Inflation <2%

Discussion in 'Politics & The Economy' started by Stuey1, Feb 18, 2014.

  1. Stuey1

    Stuey1
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  2. sidicks

    sidicks
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    To be fair the inflation number is simply the weighted average of the price changes of a "basket of goods".

    Now you can argue that the basket of goods does not provide a true reflection of costs for most people - clearly different types of household would have fundamentally different purchasing requirements and a different balance between essentials and luxuries, and the index is designed to spread the impact of large purchase over time - but to suggest that the figures are "phoney and crooked" is well wide of the mark.

    What you could rightly say is that the figure is meaningless for many people.
     
  3. Stuey1

    Stuey1
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    Inflation to me (and likely most people) is the total cost of day to day living excluding nothing (my house is not free) - It suits the government for inflation to appear low, because then social security payments and minimum wage etc can be put up less than 'real' inflation.

    Nothing should be excluded from the inflation calculation which is a 'need' (I'm not entirely sure what is but housing must be or it couldn't be that low)

    This is essentially what I am getting at:
    What you could rightly say is that the figure is meaningless for many people.
     
  4. kav

    kav
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    Indeed, my personal inflation is more like 20% over the last 5 years.
     
  5. sidicks

    sidicks
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  6. sidicks

    sidicks
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    So rental costs are not linked to house prices?

    1. That's nonsense
    2. Food prices are included in RPI and CPI

    Fuel costs are included in RPI AND CPI...
     
  7. EarthRod

    EarthRod
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    The weighted average of a Westminster politician does not provide a true reflection of truthfulness. To suggest Westminster politicians are phoney and crooked is well wide of the mark.

    For example, Westminster politicians' expense claims are known to be correct, truthful and above board. The same can be said for the UK inflation level.

    Ironic how it all balances out.
     
  8. Stuey1

    Stuey1
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    Reading the article from the beginning, DVD and Concert prices are taken into account and are cheaper (which is great), but it also skews the figure in my mind.

    Is there an inflationary measure using the actual house prices, food prices and fuel/energy prices (Basically necessities not luxuries) - as they are the items that affect the population as a whole and DVDs coming down in price and offsetting something necessary isn't particularly helpful?
     
  9. sidicks

    sidicks
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    If you link through to the ONS website you can see the main categories broken down into their components - I don't think DVDs will be a material amount compared to other factors...
    ;)
     
  10. Stuey1

    Stuey1
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    quite possibly not, but it was enough for the BBC to suggest it was having an effect?

    my point is that, I don't think normal people will even believe that inflation is <2% regardless of what figures are given or how they are broken down - because it definitely doesn't feel that way
     
  11. Philly112

    Philly112
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    What figures are you using to define the inflation you are seeing?

    Phil
     
  12. Stuey1

    Stuey1
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    None - That's my point - I don't believe these are truly representative of people's outgoings...

    I'm not arguing the numbers are wrong, I'm arguing that they don't represent how people spend their money (i.e on necessities first and foremost)
     
  13. pragmatic

    pragmatic
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    Other things that skew it are technology based item, for two reasons,
    1) It is often getting cheaper
    2) It is more fully featured, so negative inflation can/is attributed to this.

    A true measure would be essentials, which is easy enough and luxury items, then also look at housing/rental separately and we can produce a demographic based inflationary picture.

    If baby formula. nappies, buggies and other baby based paraphernalia went up in cost it would affect parents of a new born a lot, a single person not soo, much, so where does these specific items exist in the basket of goods.

    Having long term white goods in there like fridges also seems pretty bizarre, if them why not cars? They have a similar purchase pattern.
     
  14. sidicks

    sidicks
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    That's fair enough - my frustration is when people claim these number are 'made up', 'cooked' etc etc, when in fact the calculation methodology is apparent to all.

    ;)
     
  15. sidicks

    sidicks
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    Are they not included....?
     
  16. pragmatic

    pragmatic
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    To be fair cars are in there ...

    Inflation basket of goods 2012: full list of what's out and what's in | News | theguardian.com
     
  17. Stuey1

    Stuey1
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    I don't do that, I don't claim to have a better statistic - it just appears to me to be the wrong things they are measuring if DVDs and Concert tickets are even looked at!

    A better measure for me would only include things people 'need' to live (I accept need is a rather vague term and can be interpreted very differently)

    An excellent point made above around technology too
     
  18. Philly112

    Philly112
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    Inflation is something that we all know is there, but we conveniently forget about the items that are falling in price. Maybe we don't buy those?

    Phil
     
  19. sidicks

    sidicks
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    My comment wasn't aimed at you!

    Agreed - but then maybe the target wouldn't be 2% it would be 3% or 4% or 5%.....
    :)
     
  20. Downinja

    Downinja
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  21. Stuey1

    Stuey1
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    The items that are falling in price appear to me to be one off purchases rather than consumables, I could be way off but it definitely feels that way.

    Like I have said, I have no issue with the numbers - but it feels like we should have a measure fo necessary to live and then this one including all sorts of random products.
     
  22. Stuey1

    Stuey1
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    Why do we aim to have inflation at all?

    I can see why deflation would be seen as bad, but can't see why we target any inflation?
     
  23. pragmatic

    pragmatic
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    Yea, like I'm forever buying acoustic guitars ... :D
     
  24. pragmatic

    pragmatic
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    Do you want a pay rise?

    It seems to me that we're just chasing our own bloody tails, but if we go to fast we get dizzy, and if we slow down too much we end up biting it.
     
  25. Stuey1

    Stuey1
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    I wouldn't need a pay rise - if prices didn't keep going up :)

    In fact bring on deflation, They can't legally give me a pay cut (without me agreeing) *Joke ;)
     
  26. sidicks

    sidicks
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    I think the large purchases e.g. New fridge are phased in, so e.g. the RPI index assumes you buy 1/10th of a fridge each year for 10 years , to spread the impact of price changes for these items.
     
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  27. sidicks

    sidicks
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    Doesn't the RPI measure changes in like-for-like constituents, so addressing both of your points above...
     
  28. johntheexpat

    johntheexpat
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    Oh dear. Low inflation. I thought inflation was the only way HMG had any chance of reducing the debt as a % of GDP. And they've blown that too.
     
  29. IronGiant

    IronGiant
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    So inflation was 1.9% in January?, that works out as approx 23% for the year, seems about right :)
     
  30. sidicks

    sidicks
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    I guess we could artificially increase GDP like the last lot did.....
    :(
     

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