This video is sponsored by Wise. Get a free transfer of up to 500 pounds by using my link in the description. Hi guys, it's Sasha UK Inflation data just came in and inflation in April was at 8.7 which is a lot higher than the 8.4 percent in the Bank of England's predicting right Up until yesterday, higher than the 8.2 percent was predicted by analysts, higher than any reasonable number, higher than the US. And the big problem is that this drop of inflation is completely artificial.

It's fake. All the newspapers are, of course, cautiously celebrating that inflation fell from 10.1 to 8.7 But the reality is super Grim because the difference between inflation and Marge and inflation in April is 1.4 And according to this very release, 1.42 out of that 1.4 percent came from a full in electricity and gas prices. So 100 of the drop that everyone is celebrating can be attributed to the fall in gas and electricity prices and nothing else. And the only reason the gas electricity prices fell is because they jumped up so much last year after Russia Invaded Ukraine Because in April last year, barely a month after Russia invaded Ukraine, the UK increased the energy price Gap by 50 from 1277 pounds to 1971 pounds.

Now that we have gone a full year since that increase, it drops out of the inflation data and doesn't count in the 12-month index. It's interesting right, how quickly the energy rate shut up just one month after rushing. Invaded Ukraine went up massively, then continued going up through the summer. By the winter, the price guy went to all the way over four thousand pounds.

The government had to introduce the price guarantee scheme of two and a half thousand pounds. which means the UK government was basically subsidizing these energy companies by paying them the difference between two and a half thousand pounds and four thousand pounds. But gas prices collapsed back in December six months ago by Christmas Natural gas in the UK was cheaper than before The Invasion And the price right now is back down to a relatively normal historic range. and we're now at the end of May almost in June middle of the year.

And for some peculiar, really weird reason Energy Prices are just not collapsing immediately despite going up so quickly. It's almost like the moment that the energy companies had an excuse. they colluded to racketeer customers and increased bills immediately, which is illegal. But now that the energy commodity prices are 80 percent lower, things like natural gas oil Etc The Regulators in the UK government are looking the other way while consumers are being absolutely fleeced.

And of course, this is all contributing to the stupid inflation numbers. But hey, who cares? a bunch of people are making load of money last week Andrew Bailey The Governor of the Bank of England said that a big reason why inflation is getting out of hand is the inflation wage spiral according to Andrew Bailey the greedy employees are the reason and inflation is going up, not his complete failure to do his job because you see, while UK inflation has set a 10 to 11 since July last year, the average salaries have grown by six percent. and you can see on this chart by the Office of National Statistics that this means that in real terms people's wages are actually falling and the fall is accelerating. But don't you worry Andrew Bailey's and the same exact boat he actually refused A wage increase last year.

How? Noble So he has to go and sit there and make do somehow struggle through on just 575 000 pounds a year for being completely incompetent at his job as interest rates have increased High Street Banks continue fleecing their customers by paying almost nothing in interest Barclays pays 0.7 percent, Lloyd's pays one percent and so on while the bank of England base rate is sitting at 4.5 percent. If you don't want your money wasting away because of inflation, you should check out Wise Interest, which will pay you 3.89 interest on your money instead the raises variable as your money is invested in money markets. I Have personally used Wise for many years now and I use it a lot for my business every single month because I make and receive payments in US Dollars and Euros other currencies wise as a multi-currency account that makes it super easy to move money to keep money in different currencies I Can pay and get paid in dollars Super easy in the US without having to pay the extortion of bank exchange fees. And I am a massive fan of Wise.

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Go and check out the link in the description or in the pin comment to get your first transfer for free. Going back to Inflation: if you ignore the artificial drop because of the energy price Gap Inflation has gone nowhere. It's still absurdly high. Food inflation is insane.

It was at 19.2 percent in March and it's now dropped all the way down to 19.1 percent in April. This is mind-boggling Food is increasing at a rate of basically 20 percent per year. This is just on average. Many of the basic Staples are up 50.

100 or more people are struggling. This should be the one and only priority for the UK government at the moment. Everyone seems outrageous. The Home Secretary soil are Braverman trying to get out of doing a speed awareness course or whatever.

The latest distraction is. Where is the massive outrage about the insane food prices? How come people are not on the street? It's about this thing yesterday: Andrew Bailey and the other members of the Monetary Policy committee were in Parliament answering questions about why they are so incompetent at their jobs. Would you say that uh, inflation today is higher than you were expecting when you were last in front of us? Uh, yes, it is. Um, we were expecting a gradual decline in inflation up to this point.

and of course we are below the peak of 11, just over 11. But it's about at 0.8 percent higher than we expected it to be in the February Monetary Policy Report I I Do stand by The View that it has turned to the corner and I was very careful when I you know I said that a few months ago that we were seeing the first signs of that because obviously the peak was 11 and we have seen the benefits already of some some of the benefits of energy prices. But it is. It is higher than we expected to be and there are two underlying reasons for that that we see in in the data.

One is food and the second one is some Goods particularly clothing and Footwear no Andrew food prices are not the they are the the outcome. It is absurd that this idiot sits there spouting this nonsense and saying all this stuff in front of a committee. What is the point of this committee? Are these people going to be actually held accountable? Are we going to see actual court cases? Actual prison sentences for gross negligence for sleeping on the job, for incompetence That has now led to millions of people actually struggling to make ends meet? No, just answer a few good questions, make some up and off you go with no accountability whatsoever. Nice.

What I would say is that back in? February Um T23 Yes The shares? Oh yes, um. the contacts that our agents were talking to. This is a point where food price inflation I think it was around 15 if I Remember right, that's the food element and the context. We're telling our agents that they thought that was the peak and that it would come down from there onwards over the rest of this year.

Now you're right, that has turned out not to be the peak. Seriously, what the actual is this? the bank of England bases their decisions of contacts telling the agents stuff I am quoting verbatim. This is disgusting. The first group is things that I think it's reasonable to say couldn't have been expected.

in other words, events that have happened in the meantime. they in certain elements of food and they're mainly weather events around the world. frankly. so there was a well-known thing with vegetables.

Um in I Think it's Morocco Particularly Those things are things that I Think genuinely. you know you can't predict from. sort of. You know from period to period, things couldn't be expected.

The Weather: Blaming the weather in Morocco for the UK's inflation crisis. This is like an episode of South Park but is actually happening in real life. I Mean it is very difficult to forecast at very high frequencies. Some of the developments that we've seen given the magnitude of the shot is it now? Is it really very difficult to forecast this stuff? Is it really impossible to know that this is going to happen? Wasn't really that hard to know that we have an inflation problem when it exploded in 2021.

Why is it that the bank of England with a infinite resources infinite amounts of data armies of analysts seem to find it difficult to forecast while a random guy on YouTube found it not so difficult? I Think I Think the point I would make and this will lead in I Think to some of the discussion will have in a second around the rationalization of recent policy decisions. I Think the point I would make is is that the magnitude of these sharks has not only affected directly on inflation, but it's also effective how the pass-through of these shocks may be transmitted through the value chain. This guy is actually smirking while answering the question. He seems to find this topic funny.

He seems to find it amusing that millions of people in this country can't afford to pay for the electricity bill or feed their children. Is this really so amusing Excuse Me while I sit here and here and eating. The funny side. Seriously, what planet is this guy on? How is this? Okay, why is this idiot sitting there smirking and borderline laughing while talking about people suffering that his incompetence has caused? Does he actually understand that these are not numbers on a piece of paper, but real struggles by real people? I Am completely dumbfounded.

So, the indirect effects of energy price Rises for example, may have been different and had more magnified effects. and also as is well known, the second round effects which are feeding through in other costs that are faced by food producers. Yes, anyone with more than two brain cells would have known that when Energy prices went up, there would be second order effects I Talked about this on my channel for months. It really is not rocket science and I think there's a sort of difficult question.

This is the question we face and our forecast thing is whether the models and forecasting Frameworks that we've developed on the basis of the experience over the last 30 years. Whether they capture possible changes in Behavior Given the magnitude of these shocks off, this cannot be serious. blah blah blah. You know we have this model and the Mother wasn't as good as it should have been and maybe there was some kind of problem so we missed the dog ate my homework.

Are you saying that despite the bank of England having been in existence for over 300 years, you only look at the last 30 years when you think about what the risks are to inflation? Well, no. but I think it is crucial that the regime we have been in the last 30 years the inflation targeting regime is a regime that's pretty quite successful on average, and it has had an important effect on behavior in the economy. So these clowns are now saying that they are not to blame because they trusted This Magic model. This model was meant to predict that trajectory of an inflation by using data from the last 30 years where there was never a period of high inflation.

But don't you worry because it up this time. But you know what? all these other times when there wasn't High inflation? Well, the model did pretty well back then, predicting that nothing will happen when nothing happened. Imagine creating an Earthquake warning system. The second biggest earthquake in history happens and your warning system is silent.

It doesn't predict anything. it completely fails, millions of people die. But it's okay because you see statistically, all the other times when there weren't any earthquakes happening, the system accurately didn't go off at all. And what I think is sort of crucial to see is is that I mean Obviously, models are essentially taking averages of behavior.

In the past, we really only have one observation of how the UK economy responds to having inflation in the inflation targeting framework at the 10 level. So you're saying the inflationary period in the 1970s because it falls outside your period is not really one that you want to use in your models. Well, we think I mean So just let me continue as I think you make a good point is that the question then becomes given that we have inflation at 10 and we've had the magnitude of shock that we haven't seen in that 30-year period has Behavior changed. No, a model does not just take the average of the past.

If this is what your models are doing in the Bank of England you're a bunch of incompetent cloud and you have no idea what you are doing. You should be fired from your job and replaced by somebody who does. Look at the face of the MP asking questions. Absolutely.

Priceless It really tells you everything you need to know. I Know I Do have to say this quite often in these hearings that you know we have to make policy in real time. We don't make policy with a benefit defined sites. We've had to respond to shocks as they've occurred.

No, Andrew You do not need the power of hindsight to do your job and not completely up. UK Inflation jumped to three percent in August 2021, 50 above your target when alarm Bell should maybe started ringing. The MPC Committee met seven days later and voted unanimously to keep the rate at 0.1 percent. By December, inflation was over five percent and the Bank of England raised rates by 0.15 percent to 0.25 woefully inadequate.

Way too slow, way way off where inflation was going. Nobody bothered convening a meeting outside of the regular schedule when it was absolutely necessary. How much hindsight did they need to know that the rate of inflation in December was five percent higher than the base rate in December 2021. At that meeting, they said that they are confident in inflation, would pick assist percent and then come back down Based on what? Why would inflation randomly just stop and decide? Come come back down without any action from Bank of England without any reason because Andrew Bailey pulled those numbers out of his ass.

That's why this has never happened in history before. ever. But sure, let's just make some up to justify our action. Maybe a murder said so and even now, a year and a half later, UK interest rates are still almost five percent below the rate of inflation.

And nobody in the UK government or the Bank of England dare say what the actual problem is because you see the actual problem is not the weather in Morocco and the actual problem is not the fact that employees are getting small, pitiful pay increases so that they can afford to feed their families and pay rent. The big off elephants in the room is Brexit and the mismanagement of the economy From a fiscal perspective by the UK Government and from a Montreal perspective by the Bank of England These are the actual problems: UK Inflation is setting into an extremely dangerous persistent Direction Food inflation at 19.1 is not acceptable. It is not okay. It is a disaster.

Energy companies ripping off customers is vile. It's disgusting. According to the UK government energy bills had to go up because of commodity prices. Well, what happens now when commodity prices are down? Aside from the fact that this is completely demonstrably false, there's also this slight problem that the profits of these greedy foxy energy companies make are public during this period of excessive Energy prices over the winter British Gas Just accidentally happened to make record profits this morning SSC announced that they doubled their profits.

The sharp increase in full year profits came as earnings from his gas-fired power plants surged almost four-fold to 1.24 billion pounds for the last Financial year, up from the 331.1 million pounds the year before. Four times increase what they made a load of money because natural gas prices are now very low, but customers are being charged through the nose. Well, who could have possibly seen that coming? I Mean impossible to predict, right? The UK economy is unfortunately in Dire Straits The bank of England has screwed up and continues screwing up and the UK government has no idea what they are doing. Obscene levels of corruption in the government mean that companies are profiteering while employees are struggling to make ends meet.

This is an extremely sad State of Affairs and unfortunately it doesn't seem like it's moving anywhere. Remember you can get that free transfer of up to 500 pounds with wise and get paid interest. Make sure you go and check it out. use my link in the description.

Thank you so much for watching and I'll see you later.