Is hyperinflation a real possibility?

SuperTortoise · 07-03-2022 11:09pm #1

I've been asking myself this question for the past few months,

Steel, timber, diesel, have all at least doubled in price in the last 18 months, fertiliser has tripled in price, everytime you walk into a shop now it seems there is 20/30/40c thrown onto everything. I get meal bins filled every 2 weeks and everytime since last October it's gone up €10/t at a time.

We're told inflation is running at 5.5% but what's the real inflation rate for the farmer?

There was a price difference of 35c on a litre of diesel between the cheapest and dearest filling station today on my way into work! close to €140 to fill the tank and that'll last a week.

Took a look at the local mart last week and weanlings were selling for the same price/kg as last year.

It's disheartening to be running faster every year to stand still, but this year seems like i'm going backwards.

Does anyone else think we're at the start of hyperinflation or do you think it will settle back down?

Danzy · 07-03-2022 11:17pm

Probably not hyper inflation but probably problem inflation.

Strangely enough while Russian crisis is driving it now, the resulting recession will likely take the heat out of inflation.

In 2008 I said to herself that the economic crash was probably going to be the biggest event of our lives, then Covid and now the Ukraine.

So who knows I still think that the pain will come from recession or stagnation and double digit inflation.

Inflation for farming looks like it's about 15%, from my comparisons with other years, hard to properly weight but it is well above 5.5%

It's very disheartening to be always fighting a rear guard action and still be improving year on year. My motivation for it took a real dive this year, sunlight and them at grass will bring it back some bit.

patsy_mccabe · 07-03-2022 11:54pm

Most reliable way to kill inflation is to increase interest rates. Not good for asset prices like house prices and share prices, but it works. During Covid, the production of goods and services stopped but governments kept giving out money. This had to lead to inflation. When inflation gets hold, it's very hard to stop it. A bit like a dog chasing it's tail. The US fed have already hinted at interests rate hikes, so they are on the way. The war in Ukraine put another cat among the pigeons.

Inflation & Interest Rates Relationship Explained (investopedia.com)

08-03-2022 2:52am

Interest rate hikes would help in normal times but a lot of the current inflation is being driven by fuel and gas rises.

The war in Ukraine and related sanctions has exacerbated the problem.

Ideally talks would have avoided the Russian invasion but now it looks like it will rage on and cause massive suffering. There has been a war in Ukraine since 2014 but the involvement of a full on Russian invasion will lead to millions of refugees.

Ireland will need to accommodate 100,000 of these refugees and they will all need proper access to housing, education, childcare and jobs.

Ireland could end up being the laughing stock of Europe as we don’t have enough housing and services as is. Solutions will have to be found to get these people the help they need and surely that will mean no to a reduction in taxes etc.

yosemitesam1 · 08-03-2022 6:50am

Largely depends on what china do. They have the power to collapse the dollar/euro.

They seem to be keeping the pressure on commodities whether intentionally or not.

If over the coming year they decided to start to liquidate foreign reserves, it would be disastrous.

The worst of Germany's inflation in the 20s was caused by foreign holdings of marks returning into Germany and there is no way for a central bank to halt that if it starts to happen.

3DataModem · 08-03-2022 8:32am

Sorry for the O/T post, but some info on what's happening.

The world - specifically the EU - are trying to break the Rouble. Russia had about 600bn in foreign currency reserves at the start of the war. They are using that to prop up the demand side of the rouble to stop it tanking further, but eventually you will see split pricing at the shop fronts in Russia (where the Rouble price for something is set arbitrarily high by businesses to deter people spending them, due to the risk). This is the prelude to hyperinflation, and the only way to combat it for a government is to buy RUB with foreign currency reservers. That's happening right now... but the 600bn won't get them too far.

yosemitesam1 · 08-03-2022 8:36am

https://www.boards.ie/discussion/comment/118749183#Comment_118749183

Russia cant use their foreign reserves at the minute. That is why the ruble has dropped so much.

08-03-2022 9:04am

https://www.boards.ie/discussion/comment/118749183#Comment_118749183

Putrid amassed closer to $700bn, BUT the good news is among many other things he miscalculated were the sanctions which have "arrested" greater than 50% of that fortune.

JustJoe7240 · 08-03-2022 10:45am

https://www.boards.ie/discussion/2058236304/is-hyperinflation-a-real-possibility

is 35c/litre a typo? If it's not, it's almost certainly washed diesel.

nklc · 08-03-2022 11:07am

https://www.boards.ie/discussion/comment/118749227#Comment_118749227

The so-called experts on the business channels say the sanctions are not that severe and that Russia will be able to manage because we need Russian oil/gas and if the west wanted to , they could have crippled russia . Just look at the Uk first round of sanctions, harmless

Geuze · 08-03-2022 11:12am

https://www.cso.ie/en/statistics/agriculture/agriculturalpriceindices/

Here is Dec 2021:

https://www.cso.ie/en/releasesandpublications/er/api/agriculturalpriceindicesdecember2021/

Inputs up 20.9% over the year

Geuze · 08-03-2022 11:14am

@Danzy

"Inflation for farming looks like it's about 15%, from my comparisons with other years, hard to properly weight but it is well above 5.5%"

The 5.5% is consumer price inflation, CPI.

Agri prices are tracked by a different index, see my links above.

See table 1 for output and table 2 for input cost inflation.

Danzy · 08-03-2022 11:29am

https://www.boards.ie/discussion/comment/118749702#Comment_118749702

Don't worry Larry, take it off my end.

All will be ok. I had a car once that was always needing repairs, a couple of yachts must be a heartbreaker.

Danzy · 08-03-2022 11:39am

https://www.boards.ie/discussion/comment/118749715#Comment_118749715

20.9% input rise, drops in bps, and what is left is buying 5.5% less.

🤢

Thanks for the data.👍

08-03-2022 12:54pm

https://www.boards.ie/discussion/comment/118749675#Comment_118749675

Londongrad will do as little as possible, but others are doing significantly more.

Oil and gas needs to be stopped, it's covered in Ukrainian blood.

tommybrees · 08-03-2022 12:55pm

Yes, I think we are sleep walking into disaster over the coming years

patsy_mccabe · 08-03-2022 1:37pm

The rise in oil/gas prices is not true inflation. Right now, it caused by a shortage of supply. It leads into cost increases everywhere else, but it can be reversed too, with an increase in supply.

08-03-2022 1:45pm

https://www.boards.ie/discussion/comment/118750457#Comment_118750457

Been hearing this a long time though. "Just 3 more months" has been the call for the last year. Meanwhile things are still in shortage (despite the higher prices) and the window for shortages subsiding just keeps getting pushed back.

I'm not expecting triple digits but we're at the beginning of a massive disruption and change in the "normal" economy.

Over the last decade coming out of the recession things were remarkably stable. Hell even in the recession prices were "normal". But we've gotten to a point now that someone on minimum wage needs to work for maybe 4 hours to feed themselves very well for a week but 3 days to pay a week's rent in a houseshare. Consumer electronics have gotten dirt cheap. A lot of potential price rises over the last 10 years have been applied and are being applied now. Add the huge input costs increases and get ready for another rise in prices. The funnelling of massive proportions of people's income (in historic terms) straight to housing is almost unprecedented, and the fact that an increasing proportion of that stock belongs to investors who pay less tax because they're foreign is a **** travesty on several levels. If food prices went up 50% but rent fell by even 10% a lot of people would break even. Unfortunately that would be masked by the nominal rent crowd who would be worse off and for the people who managed to get on the ladder.

Danzy · 08-03-2022 7:14pm

https://www.boards.ie/discussion/comment/118750215#Comment_118750215

London has been the main friend to The Ukraine in Europe by a large margin.

Germany sent the Ukrainians arms, **** that wasn't functional 20 years ago.

08-03-2022 7:17pm

https://www.boards.ie/discussion/comment/118752745#Comment_118752745

In some ways yes, in other ways certainly not. They've sent a ton of weapons which is excellent. But sanctions on regime interests and oligarchs, money laundering (in particular), and refugees leave an awful lot to be desired.

Germany is tap dancing through a minefield of shít, but it's looking for mines to step on instead of avoiding them. They do themselves great reputational damage.

Jonnyc135 · 09-03-2022 6:37pm

https://www.boards.ie/discussion/comment/118750509#Comment_118750509

Like you I'm so sick of seeing these well paid bureaucrats in the ECB talking this crap that inflation is transitory and its supply chain issues. The oil price now means its even harder for haulage companies to transport goods. I know personally 3 hauliers downsizing as it is not paying them with input costs soaring. I have said this for a while now, ECB is running a Financial Repression model in order to liquidate there debt, they have been doing it since nearly 2014. There is and IMF research paper on Financial repression and it even states that the Europeans countries are implementing it and this paper was revised in 2015. It all revolves around low ECB interest rates and they have been tiny since 2014/2015.

Scary part about this is that the model requires steady inflation % (say 2-3% which is their target)and lower interest rates (0.5-1.5%) meaning a net negative interest rate. On the report by the IMF it states that a sudden Inflationary shock (like covid supply chains and now Putins war) may make this whole system redundant. This may then lead to spiralling government debt and even worse scary hyperinflation.

The reason the ECB are burring their head in the sand is they are scared shitless that Putin's war may screw this up. That's why even inflation running at 5.7% (will come close to 8% I would suspect come July) they will not rise interest rates or maybe next year raise them by 0.5% a drop in the ocean. If they were to follow Taylors rule for fighting inflation interest rates would be 6.5% NOW. Yet again the ordinary person oblivious to all to this is going to get screwed AGAIN.

Geuze · 10-03-2022 2:07pm

CSO statistical release, 10 March 2021, 11am

Output, Input and Income in Agriculture

Preliminary Estimate 2021

https://www.cso.ie/en/releasesandpublications/er/oiiap/outputinputandincomeinagriculture-preliminaryestimate2021/

The CSO’s second estimate of agricultural operating surplus in 2021 shows an annual growth of €617.9m (+18.9%), up from €3,262.8m in 2020 to €3,880.7m. However, these results should be interpreted in the context of the limited availability of complete information on input costs. Apart from other crops and pigs, the value of all other agricultural goods grew in 2021. The value of cereals (+45.7%) and milk (+23.2%) experienced the largest relative growth. Overall, the value of goods output at producer prices rose by €1,166.0m (+13.9%) to €9,532.6m.

SuperTortoise · 16-03-2022 10:06pm

Electricity and gas up another 30%

Inflation forecasts have been a joke at this point, 5.5%?

K.G. · 17-09-2022 2:05pm

Don't know whether it's quiet hyperinflation yet but its definitely an inflationary period. What the best strategy with inflation. should you be spending as everything is more expensive the next time.should you be be borrowing more money is free practically (inflation higher than interest rates).or is it time to hold onto money and in what formi ve never experienced an inflationary period

mauser77 · 17-09-2022 4:28pm

Fertilizer gone up 300%

Diesel up 100%

Meal up 50%

Cost of making a bale up 50%

Price in the factory up 20% how are lads supposed to keep going with them kind of figures or am i missing something

17-09-2022 6:08pm

https://www.boards.ie/discussion/comment/119631079#Comment_119631079

Change your system.

FintanMcluskey · 17-09-2022 6:52pm

https://www.boards.ie/discussion/comment/119631399#Comment_119631399

Eamon Ryan type statement.

Siamsa Sessions · 17-09-2022 7:54pm

https://www.boards.ie/discussion/comment/119630616#Comment_119630616

You make me feel better now about borrowing to build the shed I just put up. Interest rate is 6.5% and I’m paying off over 6 years. The materials and labour for the shed would probably be higher again next year.

I can depreciate the shed cost over 7 years in the tax returns but there’s a good chance it’ll still be worth the €20k then that it cost me to build now.

Silverdream · 17-09-2022 8:04pm

Spending has tightened up everywhere over the last few months. We got a few quotes to do the tarmac around the house back in May/June, none of them were realistic, one crowd quoted 16k!!! and laughed that he was so busy that we wouldn't see him till next year. Got 2 quotes for under 10k which seemed about right but both were flat out busy and couldn't look at the Job. Had a missed call from one of them yesterday but had the other crew back to us a few weeks earlier as work had slowed up over the Summer and several jobs are on hold now. They will do the job as soon as we give the go ahead now for 9k.

Tonynewholland · 17-09-2022 8:10pm

https://www.boards.ie/discussion/comment/119631804#Comment_119631804

Concrete and labour probably won't come down much, steel maybe . A good shed will last a long time.

FintanMcluskey · 17-09-2022 9:48pm

https://www.boards.ie/discussion/comment/119631804#Comment_119631804

The shed is a good investment for sure.

People continuing to spend money is what will lessen the effects of what may or may not come over the next while.

When consumers loose confidence and money stops moving is when we are rightly fucked.

Is hyperinflation a real possibility?

Comments

Preliminary Estimate 2021