Heritage rail effect from lower inflation

[railfan99]

Will the fall in UK inflation (to 6.8 annually, compared to 7.9pc when measured for the year to June 2023) announced on 16 August 2023 have any discernible effect on prospective passengers' perceptions as to whether they can afford a day out on a preserved UK railway, or is there zero correlation?

Are other factors separate from inflationary expectations far more important as to whether an individual, family or friends decide to patronise one of the UK's wonderful preserved railways/tramways?

One source I read from overseas said:

"Although there was a fall in gas and electricity prices in July, food prices continued to rise, but less quickly than in the same month a year earlier..."

It mentioned how prices for 'services' continue to increase though, but staples such as bread and milk have allegedly reduced in price.

 

[Chuffing Heck]

Just because the inflation rate might be reducing, it doesn’t mean that price's will come back down they just stop going up so much!

 

[Iskra]

Agreed, prices are still going up and there will also be a significant ‘lag’ due to the delay in financial reporting filtering through from the previous months at the previous higher inflation rate. It’s clearly an improvement but the British economy is far from out of the woods just yet. Heritage railways may start benefiting from reducing fuel and electricity costs though and they aren’t going to be as susceptible to having to offer pay rises to track inflation as a normal business may, since they do have a significant volunteer element.

 

[railfan99]

...Heritage railways may start benefiting from reducing fuel (costs)...

Iskra, as I understand it, such railways typically in UK obtain coal from fuel merchants. One company specalises in supply. Has the price per tonne (apologies, that's metric) decreased? How much per tonne do you estimate most HRs pay?

 

[12LDA28C]

I'd say it has zero effect. Pretty sure nobody watches the news to find out if the inflation rate has fallen and then thinks 'ooh, I can afford a day out at the Valley now'. Bearing in mind the incessant raising of the BofE base rate and people's mortgages going through the roof I would say that has more of a bearing on whether people can afford to spend money on leisure activities or not.

 

[bramling]

Will the fall in UK inflation (to 6.8 annually, compared to 7.9pc when measured for the year to June 2023) announced on 16 August 2023 have any discernible effect on prospective passengers' perceptions as to whether they can afford a day out on a preserved UK railway, or is there zero correlation?

Are other factors separate from inflationary expectations far more important as to whether an individual, family or friends decide to patronise one of the UK's wonderful preserved railways/tramways?

One source I read from overseas said:

"Although there was a fall in gas and electricity prices in July, food prices continued to rise, but less quickly than in the same month a year earlier..."

It mentioned how prices for 'services' continue to increase though, but staples such as bread and milk have allegedly reduced in price.

Can’t see it having much effect. 6% is still a very high rate of inflation.

I always get the feeling many people fail to understand inflation. When the likes of politicians and the media say “inflation is falling” it doesn’t mean prices are coming down, merely that they’re not rising by as much as they had been. Whilst 6% is clearly an improvement on 10%, it’s still an extremely bad situation. If one’s goes to the supermarket it’s quite common to find items that were £1 in 2019 are now £2, and no doubt in a years time they may well be nearer to £2.50.

 

[railfan99]

I always get the feeling many people fail to understand inflation. When the likes of politicians and the media say “inflation is falling” it doesn’t mean prices are coming down, merely that they’re not rising by as much as they had been. Whilst 6% is clearly an improvement on 10%, it’s still an extremely bad situation. If one’s goes to the supermarket it’s quite common to find items that were £1 in 2019 are now £2, and no doubt in a years time they may well be nearer to £2.50.

Yes, true, due to cumulation. It's occurring in quite a few Western economies.

 

[John Luxton]

I'd say it has zero effect. Pretty sure nobody watches the news to find out if the inflation rate has fallen and then thinks 'ooh, I can afford a day out at the Valley now'. Bearing in mind the incessant raising of the BofE base rate and people's mortgages going through the roof I would say that has more of a bearing on whether people can afford to spend money on leisure activities or not.

The BofE rate is not always negative. Rising rates = more money for those with positive balances a returns are higher. Just looked up the current figures

• 27.6% of the UK population are homeowners without outstanding mortgages or loans. - Thus presume could be in a better financial position. I have found Uncle ERNIE being much more generous this year and giving me a bit more disposable income which I have spent at heritage (and Network) rail venues!

 

[bramling]

The BofE rate is not always negative. Rising rates = more money for those with positive balances a returns are higher. Just looked up the current figures

• 27.6% of the UK population are homeowners without outstanding mortgages or loans. - Thus presume could be in a better financial position. I have found Uncle ERNIE being much more generous this year and giving me a bit more disposable income which I have spent at heritage (and Network) rail venues!

Which may well be why there seems to have been a trend seen in certain places where the “mature couples market” is willing and able to pay high prices for a day on a preserved railway, whilst families turn up seeking the cheapest ticket.

 

[Chester1]

Can’t see it having much effect. 6% is still a very high rate of inflation.

I always get the feeling many people fail to understand inflation. When the likes of politicians and the media say “inflation is falling” it doesn’t mean prices are coming down, merely that they’re not rising by as much as they had been. Whilst 6% is clearly an improvement on 10%, it’s still an extremely bad situation. If one’s goes to the supermarket it’s quite common to find items that were £1 in 2019 are now £2, and no doubt in a years time they may well be nearer to £2.50.

Yes, true, due to cumulation. It's occurring in quite a few Western economies.

What matters is inflation relative to incomes. Average wage increases for year to end of June were 0.6% below inflation. Thats the real squeeze for the average worker + state pension. If inflation runs at a lower rate than average wages then prices will effectively drop for the average household. International comparisons are tough. Roughly speaking we have having higher than average inflation but also higher than average wage increases compared with the average for developed countries. The phrase bandied in parts of media of "a tight labour market" is a positive for some and a negativr for others.

Income squeezes don't effect every business equally. For instance a steam trip might be cheaper than another day out and benefit from a family chosing it over a more expensive alternative. I suspect the cost of living crisis is dwarfed by fuel costs for the average heritage railway. I doubt the impending closure of the last UK source of coal for steam trains will help.

 

[yorksrob]

Whatever happens, they'll find another excuse to put up interest rates.

 

[Chester1]

The BofE rate is not always negative. Rising rates = more money for those with positive balances a returns are higher. Just looked up the current figures

• 27.6% of the UK population are homeowners without outstanding mortgages or loans. - Thus presume could be in a better financial position. I have found Uncle ERNIE being much more generous this year and giving me a bit more disposable income which I have spent at heritage (and Network) rail venues!

Which may well be why there seems to have been a trend seen in certain places where the “mature couples market” is willing and able to pay high prices for a day on a preserved railway, whilst families turn up seeking the cheapest ticket.

Another factor is people with fixed rate mortgages may benefit from higher interest rates on savings now but not pay higher interest rates on their mortgages this year or next, some even longer.

Whatever happens, they'll find another excuse to put up interest rates.

They are not high by historic standards. I am in my 30s and got 6% on my first savings account. A long term base rate of 4-6% isn’t excessive. Its concerning how many of my age group genuinely think mortgages rates will "get back to normal" at some point. A base rate of 0.5% wasn't normal!

 

[yorksrob]

[QUOTE="Chester1, post: 6375751]

They are not high by historic standards. I am in my 30s and got 6% on my first savings account. A long term base rate of 4-6% isn’t excessive. Its concerning how many of my age group genuinely think mortgages rates will "get back to normal" at some point. A base rate of 0.5% wasn't normal!
[/QUOTE]

They might not be, but house prices are.

 

[Chester1]

They might not be, but house prices are.

House prices have (finally) dropped relative to average wages in the last year. Wages have risen approximately 3.5% to 4% faster than house prices. The squeeze on prices will continue or grow if interest rates rise. Rents are going up faster than wages though. A lot of our current economic problems have very mixed results. Its easy for people to draw too many conclusions from their own situations.

 

[bramling]

Whatever happens, they'll find another excuse to put up interest rates.

To be brutally honest the bank have been way below the curve on this. They have had rates way too low at times, and many of the measures carried out during Covid like putting rates down to rock bottom were probably a mistake. I suspect it is only the constant concern about people being unable to afford increased mortgage repayments (due to the way house prices have been allowed to become inflated) which has held rates down, otherwise they would have rightfully been much higher much sooner.

It seems the real problem with our economy has been the reliance on QE over the last decade and a half. All this seems to have done is stored up problems for the future which have come to bite us as the worst possible time, and caused a massive polarisation between people who have assets versus those who don’t.

No one can or should be crowing about 6% inflation, it’s still way too high.

 

[yorksrob]

To be brutally honest the bank have been way below the curve on this. They have had rates way too low at times, and many of the measures carried out during Covid like putting rates down to rock bottom were probably a mistake. I suspect it is only the constant concern about people being unable to afford increased mortgage repayments (due to the way house prices have been allowed to become inflated) which has held rates down, otherwise they would have rightfully been much higher much sooner.

It seems the real problem with our economy has been the reliance on QE over the last decade and a half. All this seems to have done is stored up problems for the future which have come to bite us as the worst possible time, and caused a massive polarisation between people who have assets versus those who don’t.

No one can or should be crowing about 6% inflation, it’s still way too high.

The fundamental problem causing inflation is our over-reliance on untrustworthy countries. The only long term solution is more national self-reliance, and where we do need to by from elsewhere, make it stable, trustworthy countries.

The world is becoming ever more unstable and we are overexposed to every shock.

 

[bramling]

The fundamental problem causing inflation is our over-reliance on untrustworthy countries. The only long term solution is more national self-reliance, and where we do need to by from elsewhere, make it stable, trustworthy countries.

The world is becoming ever more unstable and we are overexposed to every shock.

I wouldn’t go quite as far as saying it’s the fundamental problem, but certainly no disagreement from me that it’s a significant one, that we’ve essentially sleepwalked into.

Unfortunately I suspect it’s a problem that will only get worse not better.

It really didn’t help that our government allowed the Covid response to become far too prolonged, and perhaps more damagingly it became de-facto “business as usual”. There should have been much more focus on getting the economy back productive again from July 2020. Though as you imply, this wouldn’t have helped in respect of the supply of imported goods.

The other big problem is excessive levels of debt in our economy. Again this became quite apparent during Covid.

 

[yorksrob]

It really didn’t help that our government allowed the Covid response to become far too prolonged, and perhaps more damagingly it became de-facto “business as usual”. There should have been much more focus on getting the economy back productive again from July 2020. Though as you imply, this wouldn’t have helped in respect of the supply of imported goods.

Well, it would have been possible to incentivise people towards domestically produced goods and services and away from imported goods.

Getting public transport running would have helped to facilitate this, but of course the Government has chosen to do the opposite.

 

[bramling]

Well, it would have been possible to incentivise people towards domestically produced goods and services and away from imported goods.

What domestically produced goods? I can barely think of anything which bears the legend “Made in England” these days. Brompton bicycles?

Getting public transport running would have helped to facilitate this, but of course the Government has chosen to do the opposite.

It doesn’t help that we still seem to have a segment of the population that, putting things diplomatically, remains lethargic towards work.

 

[yorksrob]

What domestically produced goods? I can barely think of anything which bears the legend “Made in England” these days. Brompton bicycles?




It doesn’t help that we still seem to have a segment of the population that, putting things diplomatically, remains lethargic towards work.

Well, that's why local services are important.

There are plenty of things we need people to work at, but we also need people spending their leisure time and money in the economy as well (as opposed to being siphoned off to banks as mortgage rates, siphoned off to fuel companies, flogging us back our own resources etc).

 

[Magdalia]

I don't have time for a long response as I have a train to catch, so I'm going to cheat by referring back to a previous discussion.

Will the fall in UK inflation (to 6.8 annually, compared to 7.9pc when measured for the year to June 2023) announced on 16 August 2023 have any discernible effect on prospective passengers' perceptions as to whether they can afford a day out on a preserved UK railway, or is there zero correlation?

Are other factors separate from inflationary expectations far more important as to whether an individual, family or friends decide to patronise one of the UK's wonderful preserved railways/tramways?

The UK economy is two speed which was recently discussed in a thread that you yourself instigated see here:

Is the UK economy "two speed"

I am a long way away, geographically, so on short visits in 2022 and planned this year I can't get the whole picture of what you're going through in the four nations (not a "Federation", as someone else reminded me). Your government says the UK economy is starting to grow marginally again (in...

www.railforums.co.uk

In it I referred to my "green team and red team" analysis of the UK economy.

27.6% of the UK population are homeowners without outstanding mortgages or loans. - Thus presume could be in a better financial position.

These people are the core of the green team. They continue to spend, particularly in the service sector. The Bank of England raising interest rates does not dampen this activity which means they have little impact on prices. By far the biggest cost in service industries is wages which means that service sector businesses have to bid up wages too.

It doesn’t help that we still seem to have a segment of the population that, putting things diplomatically, remains lethargic towards work.

These people are a big part of the red team. The UK economy has a huge problem with non-participation in the labour market but it doesn't help to cast aspersions on people's motivations for not working. Important factors that need addressing are:

• people on NHS waiting lists for operations;
• people with back and neck pain resulting from doing too much work on laptops and tablets;
• people with long Covid;
• people with mental health issues, some of these also follow on from Covid.

Regarding impact on preserved railways, the green team will continue as if nothing is happening, the red team will stay way. That applies not just to travellers on the railways but volunteers too.

 

[yorksrob]

I would like to continue to support the economy as if I were a member of the green team, however, the Establishment seems determined to push me into the red team by pushing up my housing and other costs, holding down my pay and increasing the expense of doing things due to non-functioning services.

Unfortunately, the cumulative effect of lots of people in my position (lets call us "ambers") will be to push the country into recession and create a greater burden for the remaining greens.

 

[47434]

I understand that the price of coal is falling slightly....

 

[John Luxton]

What domestically produced goods? I can barely think of anything which bears the legend “Made in England” these days. Brompton bicycles?

There are quite a lot of UK produced products if people are prepared to search them out and buy them.

Unfortunately many of our iconic brands though still produced in the UK now have majority overseas shareholders so are they really English / British?

 

[Krokodil]

House prices have (finally) dropped relative to average wages in the last year.

Which is of no use to the majority who are tied into the price they paid when the market was high. House prices falling won't make your mortgage repayments any cheaper.

What domestically produced goods?

Energy is the big one. We need to have far less reliance upon fossil fuels imported from various dictatorships. Instead we need to generate our own, whether that is renewable or nuclear.