Hey guys, it's Ashley. Yesterday we found out that UK inflation remained at 8.7 which was a lot higher than the expectations. But the really ugly bit is that inflation was not only higher than expectations, it has not changed in the last month, it has not reduced. and last month inflation only dropped from the month before because of the energy price cap.

If you exclude the artificial effect from the energy price cap drop, UK's inflation has now been at over 10 percent since July last year. UK's inflation is much worse than across the EU and is more than twice as high as it is in the United States. This is abysmal. Just when you thought that the UK government, the bank of England cannot possibly up any more than they already have, they find a way.

Today, they have increased interest rates by 0.5 to 5 because they are out of ideas of what to do now and this is the only thing that they can now come up with. The problem problem is that the Muppets whose job it was to manage inflation and the economy have no idea what they are doing. It is becoming incredibly evident. At the same time, the UK economy is suffocating.

Unfortunately, in the UK, we do not have the luxury of a booming economy serving the entire world full of innovation, full of technology that can soak up the incompetence of the Central Bank and the government. Instead of having Tech giants like Google and Amazon and Tesla that can thrive in spite of the best efforts of the idiots in charge, the UK economy relies on dinosaur Banks dinosaur insurance companies, oil companies, and tobacco. Last month, the governor of the Bank of England said that inflation is high because of hot weather. In Morocco there was a well-known thing with vegetables.

um in I think it was Morocco and particularly two weeks ago. The same guy blamed the wage inflation spiral according to the chief Tweed o dumb from the Bank of England The reason for high inflation in the UK is not him not doing his job and being years too late to increase rates from zero percent. The reason for high inflation is not the UK government's shambolic implementation of Brexit that has caused food prices to Skyrocket in particular and has destroyed access to the biggest Market of the world. The reason for high inflation is not the UK government printing insane amounts of money and putting the entire country on furlough, shutting down the entire economy and enforcing lockdowns while they themselves held champagne parties in the number 10.

Garden. The reason for high inflation in the UK is not the most egregious amount of money printing ever in history. The reason for high inflation is not having a new Chancellor with a brand new, completely different policy every few weeks because the UK government is much more interested in self-serving personal political Ambitions than doing what's rights to the country. they too busy bickering and electing a new leader every day.

The reason for high inflation is not the collapse in the value of the pound after. the rest of the world has completely lost confidence in the UK economy as a result of all of this show. No, according to Andrew Bailey the Governor of the Bank of England who earns a salary of 575 000 pounds a year. The actual problem is the fact that the people who are struggling to make ends meet have seen a small pay increase on average so that they don't have to decide between paying for electricity and feeding their children.

Because while inflation has been at over 10 percent since July now down to 8.7 at the moment, wages have increased 6.5 in the last 12 months and they were increasing much slower before that. How dare they! How dare those people get wage increases at much below the level of inflation? This means that in real terms, those people UK employees are actually earning less every month. So right now, every single month, the wages that people earn do not go as far as they did the previous month. You can't buy as many things in the shop because they cost more.

You run out of of money two days earlier in the month than you did before. You have to tell your kids that there will not be a holiday this summer because all of your credit cards are already maxed out from paying three times as much for your electricity bill. But according to the greedy of the Bank of England, you are the problem apparently. So today, they've got an increased interest rates to five percent because now that inflation has been allowed to get completely out of hand because they didn't do anything for years, that is about the only thing left in the options menu.

In the inflation data. yesterday, food fell from 19.1 to 18.4 percent. You might notice that the way that food inflation is measured is different. in the CPI index and in the CPI age index, the CPI number is 18.3 percent, but the CPI age is 18.4 percent.

The two are meant to be exactly the same. Using the same methodology. they should both be using the same approach to measure the difference in food prices. The CPU Eih just should include housing costs on top of the CPI.

So the UK Cpih index is kind of the equivalent to the U.S CPI in that sense, and the UK CPI does not include housing for some reason. But yeah, for some magic weird reason, the number changes in the report depending on which bit of the report you look at. Anyway, going back to food inflation, this number is insane because this means that food prices in May in the UK were 18.4 percent higher than in May last year. and this is on average many Staples are way way higher than this.

It might be slightly lower than it was back in April, but these are increases that are piling up on top of previous increases. The increases came in the increase is now are slightly lower, but they multiply by those increases that happened the previous month and the month before it might be slightly lower. But this is the sort of price increase that you would expect to see in Venezuela or Turkey where inflation is a current year sitting at about 69 gazillion percent. But the worst bit is that this drop in food inflation is being celebrated because it is the only real drop in the data.

Everything else is either staying roughly flat or going up clothing and Footwear up from 6.8 to 7. Communication is up Recreation and culture is up. Everything is up I Have a funny feeling that you are seeing this in your bills because I Am and everyone I know is my sky. Bill just went up by about 50 because they can Vodafone tried to Jack my price about 50 as well and I had to change that it's getting completely out of hand.

Housing remained flat in the data at seven point three percent, although the owner occupier costs increase from four to four point two percent. But here is the really ugly thing in the UK. Pretty much all mortgages come with short-term fixed periods of between two and five years. This is how we do it in the UK for some reason, and all of the mortgages from 2021 and before were taken out when interest rate states were extremely low, basically at zero percent.

Many of these mortgages were taken out at between one and one and a half percent interest rates because the Bank of England rate was so low. By the way, shout out to the Bank of England for never increasing the interest rates. After the Financial crash, they reduced the rates to zero percent to try and rescue the economy back in 2009, and then they forgot to increase the rate back up. A big part of the problem now is precisely the result of them not doing their jobs and keeping rates at zero percent for too long for no good reason.

The initial drop was an emergency reaction. It was a decision when the financial system was collapsing, they had to resuscitate the economy, and there is a very good reason why interest rates should not permanently sit at zero percent, and why they never used to sit at zero percent before the last 15 years. Because when rates sit at zero percent, it means money is basically free. 3.

You can go and borrow money for free. This is not actually good for the economy. This creates a whole load of issues and unintended consequences. This sounds nice if you don't understand how economics works.

like for example, if you're the Governor of the Bank of England. But the problem with money that is free is that if ever the money stops being free the shock of the cost increase can be extremely bad for the economy. So now when people's fixed time mortgages run out, their monthly payments will go up by 60 to 70 percent. And that's if they're lucky and they can get a new fixed rate mortgage.

Because to get that mortgage, they have to pass affordability checks. But their affordability is completely because inflation means that everyone's finances are stretched. They already can't afford the electricity bills and their food bills. Their mortgage payment is now 60 to 70 more.

So if you can't get a new fixed rate because you fail affordability, you'll have to pay the standard the bank rate. So your monthly payments will probably be 80 or 90 more than when you paid during the fixed term. So how are you meant to pay that? Because remember, don't you dare ask for a pay increase. No, because that will only make inflation worse.

according to Jeremy Hunt and you you will be the reason Landlords are going to be in exactly the same pickle. so they will be forced to jack rental prices up as well or they will have to swallow a massive loss every month. This is a problem that doesn't really exist in the same way in the United States Because in the US, most mortgages are given out on the long term fixes like a 30-year three percent mortgage. This means that when interest rates jump suddenly, they don't have anywhere near the same shock effects.

It is smoothed out over time. So at the moment the owner occupies housing cost inflation in the UK is at 4.2 percent. But now we are 18 months from when the start of the rate hikes happened. So we are now staring at the big off problem of all of these two to five year mortgages coming off those low fixed rates and they have no option.

This is going to absolutely decimate household budgets. The same household budgets that already pay three times as much for electricity and 20 more for their food. But don't you worry. Jeremy Hunt is a chancellor and savior who has said that there are no current plans for the government to do anything at all.

He literally said that in the interview yesterday. the reason why they have no plans to do anything at all is because they have no idea what they're doing. They are clueless. Jeremy Hunt has exactly zero experience of ever working in finance.

This is not a joke. This is the guy who is now in charge of the whole country's finances. In a moment of unprecedented crisis Before becoming a politician, he taught English in Japan and set up a PR firm and sold online courses. This is the extent of his experience.

This would be kind of funny if it wasn't so completely tragic. Is this really the most appropriate person to figure out the best possible fiscal policy in a unique situation to try and rescue the economy? The worst thing is that this dire situation in UK was very easy to see way ahead of time. You didn't need a really big brain with 500 IQ Look some random guy on YouTube could see it coming back in November of Gem. The UK energy Regulator just reduced the price Gap to 2074 pounds because gas prices have been really low since about December but you know it's June Maybe it's about time to start letting people not pay ridiculous amounts of money for it.

So the average household is going to save about 400 pounds a year from paying less for the electricity and gas bills? Well, that's great. The average UK house price according to the Office of National Statistics is 286 000 pounds. If you had a mortgage on a fixed term of 1.5 percent pretty standard and your fixed term is about to end and your new rate is going to be, let's say 6.5 maybe it's going to be higher now. Your monthly repayment will go up from 1140 pounds to 1 924 pounds.

so you will pay about 800 pounds more. So even though your energy bill is 400 pounds cheaper, you are still. And the problem with UK inflation is that the data is showing absolutely no signs that it is going away anytime soon. There is absolutely nothing indicating that the tide is about to turn, So the Bank of England is going to have to keep increasing rates aggressively because they have no choice now and they've backed themselves into a corner and at this point, the implications on the UK economy in the second half of this year and through 2024 look really bad.

The UK economy is in deep. The UK government and the Bank of England have really up If you are one of the imbeciles from the Bank of England or the UK government who made this happen. If you are one of those policy makers I Hope you are really proud of your achievements, you slimy. Here is a top tip: if you don't have any idea what it is that you are doing.

If you are incompetent, please do everyone in favor and resign. If it's too hot for you, please get out of the kitchen. If you have no ideas, please step aside and let someone who maybe can have some ideas and maybe has a brain in their head try and have a go instead. There are real people out there who are really, genuinely actually struggling to make ends meet.

I Know it's hard when you're a millionaire living in a mansion. you know attending Parliament to have a little debate with your mates I Know it's hard for you to understand this, but this is what's actually happening up and down the country, all because of you and your incompetence. These people have children who are suffering. This is not a joke.

This is not a game where you get to pretend to be Chancellor play with Monopoly money even though you have no idea what it is that you are actually doing. Your actions and your inaction affect the lives of millions of people in a really serious way. You and your buddies in government are responsible for this problem. You have have created.

This problem. You held the steering wheel and were pressing the gas pedal as the car was carering off a cliff. Edge It is not time to make up a new excuse about the weather in Morocco or the global supply chain shortages. Stop around and grow a pair.

If you don't know what to do, get the out before you make it worse. Unfortunately, the most probable scenario at the moment for the UK from here looks extremely ugly and is just getting more ugly. I'm really sorry to be the bearer of bad news.