Inflation in Essentials

StevieJ

CLAPTON wrote: »

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

I am not sure they have increased in price either with smuggled tobacco and cheap supermarket beer dominating the market in poorer areas.

wotsthat

Graham_Devon wrote: »

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.

How long is a while? You do realise that this isn't a recent phenomenon?

Wage inflation has outstripped 'essentials' inflation only four times since 2002. Some of us have been trying to reduce our personal inflation rates and monitoring progress for longer than this. Take my utility bills - I'm looking at another YoY decrease in 2012.

Many might have been saying this for a while but, sadly, less have been doing something about it. It's not really possible to stand in the way of inflation like King Canute - but with decent budgeting and planning it's possible to stay a few steps ahead.

Longer term the solution is not to be in a low income group. The best financial advice I ever received was for free from Homer Simpson's financial adviser "Mr. Simpson - you're too stupid to budget - earn more!"

Going4TheDream

My view is that whilst we see how much things are going up we have been shielded to a degree of the real cost by the increase in tax threshold each year, when we finally reach the £10k allowance many lower paid people will find that they no longer have this cushion to help alleviate this higher inflation especially if they are still only receiving a 2% pay rise (if they get any at all that is)

prowla

Generali wrote: »

Well the UK is currently the 6th biggest economy in the world and (I think) in the top 10% of economies by GDP/head. How far do you think people need to cut back until they're poor by international standards?

It depends how you define poor - it it by money or by buying power?

grizzly1911

wotsthat wrote: »

Take my utility bills - I'm looking at another YoY decrease in 2012.

How are you achieving this so far into the purge?.

I presume that you have switched supplier, pay DDR, online, fix etc and that you have insulated, replaced heating systems, double glazed, replaced light bulbs as well.

Are you simply starting to do without or have family circumstances changes e.g. family left home, moved house?

grizzly1911

Generali wrote: »

Well the UK is currently the 6th biggest economy in the world and (I think) in the top 10% of economies by GDP/head. How far do you think people need to cut back until they're poor by international standards?

Perhaps some are closer to the benchmark, in relative terms, than others.

Apologies, it is from , the guardian but it is a ONS source material.

The top 10% of households are now 850 times wealthier than the bottom 10%, the ONS said. It also revealed that half of UK households have just £400 in net cash at hand, compared to the £123,200 in cash balances typically held by the top 10% of households......


The ONS report puts the total wealth of the UK, including pensions, property and savings, at £10.3tn. But the bottom 50% of households own less than one tenth of that, compared to the wealthiest 10% who own 43.8% of the country's assets.

http://www.guardian.co.uk/money/2012/dec/03/richest-10-uk-households-40-per-cent-wealth-ons

I wonder what the top 10% pyramid looks like?

wotsthat

grizzly1911 wrote: »

How are you achieving this so far into the purge?.

I presume that you have switched supplier, pay DDR, online, fix etc and that you have insulated, replaced heating systems, double glazed, replaced light bulbs as well.

Are you simply starting to do without or have family circumstances changes e.g. family left home, moved house?

All the reductions are just about like for like except 2012 when one of the kids started working away (if he'd stayed it would have been touch and go whether it would have been another down year).

The starting point is measurement but after that it's the obvious; insulation, fixes (been really lucky with timing them), changed light bulbs etc.

The boring stuff saved the most money - less smaller loads in washing machine, becoming allergic to the tumble dryer, hassling kids to turn stuff off, making sure central heating and water heater settings were appropriate, wash the car less, don't water the garden with a hose etc.

After that the savings start to become diminishing i.e. just a bit more insulation in the roof, replacing worn out electricals with more efficient versions. The boiler is quite inefficient but as the gas bills are quite low the payback is long so that will be left for now. The investment has been in time and effort - the financial input has been minimal.

So far it's just MSE stuff - trying to get the same for less money - there's been no deprivation and it's become a bit of a (sad) hobby.

I don't think I'll be reporting that 2013 is down on 2012 but still expect to be way below an average and any increase will be less than the headline rates of inflation for utilities.

Pobby

As an oldie, I would say that things are very much out of kilter as far as interest rates go.I was always thinking that IRs would be around 8%. That was the norm for years. Of course old Thatch had us spinning out of control in the late 80`s when lending got out of control.A 58k mortgage was , interest only, a touch under £600 a month plus the wonderful endowment payment.

Maybe 6 years ago, a lot of folk here were talking about IRs being low at 5%.0
5% was never even considered.

Once again, Brown and company, plus most of the world, got it completely wrong. Markets and companies, insurance and investment companies turned the financial world into a casino.

I would aver that real inflation is at 3%. It is most likely higher. I would state that the stupid boom in housing, rental values should have been part of the equation.

Clearly many tax credits are nothing more than a way to let employers pay minimum or just above to their workers.

I don`t want to scare people, yet I see this whole situation has a very long way to go. I can not see anyone in government who is likely to fix it.

One can only hope. Radical measures I see as the only way.

chem1st

StevieJ wrote: »

I am not sure they have increased in price either with smuggled tobacco and cheap supermarket beer dominating the market in poorer areas.

Cheap supermarket beer is basically DUTY + cost price. It rises above inflation with the beer DUTY escalator.

And homebrew kits have more than doubled in the space of a couple of years.

DUTY free cigarettes and tobacco are different, but they too have risen in price.

DUTY free alcohol has made a comeback, but is often passed off as DUTY paid in shops. A bottle of vodka can be bought on the black market for £5 - that has actually fallen in real terms price, since the 90s when it was commonly available.

prowla

chem1st wrote: »

Cheap supermarket beer is basically DUTY + cost price. It rises above inflation with the beer DUTY escalator.

And homebrew kits have more than doubled in the space of a couple of years.

DUTY free cigarettes and tobacco are different, but they too have risen in price.

DUTY free alcohol has made a comeback, but is often passed off as DUTY paid in shops. A bottle of vodka can be bought on the black market for £5 - that has actually fallen in real terms price, since the 90s when it was commonly available.

Beer seems to be going up in the supermarkets, to the point where it can be cheaper to go to the pub.