Inflation - It Starts

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Inflation - It Starts

Postby Nick » Fri Oct 21, 2011 8:38 pm

The BoE has this theory that inflation is being imported and is outside our control. The theory is that the real threat is that the economy will collapse and inflation will undershoot it's target.

Thousands of hourly paid and staff employees across Solihull, Castle Bromwich, Gaydon, Whitley and elsewhere will qualify for the bumper pay rises after unions won an inflation-linked deal just a year ago.

The agreement was for a five per cent increase from November 1, 2010, and three per cent or the Retail Price Index plus 0.5 per cent from November 1 this year.

With the Government’s RPI measure at 5.6 per cent, its highest rate since June 1991, workers at the Midlands biggest manufacturer will now receive more than last year’s five per cent rise, itself hailed as an industry-leading deal. Many hourly paid engineers on around £35,000 a year will now see their pay rise by more than £2,000 a year when the new 12-month deal kicks in on November 1.

Roger Maddison, national officer for Unite, said: “Last year, we could have settled for three per cent for Year Two, and that would have been a popular deal. Three or four years ago, we had zero inflation and now it is nearly six per cent.

“If you are going to do a long-term deal, you have to make sure that you are protected against inflation.

Read More http://www.birminghammail.net/news/top- ... z1bRlX0oOO

Now THAT is home bred inflation in the making
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Re: Inflation - It Starts

Postby Steve Griff » Sun Dec 04, 2011 11:17 am

Thats a great great for the members, why will this drive inflation at home Nick, numbers are not my thing.
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Re: Inflation - It Starts

Postby Nick » Sun Dec 04, 2011 11:24 am

When you have inflation linked pay deals costs rise faster than inflation, which leads to even higher inflation.

The higher inflation leads to even higher pay deals, and even higher costs, and even higher inflation.

The only way to reduce inflation is to have pay rises which are less than inflation.
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Re: Inflation - It Starts

Postby Steve Griff » Sun Dec 04, 2011 11:27 am

GE will be helping the UK inflation then, their pay deals never keep time with inflation, the 10 years when I wasn't working there were the same too apparently.
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Re: Inflation - It Starts

Postby keith » Sun Dec 04, 2011 7:52 pm

But of course if you have a mortgage inflation is good !

IF no inflation and no pay rise after 10 or 20 years your mortgage is the same percentage of your income

Now assuming 5% inflation and a mortgage that starts at 40% of your income after 10 years its 25% of your income and after 20 years it's 15%

ramp inflation up to 10% it's 15% after 10 years and 6% after 20 years
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