5 ms·

We have 9% inflation in the UK but the reality of the costs of things that you need to live a relatively simple life (food, heating oil, fuel costs), have all g

by davzie 4y ago

We have 9% inflation in the UK but the reality of the costs of things that you need to live a relatively simple life (food, heating oil, fuel costs), have all gone up way more than 9%. A shop that used to cost me £80 a week now cannot be had for under £110. So you can calculate them all you like and look at the data, but the reality in my life is that prices have risen way beyond the 9% we're told is the amount.

rawbot 4y ago
Same here in Germany. My napkin calculations on food & groceries is at least 30%.
- deleted 4y ago
  [deleted]
toxik 4y ago
That is completely normal, though. Inflation is not the exact price adjustment of every basket of goods over time, that is simply not possible to represent in a single number - rather, it is some arbitrarily chosen basket of goods meant to represent an average household. It does not have to be perfect to be meaningful.
- yuropeen 4y ago
  > That is completely normal, though. If not using basics like food, fuel, and pricing on rent or mortgage - what are we basing the numbers off of? If it's the stable price of a Spotify subscription, rather than real goods needed to survive, something is horribly off.
  - toxik 4y ago
    That is exactly what inflation is computed from. Like literally.
    - gambiting 4y ago
      Then how can it be only 9%? My gas price has increased by 200% in the last few months. In August, my electricity is going up 400%. Petrol alone has gone up by about 50% compared to few months back. Sure bread is still roughly the same as it was. But living costs have absolutely exploded recently, and far far beyond the 9% indicated.
      - rwmj 4y ago
        You can calculate your personal inflation rate although you need to start by tracking your expenditures: https://monevator.com/personal-inflation-rate/ https://monevator.com/personal-inflation-rate/
      - nerdponx 4y ago
        Because headline inflation is not equivalent to "% change in cost of living", and the media should stop reporting it as such.
      - gruez 4y ago
        >My gas price has increased by 200% in the last few months That seems... unlikely. https://www.globalpetrolprices.com/United-Kingdom/gasoline_prices/ https://www.globalpetrolprices.com/United-Kingdom/gasoline_p... At best it doubled, but that's not the same as "increased by 200%", which implies it tripled.
        gambiting 4y ago
        I was paying 3p/kWh of gas, now I'm paying 9p/kWh. Also I understand the confusion, but "gas" in UK means heating gas, gasoline is called petrol.
      - fleddr 4y ago
        If you have relatively stable expenses, you can calculate your own inflation just by comparing year to year. Historically for me real inflation is the formal EU number + 2%. So that means that they're usually about a 100% off as inflation has been low for a long time, until now.
  - em500 4y ago
    The basket and weights for UK CPI are here: https://www.ons.gov.uk/economy/inflationandpriceindices/articles/ukconsumerpriceinflationbasketofgoodsandservices/2022 https://www.ons.gov.uk/economy/inflationandpriceindices/arti... and for the US: https://www.bls.gov/cpi/tables/relative-importance/home.htm https://www.bls.gov/cpi/tables/relative-importance/home.htm The weights are based on estimates of how consumers actually spend on different goods and services, rather than on how much someone would need to spend for subsistence or survival.
- anonymousDan 4y ago
  The problem is it is not necessarily arbitrary - governments can pick a basket that masks inflation in areas that it wouldn't suit their agenda to highlight.
  - pessimizer 4y ago
    "Arbitrary" means "picked." It doesn't mean "random" (although you certainly can pick things randomly.) The alternative to arbitrary choice is systematic choice i.e. having a set of specific meaningful criteria that determine something. So I agree with you, but the problem is that it is arbitrary, and the arbiters could be rigging the outcome with their choices.
- ls15 4y ago
  > It does not have to be perfect to be meaningful. It is deceptive though, if this number is not representative of people's actual cost of living and it is then used to adjust their income for inflation. How clear is it that this basket really represents an average household (today)? Employer: "What do you mean, cost of living has gone up by 14%? Official inflation is 7%, but the best I can do this year is 3.5%." Politician: "Inflation is X every year, so we increase pensions by X% every three years."
glenngillen 4y ago
Here’s a post from last year that I thought did a great job of illustrating your point, and how misleading the reporting of a single inflation number is without also knowing the variance: https://economicsfromthetopdown.com/2021/11/24/the-truth-about-inflation/ https://economicsfromthetopdown.com/2021/11/24/the-truth-abo...
- davzie 4y ago
  A great read thanks!

by davzie 4y ago

rawbot 4y ago

Same here in Germany. My napkin calculations on food & groceries is at least 30%.

deleted 4y ago
[deleted]

toxik 4y ago

That is completely normal, though. Inflation is not the exact price adjustment of every basket of goods over time, that is simply not possible to represent in a single number - rather, it is some arbitrarily chosen basket of goods meant to represent an average household. It does not have to be perfect to be meaningful.

yuropeen 4y ago
> That is completely normal, though. If not using basics like food, fuel, and pricing on rent or mortgage - what are we basing the numbers off of? If it's the stable price of a Spotify subscription, rather than real goods needed to survive, something is horribly off.
- toxik 4y ago
  That is exactly what inflation is computed from. Like literally.
  - gambiting 4y ago
    Then how can it be only 9%? My gas price has increased by 200% in the last few months. In August, my electricity is going up 400%. Petrol alone has gone up by about 50% compared to few months back. Sure bread is still roughly the same as it was. But living costs have absolutely exploded recently, and far far beyond the 9% indicated.
    - rwmj 4y ago
      You can calculate your personal inflation rate although you need to start by tracking your expenditures: https://monevator.com/personal-inflation-rate/ https://monevator.com/personal-inflation-rate/
    - nerdponx 4y ago
      Because headline inflation is not equivalent to "% change in cost of living", and the media should stop reporting it as such.
    - gruez 4y ago
      >My gas price has increased by 200% in the last few months That seems... unlikely. https://www.globalpetrolprices.com/United-Kingdom/gasoline_prices/ https://www.globalpetrolprices.com/United-Kingdom/gasoline_p... At best it doubled, but that's not the same as "increased by 200%", which implies it tripled.
      - gambiting 4y ago
        I was paying 3p/kWh of gas, now I'm paying 9p/kWh. Also I understand the confusion, but "gas" in UK means heating gas, gasoline is called petrol.
    - fleddr 4y ago
      If you have relatively stable expenses, you can calculate your own inflation just by comparing year to year. Historically for me real inflation is the formal EU number + 2%. So that means that they're usually about a 100% off as inflation has been low for a long time, until now.
- em500 4y ago
  The basket and weights for UK CPI are here: https://www.ons.gov.uk/economy/inflationandpriceindices/articles/ukconsumerpriceinflationbasketofgoodsandservices/2022 https://www.ons.gov.uk/economy/inflationandpriceindices/arti... and for the US: https://www.bls.gov/cpi/tables/relative-importance/home.htm https://www.bls.gov/cpi/tables/relative-importance/home.htm The weights are based on estimates of how consumers actually spend on different goods and services, rather than on how much someone would need to spend for subsistence or survival.
anonymousDan 4y ago
The problem is it is not necessarily arbitrary - governments can pick a basket that masks inflation in areas that it wouldn't suit their agenda to highlight.
- pessimizer 4y ago
  "Arbitrary" means "picked." It doesn't mean "random" (although you certainly can pick things randomly.) The alternative to arbitrary choice is systematic choice i.e. having a set of specific meaningful criteria that determine something. So I agree with you, but the problem is that it is arbitrary, and the arbiters could be rigging the outcome with their choices.
ls15 4y ago
> It does not have to be perfect to be meaningful. It is deceptive though, if this number is not representative of people's actual cost of living and it is then used to adjust their income for inflation. How clear is it that this basket really represents an average household (today)? Employer: "What do you mean, cost of living has gone up by 14%? Official inflation is 7%, but the best I can do this year is 3.5%." Politician: "Inflation is X every year, so we increase pensions by X% every three years."

glenngillen 4y ago

Here’s a post from last year that I thought did a great job of illustrating your point, and how misleading the reporting of a single inflation number is without also knowing the variance: https://economicsfromthetopdown.com/2021/11/24/the-truth-about-inflation/ https://economicsfromthetopdown.com/2021/11/24/the-truth-abo...

davzie 4y ago
A great read thanks!