Quote:
Originally Posted by BBKing
2p on petrol tax is dwarfed by the effect of the post-Iraq oil price rises.
What we're forgetting slightly is the ability to cut costs by using fuel more efficiently, which becomes ever more incentivised with every increase. Also manufacturing costs for the goods are still falling and there's always those East European hauliers. What do you want, inflation or roads full of Polish truckers blindly following the satnav under low railway bridges? Difficult one.
Still, stagflation (a recession where prices go up) is a definite possibility, which is great news, particularly if you have a large recent mortgage. Why? Because it reduces the value of your debt so you have to work less to pay it off, plus interest rates have to come down to try and cure the recession so you pay less interest. Kerching time, if you keep your job that is.
Inflation is bad if you have lots of savings, stagflation is doubly bad because you don't earn interest on them, but it's great if you have lots of debt.
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We dont have stagflation, inflation is predicted to go up to 3% this year which will stop interest rates dropping and therefore mean people dont have the money to spend to keep the econonly bouyant. My point is that the Government can help to cut inflation by not increasing taxes on fuel, however they choose to hit us twice by increasing taxes and then the BOE increase interest rates to try to control inflation.
Whilst i agree manufacturing costs are dropping, this doesnt help our economy much as it usually means that the manufacturing has been shipped abroad and yet more money flows out of the country