Inflation in Essentials

Generali

Tullet Prebon, a broker, has put together an inflation index of just 'essential' items. I thought this might be of interest to some.

http://tullettprebonresearch.files.wordpress.com/2013/02/tpsn043_essentials_index.pdf

grizzly1911

Generali wrote: »

Tullet Prebon, a broker, has put together an inflation index of just 'essential' items. I thought this might be of interest to some.

http://tullettprebonresearch.files.wordpress.com/2013/02/tpsn043_essentials_index.pdf

Nice to see some evidence that shows the bleedin' obvious.

For those that don't actually get any increase in pay, and those on the most modest incomes, then position is even more marked as less of the cheaper stuff, less necessary stuff, is consumed in the basket.

wotsthat

Low income groups are always affected by inflation more than better off people as their discretionary spend is a higher proportion of income.

Might be another factor in the unemployment figures with people realising that getting a job might just be the starting point needed for the journey out of that low income group.

michaels

What is interesting is that inflation calculations assume that as relative prices change consumers will switch from relatively more expensive goods in their basket to relatively cheaper ones but obviously for real 'essentials' such substitution is not possible.

However I am slightly suspicious about some of the numbers quoted, I think retailers and providers in general are getting cleverer at increasing 'basic' prices in order to offer 'savings' be it BOGOF or discount power tariffs or new customers getting cheaper car insurance and I am not sure how much the official price indicies pick up this 'segmentation' of the market rather than just recording official prices. Certainly my car insurance risk has not really changed over the last 5 years and my premiums have inched down if anything etc.

Graham_Devon

Generali wrote: »

Tullet Prebon, a broker, has put together an inflation index of just 'essential' items. I thought this might be of interest to some.

http://tullettprebonresearch.files.wordpress.com/2013/02/tpsn043_essentials_index.pdf

Confirms what many have been saying for a while.

Surprised to see it lower in 2012, but for 2011, 8% inflation looks bang on to what the public were generally saying.

Figures 3 & 4 in that report are excellent.

CLAPTON

I'm not entirely sure that alcohol and tobacco are 'essential' items (and make up 21% of the index)

chris_m

CLAPTON wrote: »

I'm not entirely sure that alcohol and tobacco are 'essential' items (and make up 21% of the index)

Me neither, but you beat me to it.

purch

CLAPTON wrote: »

I'm not entirely sure that alcohol and tobacco are 'essential' items (and make up 21% of the index)

The index is put together by a money broking firm.

vivatifosi

Great spot Gen. I've long suspected that inflation has been highest where elasticity of demand is closest to inelastic/low elasticity and that this is what is hitting us. It's good to see this being measured finally.

Having said that, I take on michaels's point re BOGOFs etc and also agree with CLAPTON's point that alcohol and tobacco aren't essentials.

Generali

vivatifosi wrote: »

alcohol and tobacco aren't essentials.

To addicts they are. I used to be a smoker and I would have bought cigarettes before food at that time.

dryhat

I haven't read the report in the OP but I don't need someone to tell me that the real rate of inflation is higher than the official rate.

Inflation is like a stealth tax which slowly drains you of your income.
And the more the government inflates the more you lose.

While people are saving a couple of quid on their mortgage they are happy and don't realise that they are being robbed.

Calling for more printing/lending is like asking a pickpocket to come back and steal a bit more off you when you're not looking.