Wednesday, 18 September 2013

You're Better Off With Solar Panels.

Inflation rates...Don't you think it's weird that there are two rates of inflation?
You would imagine that there would be a standard definition of how prices affect consumers. 

Why not look at how much have prices risen in the past month/quarter/year, compared to the relevant previous period.? But, no, They have two entirely separate rates.

1: Retail Price Index (RPI) which measures a basket of goods containing the things families use. This means that food, clothing, electrical appliances, transport, etc, etc, are all included.

2: Consumer Price Index (CPI) which removes many of the basic items we can't manage without, i.e. mortgage interest, council tax.

Historically, CPI is lower than RPI. For long periods pensions, benefits and many other payments were based on RPI rates. It comes as no surprise that authorities are now changing annual increases to CPI, claiming it more accurately reflects changes in society.

Those of us who've signed up for FiT payments receive an annual increase each April 1st (how appropriate), based on the previous December's RPI inflation rate. 

I was delighted to receive 4.8% in 2012 and 3.1% in 2013. I was even more delighted when I looked at comparable figures comparing my tax free payment versus the 20% taxed average savings rates being offered on the High Street.

Looking at the figures you notice that the "Global Financial Crisis" in 2007-2008 wiped out more than bankers bonuses and confidence in the City of London, it started a decline in interest rates that are still at a record low today.

Whatever your motives, or whenever you invested in solar panels on your roof, you're now enjoying an index linked return on your initial investment that's going to benefit you for decades.

Mark Carney,the new Governor of the Bank of England has shown no signs of changing the "Quantitative Easing" policy which has been so disastrous for small savers in the UK. 
Why would banks pay better interest rates to savers when the BOE is printing cheap wads of cheap money? The current record low rate of 0.5% has been in place since 2009, analysts predict we've got another 18-24 months before it rises.

I suspect we'll be getting another 3% rise next April on our FiT rates. Just be grateful that we're still offered RPI.

Twitter: (@solaricarus)

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