Is a little bit of inflation really such a bad thing?

This is Money Podcast

This is Money

Business News, Business, Investing, News

4.1 • 650 Ratings

🗓️ 22 May 2021

⏱️ 52 minutes

🔗️ Recording | iTunes | RSS

🧾️ Download transcript

Summary

The UK’s official inflation figure more than doubled to 1.5 per cent in April, it emerged this week, as the stronger than expected recovery continued to push up the cost of living.

Meanwhile, as we discussed on last week’s podcast, a wave of demand is meeting a shortage of supply for some items, sparking fears of an inflationary spike.

But while this is bad news for the pound in your pocket – which will buy less – and for savers, who will see their measly interest rates fail to keep up with how inflation erodes their cash, wasn’t the whole point of all that money printing and rate cutting to get a stronger recovery and inflation back towards the 2 per cent target?

On this week's podcast, Georgie Frost, George Nixon and Simon Lambert look at why inflation has become a hot topic, how it will affect savers and investors, and what it could mean for the game we all thought we could stop playing for some time: when will interest rates rise?

George runs through the impact for savers, who now can't find an account that beats inflation, but he explains a trick to get a better rate through laddering.

And Simon discusses what inflation could mean for investors and why the jam-tomorrow growth stocks that have delivered over the past decade may not be the ones to hold for the next ten years.

Or will they? We also discuss moonshot investing and how backing disruptive companies that if they get it right, can absolutely take off and compound spectacular gains, has paid off for investors such as Scottish Mortgage.

Simon highlights the academic research showing why most stocks don't make money and the most successfully often fall by 40 per cent, as Scottish Mortgage's James Anderson highlighted in his recent fund manager's note.

But is this attitude the same as that of the bitcoin true believers, who have been having their faith tested again this week?

Transcript

Click on a timestamp to play from that location

0:00.0	Welcome to This Is Money Podcast. I'm Georgie Frost.
0:02.8	And alongside me and editor Simon Labbert.
0:04.8	Today is senior reporter George Nixon.
0:07.0	And coming up is a little bit of inflation, such a bad thing.
0:11.0	Well, the recent rise is not great for savers, but our investors' fears just hot air.
0:15.2	Meanwhile, the UK is set for its fastest period of economic growth since the Second World War,
0:19.9	so is it time to invest in Bounceback Britain? One World War, so is it time to invest in
0:21.2	bounce back Britain? One thing it might not be time to invest in is Bitcoin, or is it? Don't forget
0:27.5	you to up to date with all the latest breaking money news, just go to this ismoney.com.com
0:31.0	UK or download the app. But first, inflation more than doubled last month as rising energy
0:37.0	bills and clothing prices
0:38.5	drove up the cost of living. It means that prices are rising at the fastest rate since the first
0:43.5	COVID lockdown brought the economy to a screeching halt back in March last year. Now, it's
0:48.4	feared that a steep rise in inflation could force the Bank of England to raise interest rates.
0:52.6	So what? What's the big deal with inflation anyway?
0:55.9	And heck, I don't even eat chocolate.
0:57.8	Apparently that's gone up or play video games or anything like that.
1:01.3	George, inflation.
1:03.2	Why do I care?
1:04.0	And I say this because I actually got into a bit of a Twitter,
1:06.8	a controtone, with someone who was really, really caring about the rates of inflation and the
1:13.5	CPI figure I used, not the RPI. And then we've got obviously the CPIH just to throw it. Why on earth
	...

Please login to see the full transcript.

Previous episode | Next episode

Disclaimer: The podcast and artwork embedded on this page are from This is Money, and are the property of its owner and not affiliated with or endorsed by Tapesearch.

Generated transcripts are the property of This is Money and are distributed freely under the Fair Use doctrine. Transcripts generated by Tapesearch are not guaranteed to be accurate.