Inflation or Deflation coming?

[NorthernBoy]

With all this money printing going on you would expect that prices should be going up and inflation taking hold. However we seem to be in a deflationary period with little movement in prices or wages.

Just wondering what other people think will happen to inflation over the next few years?

Personally I think we will see some increase in prices once things open, namely holidays abroad etc as there will be huge pent up demand. Longer term I think we are still in a deflationary period.

[RobertT]

Inflation rates are currently in positive territory, so no deflation at the moment, and I'm not sure technically whether the UK has ever had deflation? But rates have been going down over the last few years and will probably stay that way as long as Covid is stopping the economy from growing.

Once we get back to some kind of normality, rates might start to rise a little as people can start spending again. Although as unemployment has increased, maybe not to previous levels.

I don't think we'll see a massive increase in wage inflation, as many will just be pleased to have a job.

Then you'll have the effects of Brexit and potential increased costs of imported goods, etc.

Overall I think rates will stay fairly low for the next year or so and then as the economy 'regenerates' itself, assuming Covid is no longer too much of an issue, rates will slowly rise again to the 2-2.5 level.

It's not really my field and I'm not sure the 'experts' know what's going to happen too far into the future either, so my opinions are probably wide of the mark.

[NorthernBoy]

Just got my car cleaned and the price has gone up to £8 as compared to £6 pre lockdown. My partner had her nails done and she tells me prices have gone up 15%. Also house prices had gone up significantly in the last 12 months

Are we seeing real inflation now and will it last

What’s everyone’s else experience now lockdown has been lifted?

[Hawkey99]

I think inflation is pretty certain in the short term, intact the fed have said they are happy to let their economy run hot for a few years.

However its post 2025 I am more concerned about......

We could follow Japan and end up with deflation and a stagnate economy for years or even decades.

The honest answer is I don't know and I don't think the experts do either.

You can get very highly thought of economist who go inflation and some others who are equally thought of saying deflation.....

All I say is .....Heres to the end of this wicked disease this year.....No one is safe until we are all safe....Everywhere......

[david3595]

Car wash gone up £2, Barbers up £2, Beer Gardens not opened yet but friends in England say their local added 50p to a pint and they now pay £4.30 which is still on average 70p less than my local at moment

[RobertT]

Many businesses will see them being able to reopen after Covid restrictions as an excuse to up their prices to get back some of the income they've missed out on, and some will be blatantly profiteering from the situation.

But I do think an issue here is what is included when working out the official inflation figures, and what isn't.
Is the cost of having your car cleaned or your nails done included in that 'basket of goods' they use to work out the rate of inflation?

In practice, the actual rate could be lower or higher than headline figure and would affect people in varying amounts based on what they spend their money on.

[aiden01]

Car wash gone up £2, Barbers up £2, Beer Gardens not opened yet but friends in England say their local added 50p to a pint and they now pay £4.30 which is still on average 70p less than my local at moment

Wash own car shave own head stuff the rip off pubs an clubs buy a large carryout at quarter of price lifes good lol.

[renrag40]

It is only comparatively recently (in historical terms) that deflation has become a rarity. Between 1751 and 1933 the UK had 89 deflationary years. Since then just 1 in 2009.
Most economic modelling puts inflation peaking in the late summer months of 2021 and then falling back. Only time will tell whether they are accurate or not.

[Woody Guthrie]

There's no way with the added pressure of Brexit that we're heading into a period of deflation.
The basket of goods is weighted and by far the biggest chunk of that is food and non alcoholic beverages all of which if anyone has been shopping lately are heading in the wrong direction.

Also as has been pointed out the service , entertainment and retail sectors have all built up a great deal of debt during the lockdown period and that will have to be paid for as will recruitment costs for those that have had to lay off staff and are now looking to staff up again.

[NorthernBoy]

I see the latest UK inflation figures for June was 2.5%, will interesting to see what it is by September.

Do people think inflation goes higher from this level or falls back?

[RobertT]

In terms of pension increases, etc then to some degree we want inflation to be fairly high in September, but obviously that will impact those with savings accounts with dismal interest rates.

Personally I think inflation will rise in the short term but that might trigger the Bank of England to increase base rates and it will then fall back a bit. They try and hit a 2% target!

On a separate note it looks like the government might renege on their state pension triple lock manifesto promise.

[Hawkey99]

Yes I can see us hitting 3.5% in September which is good for us, as long as it then settles down or otherwise we are back to square one.....

[NorthernBoy]

Yes I can see us hitting 3.5% in September which is good for us, as long as it then settles down or otherwise we are back to square one.....

3.5% is certainly possible by September and would give a nice lift to pensions next year. I think us inflation is running at over 5%, whether we get to that level is anyone’s guess.

[renrag40]

RPI for June was 3.9%.

[Hawkey99]

Are you sure....

I thought I saw 3.3%...