Will the real rate of inflation please stand up?

StevieJ

HAMISH_MCTAVISH wrote: »

Here you go.....


http://www.dailymail.co.uk/news/article-1361756/Food-price-rise-hits-UK-families-hardest.html#ixzz1JbdHc115

Using the excuse of rising inflation on import costs to raise your margin by far more at retail.

Sounds like profiteering to me.

Sounds like you just made up my mind for me on this years S&S ISA

ILW

HAMISH_MCTAVISH wrote: »

Here you go.....


http://www.dailymail.co.uk/news/article-1361756/Food-price-rise-hits-UK-families-hardest.html#ixzz1JbdHc115

Using the excuse of rising inflation on import costs to raise your margin by far more at retail.

Sounds like profiteering to me.

So it appears your definition of profiteering is increasing margin between selling and buying price.

I come back to why you do not consider house sellers the same.

I am not saying it is wrong to get the best price possible, just wonder why you make the distinction.

HAMISH_MCTAVISH

ILW wrote: »

So it appears your definition of profiteering is increasing margin between selling and buying price.

I come back to why you do not consider house sellers the same.

I am not saying it is wrong to get the best price possible, just wonder why you make the distinction.

Seriously?

You don't see a difference between using a semi-monopolistic market position to increase margins on mass produced products with no supply shortage nor excess of demand, versus individuals competing in a free and open market where demand exceeds supply?

I give up.

Thrugelmir

StevieJ wrote: »

Exactly my point (don't get bogged down in politics:)) two sides of the same coin. Maybe we should create a new index that includes both CPI/RPI and disposable income.

Elsewhere outside the UK there isn't the same fixation with "inflation". As the actual effects on people are so widely different depending on their spending patterns. Maybe there should be a basic living index instead.

ILW

HAMISH_MCTAVISH wrote: »

Seriously?

You don't see a difference between using a semi-monopolistic market position to increase margins on mass produced products with no supply shortage nor excess of demand, versus individuals competing in a free and open market where demand exceeds supply?

I give up.

In the end it is just pricing at what the market will stand. I believe it is called capitalism.

Thrugelmir

ILW wrote: »

In the end it is just pricing at what the market will stand. I believe it is called capitalism.

Pricing is also sensitive. As the inherent danger is that you will lose the confidence of the consumer. A business that survives long term is more likely to have established customer loyalty. New business is around 20 times more expensive to generate than repeat existing business.

Mr_Mumble

A quick look at digitallook shows Tesco's operating margins are forecast to fall from 6.1% for FY 2010 to 5.7% in FY 2011, Sainsbury from 3.6% to 3.1% and Morrison from 5.5% to 5.4%. Here's Tesco's figures for the previous five years:

27-Feb-10 : 6.07%
28-Feb-09 : 5.88%
23-Feb-08 : 5.90%
24-Feb-07 : 6.27%
25-Feb-06 : 5.78%

Analysts have been warning about a squeeze on supermarket margins and the ONS mentioned it was supermarket sales that saw a drop in in food inflation last month

Margin falls are margin rises and inflation is deflation. What a whacky thread this is!

Thrugelmir

Mr_Mumble wrote: »

A quick look at digitallook shows Tesco's operating margins are forecast to fall from 6.1% for FY 2010 to 5.7% in FY 2011,

Tesco's is an international business with increasing revenue and earnings from overseas. So you would need a geographical breakdown from the annual accounts to extract meaningful data.

Graham_Devon

Stephanie Flanders / Henderson Global Investors

“It has recently become fashionable to quote the tax-adjusted inflation measures, CPI-CT and CPIY, which are running well below headline inflation, at 1.9% and 2.0% respectively (up from 1.5% and 1.6% in November.) CPI-CT is calculated at constant tax rates while CPIY excludes indirect taxes altogether.

“These measures, however, understate "true" inflation because they are calculated on the assumption that indirect tax hikes are passed on in full to consumers. ONS research on the December 2008 VAT reduction from 17.5% to 15% indicated pass-through of only one-third. Assuming that one-half of the increase in VAT and other indirect taxes last year was reflected in the prices charged to consumers, inflation would now be about 2.8% had tax rates remained stable.

That was when inflation hit 3.7.

So real inflation, based on that, and stripping out VAT, would actually be 3.1%.

However, as the bloke from Henderson Global Investors states....using CPI-Y has simply become fashionable.

StevieJ

Graham_Devon wrote: »

Stephanie Flanders / Henderson Global Investors



That was when inflation hit 3.7.

So real inflation, based on that, and stripping out VAT, would actually be 3.1%.

However, as the bloke from Henderson Global Investors states....using CPI-Y has simply become fashionable.

My experience of the rate hike was that they passed it on and some, retailers are less likely to pass on a reduction as opposed to a well publicised increase in VAT.