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Posts Tagged ‘Rising’

The Fed says that it is keeping an eye on inflation. What they don’t say is that their eye balls are slanting upwards. In order to save the whole financial system (if it can be salvaged), the Fed has been printing money as fast as it can and loaning out tens of billions at firesale rates to keep some financial institutions from going bankrupt and bringing down the house of cards.

I have a small car and it takes $50+ to fill it up!

And who hasn’t been to the grocery store in the last 2-3 days? The U.S. is wrestling with the worst food inflation in 17 years, and analysts expect new data due on Wednesday to show it’s getting worse. That’s putting the squeeze on poor families and forcing bakeries, bagel shops and delis to explain price increases to their customers.

The US$ has literally gone to hell in a hand basket!

U.S. food prices rose 4 percent in 2007, compared with an average 2.5 percent annual rise for the last 15 years, according to the U.S. Department of Agriculture. And the agency says 2008 could be worse, with a rise of as much as 4.5 percent. Would you believe 6%? We’re in a major economic meltdown!

Potatoes anyone?

As wheat and rice prices surge, the humble potato, long derided as a boring tuber prone to making you fat, is being rediscovered as a nutritious crop that could cheaply feed an increasingly hungry world. Potatoes, which are native to Peru, can be grown at almost any elevation or climate: from the barren, frigid slopes of the Andes Mountains to the tropical flatlands of Asia. They require very little water, mature in as little as 50 days, and can yield between two and four times more food per hectare than wheat or rice.

I’m glad I’m Irish. I like potatoes!

It’s an international crisis. U.S. households still spend a smaller chunk of their expenses for foods than in any other country — 7.2 percent in 2006, according to the USDA. By contrast, the figure was 22 percent in Poland and more than 40 percent in Egypt and Vietnam. In Bangladesh, economists estimate 30 million of the country’s 150 million people could be going hungry. Haiti’s prime minister was ousted over the weekend following food riots there.

Unfortunately, we’ve built a NO WIN economic picture!

A new countrywide consumer poll from Lloyds TSB has indicated that worries about food, fuel and energy costs are forcing expectations of high inflation in the coming year.

The consumer barometer identified that average expectations for inflation in the next 12 months were found to approach four per cent, as opposed to the official three per cent set out by the Bank of England’s monetary policy committee’s (MPC’s) quarterly retail price index (RPI) report. Conducted earlier this month, the barometer questioned 2,000 adults throughout the UK and found that 90 per cent felt that average prices had risen in the past 12 months, compared to the 63 per cent recorded in May 2007. A further 89 per cent said they expected prices to increase again in the next 12 months. Both of these results were at their highest level since 2004.

Respondents to the study envisaged that by this time next year, inflation would be up to 3.8 per cent, up from 3.6 per cent estimated in last year’s survey. Lloyds TSB also suggested that consumer confidence in employment and their own job security was also slipping. Nearly a quarter (23 per cent) of respondents said they felt their job was less secure than it was a year ago, while 48 per cent of people said that overall employment prospects in the UK had got worse in the past 12 months.

For those who have found themselves struggling with general living expenses, taking out a low-rate loan may be of assistance in meeting the costs of food and energy. Meanwhile, consumers who have become increasingly indebted as living costs soar, taking out a debt consolidation loan may provide a lifeline.

Trevor Williams, chief economist at Lloyds TSB Corporate Markets, said: “Currently at three per cent, there is no disputing that the current prediction is that inflation will stay high. However the latest report from the Bank of England suggested that in the long term inflationary pressures would ease as food and fuel prices start to fall in the next 12 months. In stark contrast to this, our latest barometer shows that consumers do not believe prices will ease and so inflation expectations for the next 12 months are tipping four per cent. The MPC continues to highlight the need to anchor inflation expectations as key to bringing actual inflation under control.”

He added that any future cut in the interest rate would send the wrong message to consumers. Mr Williams suggested that the UK will be in for a period of flat or rising interest rates if consumer expectations continue to rise.

In a press conference following the MPC’s May RPI publication, Bank of England governor Mervyn King attributed the current rise in inflation to increasing global costs of food and energy. He added that consumers will continue to feel the effect of these inflated prices over the course of the next 12 to 18 months and as such, he asserted that it “doesn’t make sense” to focus on bringing inflation down to the Bank’s target level of two per cent within this timeframe. However, Mr King said that “we should certainly” look to tack inflation back to this level in two years’ time.

Although it held the base rate of interest in its last decision, the MPC has made two cuts so far this year. In April, the base rate was cut by a quarter of a percentage point to stand at its current level of an even five per cent.

A new countrywide consumer poll carried out by Lloyds TSB has indicated that concerns about food, fuel and energy costs are driving expectations of high inflation in the year to come.

The consumer barometer identified that average expectations for inflation over the next 12 months were going to be nearing four per cent, and not the official three per cent set out by the Bank of England’s monetary policy committee’s (MPC’s) quarterly retail price index (RPI) report. Carried out early last month, the barometer questioned 2,000 adults throughout the UK and discovered that 90 per cent felt that average prices had gone up over the past year, compared to the 63 per cent recorded in May 2007. An additional 89 per cent said they expected prices to increase again over the next 12 months. Both of these results were at their highest level since 2004.

Respondents to the study predicted that by may 2009, inflation would stand at 3.8 per cent, up from 3.6 per cent estimated in last year’s survey. Lloyds TSB also suggested that consumer confidence in employment and their own job security was also falling. Nearly a quarter (23 per cent) of respondents said they felt their job was less secure than it was a year ago, while 48 per cent of the people said that overall, employment prospects in the UK had got worse over the past 12 months.

For those who have found themselves failing with general living costs, taking out a cheap loan may be of assistance in meeting the costs of food and energy. Meanwhile, consumers who have become increasingly indebted as living costs soar, taking out a debt consolidation loan may provide a lifeline.

Trevor Williams, chief economist at Lloyds TSB Corporate Markets, said: “Currently at three per cent, there is no denying that the immediate outlook for inflation remains high. But the Bank of England’s latest report projected that inflationary pressures would ease in the long term as food and fuel prices start to fall next year. In stark contrast to this, our latest barometer shows that consumers do not believe prices will ease and so inflation expectations for the next 12 months are tipping four per cent. The MPC continues to highlight the need to anchor inflation expectations as key to bringing actual inflation under control.”

He added that any future cut in the interest rate would send the wrong message to people. If consumer expectations of inflation continue to rise, the UK will undergo a period of flat or increasing interest rates in order to bring inflation back under control, Mr Williams concluded.

In a press conference following the MPC’s May RPI publication, Bank of England governor Mervyn King attributed the current rise in inflation to rising global costs of food and energy. He added that consumers will continue to feel the effect of these inflated prices over the course of the next 12 to 18 months and as such, he asserted that it “doesn’t make sense” to focus on bringing inflation down to the Bank’s target level of two per cent within this timeframe. However, Mr King said that “we should certainly” look to bring inflation back down to this level in two years’ time.

Although it held the base rate of interest in its last decision, the MPC has made two cuts so far this year. In April, the base rate was cut by a quarter of a percentage point to stand at its current level of an even five per cent.