MSE News: Inflation in surprise fall but prices still rising sharply

Stompa

PaulChelt wrote: »

This time last year I was spending £25-30 a week. Now I am lucky to get £40.

You must be buying lots of things that are being particularly hit by inflation, I'd estimate my shopping bill has increased by maybe 5% over the last year.

GCH888

Quote from article:

"The ONS says a sharp fall in prices of games, computer consoles and high street electrical products such as televisions and digital cameras outweighed another rise in food prices.

Recreation and culture, which includes games and hobbies, saw prices fall by a record 0.9 of a percentage point. Another significant faller was clothing and footwear as summer sales began early, especially in women's shoes and fashions"

So basically retailers have been forced to reduce their prices to get rid of their stock due to lack of sales. Hardly a positive sign that the economy is improving.

This reminds me of those news reports of falling unemployment figures. The only reason why less people are claiming unemployment benefit is because they've reached their six month maximum allowance and are no longer entitled to benefits anymore. Once the money is no longer available, who in their right mind would continue traveling to the job centre every week to sign on if it actually costs money for the journey?

robinpe

Thanks for your article on inflation. I now know how they fiddle the figures to make inflation look lower than it really is. They include items such as televisions, games, computers, internet dating, hair curlers etc. What some of these have to do with inflation is beyond me. As for televisions, computers and games, these are all expensive when first brought out but always go down in price - they never go up in price because they are always included when most expensive. I wonder if they also take account of the shrinking size of prepacked food, sweets, crisps, baked beans etc etc, where the size goes down without the price going down.
Still it is no wonder when Mervin King is running the show. He the man who publicly refused Northern Rock a loan causing the run on the bank. He the man who who in Northern Rock's worst hour publicly stated "it is not this bank's job (the Bank of England) to bail out failed banks" - I wonder if he still thinks this after the bail out of the large banks or does he only think the of the smaller banks such as Northern Rock and Bradford & Bingley???????

Mervin King should do his job and control inflation. It is George Osbornes job to worry about growth not Mervin King. Sooner we get rid of him the better.

Masomnia

robinpe wrote: »

Thanks for your article on inflation. I now know how they fiddle the figures to make inflation look lower than it really is. They include items such as televisions, games, computers, internet dating, hair curlers etc. What some of these have to do with inflation is beyond me.

Erm, because people buy them. If they weren't included the statistics would be considerably less accurate.

Masomnia

CLAPTON wrote: »

on aggregate that may be so, but I specifically said depending upon 'your circumstances'

in general if you have a lot of debt (i.e. mortgage ) then increased income and increased inflation are generally welcome
if you depend upon saving interest or your income isn't rising in line with inflation then increased inflation is generally unwelcome

Exactly, if your savings and salary are going towards buying a house, and increase with inflation then that's good. House prices are stagnant/falling so your money will go further with more inflation.

People think these statistics are fiddled because they don't fit especially well with their circumstances, but the statistics are just averages and measure what they're set up to measure; what the average person buys in an average quantity.

Masomnia

masonic wrote: »

Ok, I can see that's not what you were saying. It's just that the terms "inflation" and "inflation rate" are being used interchangeably in several of the posts here when really they shouldn't be.

The media seem to have collectively decided this month to cook up the term "falling inflation", which is nonsense, to create a sensationalist concept to grab peoples attention - 'inflation is falling, but prices are still rising'. There would be no need to remind people that prices were still rising, as if it is some sort of contradiction, if they used the term "slowing inflation" or a "falling rate of inflation". It's all very Daily Mail.

Even the BBC, respected as it is, is happy enough to report that the consumer prices index is down from 4.5% to 4.2% :mad:

robinpe

Masomnia wrote: »

Erm, because people buy them. If they weren't included the statistics would be considerably less accurate.

Hi
I see that you are a student! You are being brainwashed. Those items are in there to make inflation look lower than it really is and cheat pensioners out of the true inflation rises they should be getting. How are items that only decrease in price a reflection of the true rate of inflation? It's a fix to save the Government paying the pensioners the true rate of inflation increases they should be getting. Try discussing this in one of your discussion groups or economics lecturers or accounting lecturers. As soon as such items reach bottom price they are replace with a newer model at top price which decreases again making inflation look lower than it really is!

Masomnia

robinpe wrote: »

How are items that only decrease in price a reflection of the true rate of inflation?

I'm not following, there's loads of other things measured. And it is weighted towards what the average person spends on those items.

As soon as such items reach bottom price they are replace with a newer model at top price which decreases again making inflation look lower than it really is!

They're at bottom price because people start buying the new stuff. Which is why the new stuff is put in the basket.

It's really not a conspiracy. You're right when you say it may not be appropriate for pensioners though, maybe we should have a separate index for them?

masonic

robinpe wrote: »

Mervin King should do his job and control inflation. It is George Osbornes job to worry about growth not Mervin King. Sooner we get rid of him the better.

It is a mistake to think of the MPC as if it were an independent body. It is completely beholden to the treasury and is not going to put up interest rates if the treasury doesn't want it to do so.

talexuser

Is it not apparent (since it's gone on so long) that the government actually want a level of inflation that they think the voters will let them get away with in order to reduce the real debt long term as a matter of "secret" policy while publicly sticking to 2% with never ending excuses of "blips" and "special circumstances" etc?