UK are showing immense stoicism and forbearance.
  • pjc50 4y ago
    Indeed. All the institutions which might possibly have produced that level of coordinated unrest were deliberately dismantled or atomized. There's no way to turn dread into political action.
  • deleted 4y ago
    [deleted]
• cs702 4y ago
  > In an inflationary economy, the winners are rich who have valuable assets whose value skyrocket - think real estate, businesses, etc. Actually, it's the opposite that is happening, because central banks have aggressively raised interest rates to bring inflation under control. When rates rise, the net present value of every long-term cash-earning asset declines, and those individuals and businesses (including banks) that borrowed too much in relation to the declining value of their assets, can and will suffer large losses. It's not a coincidence that stock markets are down, businesses are cutting costs, office buildings everywhere are starting to file for bankruptcy protection, mismanaged banks are now in financial distress, venture capital firms and their investors are facing the prospect of large losses, and so on.
  • ed_elliott_asc 4y ago
    Isn't the problem with raising interest rates that the rich with savings have assets that improve and the poor with debts have loans that get worse?
    • cs702 4y ago
      > have assets that improve The opposite is happening: Asset values are declining. Stocks, bonds, property, etc. -- all declining in value. That's the reality.
    • Rury 4y ago
      Rising interest rates make debts worse and asset values (including those belonging to the rich) to decrease, whereas it's mostly just the value of money which improves. Also, who is rich/poor and has assets/debts can be hard to tell from appearances alone. Would you call this guy poor [0]? Seems like he has a good life. Which begs the question... when we talk about taxing the rich, who are we thinking of exactly? Someone living beyond their means, or below their means? [0] - https://www.youtube.com/watch?v=r0HX4a5P8eE https://www.youtube.com/watch?v=r0HX4a5P8eE
• spraveenitpro 4y ago
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• cudgy 4y ago
  So, do you feel that the focus of the central banks to keep interest rates low and inflation low is to protect the lower class? I would submit that what the central banks want is to benefit the main asset holders who suffer the most from erosion by inflation.
  • NoboruWataya 4y ago
    Asset holders do not suffer the most from erosion by inflation; asset holders benefit from inflation (which is a devaluation of the currency) because the price of their assets increases. It is those whose wealth is mostly in cash that suffer the most. Keeping interest rates low keeps inflation high. Raising interest rates reduces inflation but also hurts asset prices and can potentially bankrupt some heavily indebted businesses. This is the balancing act the central banks have been trying to perform. The reality is that getting it wrong in either direction hurts the lower class: excessively high interest rates lead to high unemployment; excessively low interest rates lead to high inflation.
    • cudgy 4y ago
      Interesting. When did cash cease being an asset?
• Aunche 4y ago
  A food producer may benefit from inflation, whereas a government loses out, despite both representing "the rich". An unattached young trades-person can ride the wave of inflation because they can easily switch to jobs with higher wages, whereas a another with a family cannot. Neither "the rich" nor the "lower class" is a monolithic entity. The idea that they are monolithic allows for elites to disguise their selfish consolidation of power as evidence of being on the side of the people. For some obvious examples, Hitler successfully blamed the Jews for German hyperinflation, and Stalin successfully purged political enemies he deemed as "capitalist".
  • nehal3m 4y ago
    Godwin's law in effect in comment number two (at the time of writing). I see the sentiment you're trying to portray but maybe try and be a little more verbose so you don't have to name the 20th century atrocities. Something like: Being deluded into thinking ["the rich" nor the "lower class" are monolithic entities] is a recipe for abuse by those in power.
    • Aunche 4y ago
      Fair point. Edited. I do think the examples are still relevant because I don't think many people are aware of how this relates to antisemitism and the Soviet purges. I could bring up for a modern example, like Trump somewhat dismantling of the EPA, but that's requires more nuance to demonstrate my point.
• cmurf 4y ago
  There's a lot of national and consumer debt to inflate away so I think inflation is what's on the menu. Workers are going to bear the brunt of the fallout if they cannot or will not demand increased pay. Workers can't get sucked into the trap of employers claim they can only afford to pay more for rent, loan, and supplies costs - and not wages.
• oliwarner 4y ago
  > a loaf of my favourite bread increased from £3 to £4 What on earth are you eating? From where? The average 800g loaf costs £1.36. But to feed into your point about who suffers, if you had to give up your luxury loaf, you could still afford two average loaves in its place. People who could only afford a 80p loaf before are now going without.
  • samhuk 4y ago
    A 1kg wholewheat sourdough loaf. I'm a bit picky regarding bread and have actually started making my own in the last few months due, in part, to A) rising prices, B) manufacturer corner-cutting, and C) it's fun!
• Nifty3929 4y ago
  The lower class does suffer the most, but unfortunately it is the policies intended to help them which actually cause most of the problem. By giving money to people without producing more stuff - or even making it harder to produce the same - you MUST have inflation, rationing, or empty shelves - and often all three. The solution to allowing lower classes to have more stuff is to make it easier for everybody to produce more stuff. Giving money CAN help with distribution of stuff, allowing poor people to purchase a larger share. But it requires lots of money given directly to the people that need it (vs allowing the gov't to spend it themselves). And also requires lots of high inflation. Imagine, for example, just giving everyone £10M to spend on whatever they want. This would not create any more stuff - but it would sure be a big equalizer for people buying that stuff! But really - if we could all focus a bit more on production - allowing, encouraging, and celebrating it - then we'd all have a lot more stuff.
  • benlivengood 4y ago
    https://www.epi.org/productivity-pay-gap/ https://www.epi.org/productivity-pay-gap/ shows that producing more stuff per person since 1978 hasn't fixed inflation (not graphed there), and we can afford less of it because real wages haven't kept up.
    • solveit 4y ago
      No, that's not what real wages mean. Real wages going up means we can afford more stuff, full stop. The fact that real wages haven't kept up with productivity means that we can't afford as much more stuff as is being produced, but we can still afford more stuff. I'm not making a point about society, I'm making a point about what real wages mean.
    • PathOfEclipse 4y ago
      Inflation is primarily caused by governments increasing the supply of money: https://www.hoover.org/research/inflation-true-and-false https://www.hoover.org/research/inflation-true-and-false. Inflation was fixed in the U.S. when Reagan became president: https://www.pacificresearch.org/beating-back-inflation-team-reagan-vs-team-biden/ https://www.pacificresearch.org/beating-back-inflation-team-... Recent studies in fact show that wages and productivity are still linked: https://www.aspeninstitute.org/wp-content/uploads/2019/01/3.2-Pgs.-168-179-The-Link-Between-Wages-and-Productivity-is-Strong.pdf https://www.aspeninstitute.org/wp-content/uploads/2019/01/3.... And, finally other analyses show that studies on wage stagnation fail to take into account other factors, like the increase in non-wage benefits since the 70s: https://www.cato.org/projects/humanprogress/cost-of-living https://www.cato.org/projects/humanprogress/cost-of-living
• LewisVerstappen 4y ago
  > In an inflationary economy, the winners are rich who have valuable assets whose value skyrocket - think real estate, businesses, etc. Uh, that's not true in the slightest? Are you completely unaware of what's happened in the stock market and real estate market over the past year (these are the examples you provided lol)?
  • tapland 4y ago
    Do you think that won’t recover? Anyone with means can buy up now or keep saving. The poor can’t and their 0 investments will be worth 0 after as well.
• shin_lao 4y ago
  Another way to say it is that inflation is the most unfair tax that exists.
• ochoseis 4y ago
  It is said that inflation (caused by money printing at least) is a hidden tax on everyone, which definitely hits the poor more than a progressive tax scheme would.
  • surement 4y ago
    it's a tax on your bank account, but other assets can increase in value proportionally with inflation
  • supernova87a 4y ago
    I forget a famous economist (old British guy I think) who said that there is no more effective way to secretly and insidiously overthrow / disrupt a society as unchecked inflation. (something similar to that, I'm probably paraphrasing badly)
• saos 4y ago
  > riots Cmon..I'm a brit too. I haven't seen riots. It's dangerous comment from you.
  • samhuk 4y ago
    Perhaps I should have been a bit clearer on that part. I was thinking of the recent political turmoil in France, which is somewhat related to the economy (rising retirement age is always a response to struggling economies, in part due to ailments like inflation).
• Paul_S 4y ago
  What I want to know is what kind of bread costs 4 pounds? For people not in the UK: bread at a supermarket costs a quarter of that.
  • LouisSayers 4y ago
    Perhaps a gluten free bread or some other special type?
  • samhuk 4y ago
    I will copy a previous answer of mine to a similar comment: A 1kg wholewheat sourdough loaf. I'm a bit picky regarding bread and have actually started making my own in the last few months due, in part, to A) rising prices, B) manufacturer corner-cutting, and C) it's fun! Regarding "A quarter of that", that is, IMHO, very optimistic. 1kg of bread for £1 would be quite the steal. However I should have been more specific about it being sourdough, which is much more expensive to produce than "regular" bread at UK supermarkets.
• nostrademons 4y ago
  Passive rich are usually severely hurt by inflation as well. One feature of inflation is that interests rates rise to cover expected future inflation. High interest rates = low asset values, since the value of an asset is the discounted value of all future cash flows and the discount rate goes up with prevailing interest rates. In theory companies' earnings should rise with inflation, but in practice existing companies are often too locked into existing price structures and competitive markets. Additionally, anyone with fixed-denomination assets (bonds, bank deposits) sees the value of them decline in real terms since the dollar is worth less. The main winners of inflation are: Adaptive over passive. As you mentioned, the average blue-collar wage growth always lags behind inflation. We aren't really seeing white-collar wage inflation either in the U.S. right now though - fast food workers are making $22/hour and Amazon drivers $18/hour, but FAANG engineers are getting laid off. Who are the winners then? The people who swap jobs or swap industries into ones with pricing power, or who found new businesses enabled by changing price structures. What we're seeeing in the U.S. now (with ~5% wage inflation) is that the 80% of wage earners who stay put at their job are getting ~0% raises, while the people switching are getting ~20% raises. Debtors over savers. This is well documented in econ textbooks - inflation is a transfer of wealth from savers to debtors, because debtors can pay back their debts with less valuable money. Governments over citizens. Partially this is because of government usually being a net debtor if it gets into a position where inflation happens, and partially it's because of the government's power to issue new currency. Plus tax revenue is usually a percentage of economic activity, so if all prices & wages increase by a certain percentage, so do tax revenues (and the government can bracket-creep you into higher tax brackets). Poor people usually fare worse than rich people because of the adaptive vs. passive bulletpoint - they have fewer options and less awareness of options than richer people do. But the debtors-over-savers effect works in their favor: poor people usually have higher debts than rich people, and inflation is a form of debt jubilee. If, for example, they jump into a fast-growing new business started because of inflation (like Microsoft or Apple Computer in the 70s) it could be their ticket out of poverty.
  • samhuk 4y ago
    Thank you for taking the time to provide the detail. I see now that the subject is quite a lot more complicated than I thought, and it's less about wealthy versus not-wealthy but rather a list of X versus Y, where X and Y are not what you would necessarily expect, such as gvmt versus citizen, etc. Again, thanks.
• Lio 4y ago
  > A sad thought I have about inflation is the fact that it is, wittingly or not, a weapon wielded by the rich against the middle and lower classes. I believe that Andrew Bailey, the current Governor of the Bank of England, was criticised for exactly that last year. https://www.theguardian.com/business/2022/feb/04/bank-of-england-boss-calls-for-wage-restraint-to-help-control-inflation https://www.theguardian.com/business/2022/feb/04/bank-of-eng...
• jrockway 4y ago
  The winners from inflation are anyone with debt. If your mortgage was equivalent to 1000 loaves of bread yesterday, and it buys 500 loaves of bread today, you just got a bunch of free money. This assumes wages keep pace with inflation; at the very low end of the spectrum (minimum wage) they probably don't, but for professionals, it seems like everyone has gotten inflation raises over the last couple years. Other than the sticker shock on the price of everything, it's not too bad for a lot of us.
  • justincormack 4y ago
    UK wages have not risen with inflation over the last year or so. Private sector wages went up about 7%. Public sector less.
  • ambicapter 4y ago
    > it seems like everyone has gotten inflation raises over the last couple years. based on what?
• AviationAtom 4y ago
  I think the current situation makes a convenient argument for a class war running amok. I think fewer folks are willing to talk about what lockdowns did to the supply chain.
• drewcoo 4y ago
  Ok, I'm with you so far. But I think there's more to it. What happens with those classes during deflation?
• Bukhmanizer 4y ago
  I just want to point out that pretty much every natural economic condition is beneficial for the rich. The thing about money is it’s very flexible. You can hoard it in deflationary cycles, spend it on assets in inflationary cycles, grow it in economically good times and buy cheap property and goods in economically bad times.
  • seizethecheese 4y ago
    The gap between living standard of poor and rich is much smaller than a few hundred years ago. What you claim cannot possibly be correct.
    • miohtama 4y ago
      The gap was lowest in 70s, has widened since then and is now as wide in 40s https://equalitytrust.org.uk/scale-economic-inequality-uk https://equalitytrust.org.uk/scale-economic-inequality-uk
    • pastor_bob 4y ago
      A few hundred years ago, the vast majority of people lived under Autocracies. The elite could simply dictate how societies would operate.
  • Silverback_VII 4y ago
    It's like Monopoly, at some point there is just nothing you can do. The resets are probably the collapses of civilizations.
    • mycodebreaks 4y ago
      good point, assets aren't infinite.
    • _yb2s 4y ago
      Money isn’t fundamentally a zero sum game like it seems on the surface… rich peoples wealth is invested, and gets used by less wealthy people to also create value - they might say draw a salary supported by a business loan, or mortgage a house.
• anonuser123456 4y ago
  >A sad thought I have about inflation is the fact that it is, wittingly or not, a weapon wielded by the rich against the middle and lower classes. I’m sure the Roman plebeians also thought as much during drought induced famine; “the wealthy caused shortages by their greed” Seems to be the natural response of the hyper-social-aware-confabulatory-ape-mind we, as humans possess. But make no mistake, inflation is caused by a mismatch between societies expectation of productive capacity, and its real productive capacity. Right now, real asset values are going down. Yes, some businesses have maintained nominal increases, but as consumers feel the squeeze so will asset real values. Asset valuation is based on real returns, and consumer behavior drives real returns.
• agentofoblivion 4y ago
  I don’t think that’s quite right. Lower classes also have debt, and inflation effectively reduces your debt. In that case, it’s a direct transfer of wealth from lenders to debtors.
• ransom1538 4y ago
  "In an inflationary economy, the winners are rich who have valuable assets whose value skyrocket" Agree. But, even better in inflationary economy: Debt. You want to own massive assets with loads of debt.
• Bloating 4y ago
  Its always someone else's fault, no matter what. I mean, the current laws of physics are just a conspiracy to benefit the rich. Congress just needs to pass a law making everything free without limit. When you point your finger, there's three point back at you
• bonadrag 4y ago
  Amazing that you were able to bring class divide that inflation fosters without mentioning the major responsible for it: the government and central banks. In fact, inflation is, in its current form, a tax levied by the government on all citizens--rich and poor. You are correct that the rich can find ways to hedge some of the effects of inflation, but that's expected as the rich have way more disposable income. I just want to know for how long people will close their eyes to these policies (green energy stimulus, self-inflicted supply chain bottlenecks, QE and bailouts to ultra rich and party donors via deposit bailout).
  • charlieyu1 4y ago
    Don't think the UK government can do much about it, the inflation is driven by USA rising interest rates which devalues the pound
    • O__________O 4y ago
      Pretending the UK did not intentionally decide to leave the EU, among other choices it has made, did not impact food prices is what it is. Related Google: https://www.google.com/search?q=did+brexit+impact+uk+food+prices https://www.google.com/search?q=did+brexit+impact+uk+food+pr...
      • charlieyu1 4y ago
        France and Germany are also experiencing food inflation in double digits, surely you can't just blame Brexit as the big factor
        • O__________O 4y ago
          Assuming you took a look at the search result I provided, but in case you missed it - “The OECD said last week that the U.K. is lagging substantially behind other developed economies, performing second only to Russia among the world's major economies.”; which is saying a lot given Russia basically committed economic suicide. Source: - https://www.cnbc.com/amp/2022/12/01/brexit-has-added-6percent-to-britons-food-bills-new-study-finds.html https://www.cnbc.com/amp/2022/12/01/brexit-has-added-6percen...
• PaulHoule 4y ago
  The conventional analysis is the other way around. When inflation is entrenched, wages and prices rise at a similar rate so that workers aren't too terribly effected but the value of financial assets don't keep up. Inflation is insidious in that respect in that it compounds like interest, you might think 5% a year is not that much, but over 50 years the value of your assets are less than 10% than what they were. It is harmful to the financial services industry in that people decide it is not worth investing. In 1979 Merrill Lynch was practically a penny stock because they didn't have any products to sell that people found attractive.