The Hidden Truth About UK inflation: Don't Celebrate Yet!

UK inflation was published yesterday and there has been much celebration. Some think this means Mortgage Rates will fall as the Bank of England will end its campaign of rate increases now that it has raised Bank Rate 13 times since December 2021. But if we dig into the numbers it turns out that the news isn't as good as it seems.
If you want to learn more about investing then why not become a pensioncraft.com member? To find what we offer and how you can join our friendly community click here www.pensioncraft.com/investor...
What Else PensionCraft Offers:
💡 Book a coaching session with Ramin so he can answer your questions in a one-to-one video call via Zoom: pensioncraft.com/power-hour/
📰 Sign up for our free weekly market roundup to get news and views about what's going on in the stock market and wider economy pensioncraft.com/market-roundup/
📖 Understand investment in more depth with my online courses pensioncraft.com/courses-we-o...
❓ Join PensionCraft on KZbin and you’ll be supporting me to make more content and I will answer your questions and respond to your comments on KZbin as a priority kzbin.info...
Where Else You Can Find Me
🎧Check out our weekly podcast "Many Happy Returns" on your podcast provider of choice many-happy-returns.captivate....
🌐 Website - pensioncraft.com/
📱 Twitter - / pensioncraft
👨 Facebook - / pensioncraft
🔗 Linkedin - / pensioncraft
Tools I Use To Create My Videos
✔️ My primary data source is SharePad and an affiliate link for this is here sharescope.co.uk/pensioncraftsp (This link provides new users with a special offer and gives me a small commission)
The rest of the tools I use are free open source software:
✔️ ggplot2 package in R for my plots
✔️ RStudio to edit and run R code
✔️ OBS to record my videos and live streams
✔️ Kdenlive to edit my videos
Take A Look At Some Of My Other Videos & Playlists
📹 Investment Strategies playlist • Investment Strategies
📹 Income Investing playlist • Income Investing
📹 Investing With Vanguard playlist • Investing with Vanguard
📹 Portfolio Building Blocks playlist • Portfolio Building Blocks
DISCLAIMER
All information is given for educational purposes and is not financial advice. Ramin does not provide recommendations and is not responsible for investment actions taken by viewers. Figures that are quoted refer to the past and past performance is not a reliable indicator of future results.

[@Muller_Andr]

The stock market will go down further and goodluck on the fed pausing rate hikes w/ all the hawkishness that has failed to keep up with inflation.

[@AnkurYo]

The market has been a turmoil since covid, the brief relief rallied for only a year and now the devastating effects of pumping trillions into the economy is here and will be for a while.

[@Jennapeters144]

Fixed income and treasuries may work for you while you try to figure out the next entry point for stocks

[@simone_maya]

It is always good to have a balanced fin-plan. I work with a professional planner and fixed-income strategist in NY. the fixed income portion of your portfolio won’t simply serve as a buffer to the volatility of the equity portion of your portfolio, but will provide legitimate income.

[@xavier_lucas]

@simone_maya Who are you working with please?

[@simone_maya]

LOREN LENA WALKER, advanced lady in 60s or 70s and professional, reserach if you care for supervision.

[@stevo728822]

Prior to this period of inflation I believe EU food prices were already higher than the UK. This is from my experience of shopping in EU supermarkets on a year of travelling around European countries. British people complain about UK supermarket prices but they'd complain even more if they had to pay French supermarket prices.

[@drifty_grifty]

Difference is the quality in France is much better

[@fridgefood6282]

True that, we seem to have cheaper food than most developed countries

[@voice.of.reason]

@@fridgefood6282 Cheaper than so called third world countries too. Ireland has insane food prices

[@georgec2894]

Come to Norway if you want high price AND poor quality/variety in your food 😂

[@danguee1]

But then you get French quality - which is quite a bit higher. Having said that, French supermarket prices are a bit daft - even the poor quality stuff is expensive.

[@DomenicNicosia-bs8qd]

Taking food and energy prices into account UK inflation must be running at around 15% plus the BOE figures just don't add up

[@jim-es8qk]

The USA also have a cheap supply of natural gas. They fracked extensively. Europe's main supply came from Russia and pushed up prices following the outbreak of war.

[@steveinstamford]

The way the inflation was changed a few months ago, again to make look numbers better for the government. Its well above the advertised rate

[@lynn3051]

Thanks Ramin & Teddy ❤

[@Pensioncraft]

Thank you too @lynn3051

[@detectiveofmoneypolitics]

Economic investigator Frank G Melbourne Australia is still watching this very informative content cheers Frank ❤

[@user-eg9kf6wq2d]

Thanks as always for another great video!

[@Pensioncraft]

Glad you enjoyed it! @user-eg9kf6wq2d

[@DamienTalksMoney]

Excellent video! Love Teddy.

[@Pensioncraft]

Hi Damien! It was great to meet you and T and of course Toothless (okay, actually Will's dog from Kindling Media) the other day. Thanks, Ramin

[@stevo728822]

I believe NS&I protect deposits up to £2 million. Some KZbinrs are promoting Wise which isn't FSCS protected.

[@SphericallyChallenged]

Audio levels need raised please sir. Cannot hear when travelling with headphones.

[@petergorian535]

Final comment can you compare inflation numbers in different countries - doubt they are calculated the same way.

[@caracal9458]

when you throw a ball in the air it moves very slowly down the moment after hitting the top of the arch, but quickly picks up speed (hopefully!)

[@dw300]

Inflation is controlled by gravity.. who knew!

[@MagicNash89]

Love your comments Ramin, keeping a cool head among the sea of ignorance and overreaction, would love to see you comment more on other international news like this too...if you think you can

[@Pensioncraft]

Thanks for the comment @MagicNash89

[@rfxtuber]

@@Pensioncraft Ted was the star of the show... hahahahahha

[@MrFrobbo]

No mention of everyone coming off 2 to 5 year mortgages which will shock the CPI(H) figures and lead to a significant rise going forward...

[@Josh95x]

I think you vastly overestimate the financial literacy of the average Brit. The majority don't invest outside of a pension or know what a money market fund is. They don't even look around for the best savings rates. Also, something to be aware of is that fixed ISAs (unlike standard fixed savings accounts) are runnable because you can withdraw the money due to ISA rules - you just pay a penalty to do so.

[@petergorian535]

Interesting UK core inflation trends counter to UK EURO Japan.........odd?

[@alastair8257]

I'm here for 'that dog smahing those biscuits'...and some mega finance chat! More biscuit smashing please... Great video. Thanks so much for the excellent inflation summary! Love to Ted

[@Pensioncraft]

Thanks so much :) @alastair8257

[@george6977]

Risk adjusted return on short dated gilts crazily high? The nominal return, but the real yield is negative as the inflation rate is higher.

[@fredatlas4396]

@george6977 Where are you investing your money in your pension

[@petearmstrong2778]

Financial analysts/media agreed a 0.25% BOE increase but today the UK Retail data released and shows it rose way above consensus so now they are agreed that 0.50% BOE increase now most likely. 24 hours see a complete change. May change tomorrow!

[@timhulme6103]

You mention the analogy of the oil tanker taking time to change direction once a decision to alter course is made in regard to core inflation and the setting of interest rates. Such rate changes you state take months even years to feed through to bringing inflation to the 'right' level. If the BoE/government want inflation to fall to a desirable level then doing what they are doing now and continuing to raise rates UFN when CPI has appeared to have peaked strikes me as the right amount too late. Two speculative reasons may I suggest (and in no particular order): 1) The BoE is attempting to restore it's battered reputation after being criticised for being too slow of the mark in 2021 - for which the borrowing public will pay the price. 2) The BoE being in the market for international money to fund government expenditure has to compete with other central banks to attract funds and thus the raising of rates is all to do with competition with other CBs and a lot less so with headline domestic monthly inflation figures. (Yes, there are other reasons to put forward, not just these two). Separately, I have not read anywhere how our Prime Minister will go about cutting inflation (which is not his job!) by half by the end of this year when he has no control over the main lever for inflation control - that is interest rate setting. (Or am I being a little naive here?)

[@michaelmartin8123]

The central bank doesn't have control over wages or government spending, both of which can run contrary to the CB's efforts. The government does (at least in the public sector), and is leveraging that power to bolster the bank's efforts. Hence the current strife in the labour market.

[@Pensioncraft]

Hi @timhulme6103 I think you're right that sterling weakening plays a part in monetary policy as this causes pass through inflation. So keeping sterling from weakening excessively is definitely on the Bank of England's radar. Reputational risk is too. Thanks, Ramin.

[@spokes1018]

Odd how we had interest rates of 5% in 2008 and 2011 but didn’t raise rates and kept them super low and it burn itself out.

[@ratttttyyy]

QE coming back home to roost.

[@apothe6]

We like Teddy

[@danguee1]

Don't forget: YOUR inflation will be different if you have different spending patterns - which we all have. My inflation, based on my transactions in my current account is up only 2-3% on the year. Whereas others may have 20% based on their patterns. Even 'core' CPI has no meaning if you don't buy the stuff in 'the basket'.... Have I cut back on my spending? Maybe - but just a tiny amount and I stock up when bargains come along.

[@UpRiverRafting]

Most items in the grocery stores here cost 1.5xs what they did before 2020

[@UpRiverRafting]

He listed a number of places where you can buy a single bond in the UK. Anyone know the best places to buy single US bonds? Thanks

[@user-vc5qk9tg7u]

every d0llar traded is contributing to U$ gl0bal terr0rism

[@smc340uni6]

In the UK, surely the time is ripe to employ a touch of MMT given we've a significant amount of un-utilised Capacity in the labour/production markets. So on that basis, how would you view targeted monetary spending into the economy to create a positive stimulus, that would create new jobs and so reducing the tight labour market ultimately slowing wage demands? bw

[@joetipton8681]

Why would I get a government bond when I can get a fix rate for one year at 6%?? I don’t get it?

[@eddieward-ev3rv]

Because any capital gain on a bond is tax free

[@joetipton8681]

@@eddieward-ev3rv thank you for taking the time, that explains it 👍👍

[@rev3715]

Hi, do you have any thoughts on Trueflation still putting uk at 11%+?

[@Paul-zu2he]

I do - that's too low

[@danguee1]

@@Paul-zu2he How would you know? Your own personal spending profile? I bet you haven't done the numbers - that's just a feeling....

[@TheRealMrLaserCutter]

Oil and wheat shooting up is worrying. We are just in a more volatile era which will require higher rates to keep inflation down. I think climate change is going to be a bigger issue than most think

[@jim-es8qk]

yes, but the pound has recovered against the dollar. It makes oil cheaper and 5% rates is not high.

[@petergorian535]

US inflation is also being helped by the fact they raised interest early and higher in part not just tackle inflation but also to boost support for a failing US$. That also had the side of affect of keeping import prices lower. The US is extremely good at printing large amounts of money to generate global inflation and then aggravate the problem with tricks like this one. But that game can only played for so long. When US interest reduce and/or the fiat nature of their currency really gains global attention and alternatives like BRICS continue to grow things are going to get very nasty for the modal US citizen. Homelessness is already acute and will worsen.

[@rameshpudhucode6862]

Don’t envy. I am from india. We know how poor British people are. Compared to America or even Germany. You guys looted india and colony. That is why unlike America you don’t have innovation or technology

[@jim-es8qk]

They also have a cheap supply of natural gas. They fracked extensively. Europe's main supply came from Russia and pushed up prices following the outbreak of war.

[@patrycjasz3102]

My favourite channel

[@Pensioncraft]

Thank you! @patrycjasz3102

[@sender5804]

inflation will fall sharply, just like in USA, but not as fast

[@rameshpudhucode6862]

In America it never went up to 11.7%

[@sender5804]

@@rameshpudhucode6862 so?

[@pip1723]

The government have proved there clueless with the economy best of luck to the incoming government sorting this mess out.

[@podtunnie3087]

The numbers are lies usa inflation is going though the roof ,china are selling off all the debt

[@888ssss]

house go up.....and pensions go down 😂😂

[@mikehardwicke23]

History shows another wave of inflation follows a pullback/stabilisation. I would like to have seen a historical comparison. Otherwise excellent as always 👍

[@travellingtom6091]

Yes. I listened to a recent interview that said the same. Would be good to see Ramin discuss the other periods of high inflation and the pattern of recovery. I was told that inflation peaks three times before settling.

[@MagicNash89]

@@travellingtom6091 A more interesting question would be whether people knew this in the past period of high inflation. Because we know and discuss this - that it might bounce back, policymakers know this, which is why the sensible analysts predict interest rates staying high and stabilizing for longer,

[@Pensioncraft]

Hi @mikehardwicke23 there's a lot of historical data from the Bank of England and ONS on UK inflation so that's certainly a possibility. The second wave is also a possibility but nobody knows if that's coming. For example, we could have a cold winter and competition for LNG with China/Europe could send prices skyrocketing again which would kick off another inflation spike. But there's no reliable way to predict whether that will happen. Thanks, Ramin.

[@mikehardwicke23]

@@Pensioncraft Banks are under pressure tho' not reported, BOE likely to print 4th quarter, then inflation will rocket IMO

[@MagicNash89]

You a fashion icon, Ramin? Nah...now Teddy on the other hand...Or maybe Laura, who we never see on screen...

[@TheSteinbitt]

Wth are you on about?

[@mindcache5650]

The ‘ Hidden Truth’ is that the Tory media have totally ignored that there’s a war going on. Let’s see the input of agricultural prices after the Ukrainian blockage .

[@alwayslearning4964]

How random lol

[@kaya051285]

Buying governments bonds don't move 'cash' out of the banking system Cash in the banking systrm always stays in the banking systrm If you have £100 in your savings account you can use it to buy a stock or a bond but that money doesnt leave the banking system The idea that savings in the banking system will move into gilts doesn't make any sense An individual can get rid of their banking deposits but only by passing it onto someone else who keeps it in the banking system You can't convert banking deposits into gilts or vice versa The only way to reduce banking deposits is to pay off debt and that will happen on the margin. And in fact it makes more sense than investing in govenrment bonds as a persons mortgage is higher than gilt rates and even lower risk

[@fredatlas4396]

Not if you've payed your mortgage off

[@voice.of.reason]

I think the market and people are deluding themselves about the inflation figures

[@ReformationsGlassArt]

that dog CRUNCHING down the mic is hella annoying !

[@lukebtaylor7]

You need better audio my dude

[@MS-kh9fy]

another good video. Kepp up the good work

[@Pensioncraft]

Much appreciated @MS-kh9fy