CPI is 2%.

Loughton_Monkey

grizzly1911 wrote: »

.....For the essential regular things like groceries, fuel, energy, utilities, insurance, rent it is easier to follow whether 2% is a likely reflection or not.

Personal inflation may be a lot lower if an individual chooses to change consumption pattern but that doesn't affect the underlying inflation rate.

Personal inflation really has little meaning not least because nobody buys the same things every year. CPI is a 'back of the envelope' guide. That's all.

Anyone with sense 'controls' what they need to spend next year with a budget. Overspend on one type of expense, then just cut down something on another. Simple.

Carl31

i go by how much my bran flakes cost

currently £1.94 a kilo, up from about £1.85 last year

Andy_L

michaels wrote: »

Actually I think the CPI calcs do include substitution effects to a certain extent.

AIUI its a bit of a fiddle. Because it uses the geometric mean it will always be lower than an index that uses the arithmetic mean (like RPI does). The claim is that that difference "represents" substitution savings but since the basket of goods isn't varied to show substitution that's a bit of a fiddle/kludge/necessary approximation depending on your point of view

purch

michaels wrote: »

Actually I think the CPI calcs do include substitution effects to a certain extent.

When Mourinho decides to replace 3 players after 15 minutes of the 1st half, it can knock 0.1 % off the monthly series (depending on the result) :eek:

grizzly1911

michaels wrote: »

Actually I think the CPI calcs do include substitution effects to a certain extent.

Is that more to do with "obsolescence" rather than someone deciding to trade down in a product? The comparison item no longer being available or the bulk of people shifting form one item to another, tablets rather than tower PCs perhaps.

Off thread - Interesting that both Argos and PC world announced improved sales over the Christmas period. Whilst Argos pointed at tablets not too surprising PCW didn't in the headlines:think:

Perelandra

I've no idea what my personal CPI is, but might be interesting to dig into it.. although I reckon it's about 15%:


Approximately 70% of my takehome pay goes into my S&S ISA, Pension or Mortgage payments, roughly 10% goes into saving for one-off purchases, leaving 20% for living expenses (and I will spend all of this).


The 70% is fixed- it's exactly the same this year as last, and will be the same next year too. The 10% will probably be fixed in absolute terms.


So if I were to get a payrise of only 1% this year, my living expenses could, and would, go up by 5% as I'd be able to spend all this increase on the part that's left over after the various savings and investments... so I might argue that my personal CPI is "Payrise x 5", if I only look at the living expenses. If the payrise were as much as 3%, then I'd have an expenses CPI of 15%.


However, equities are materially more expensive than this time last year- in some of my funds 20% up- I get far fewer shares for every £ that I invest. So should I count this increase in cost in my CPI calculation? Perhaps a 15% personal CPI on the investments.


Finally, an interest rate rise of 1% would reduce my level of overpayments- about 15% of my current monthly payment would go into increased interest, so it could be argued that my money is buying 15% less "house" than it was before.


15% CPI... eek!!


(above not to be taken too seriously....)

MrRee_2

Loughton_Monkey wrote: »

I assume you are referring to my new BMW?

so the new car is costing me "nothing".

You were doing so well, then that!!! :rotfl::rotfl::rotfl:

A car for £100 may be considered to cost you nothing ........ a new BMW? Nah!

Loughton_Monkey

MrRee wrote: »

You were doing so well, then that!!! :rotfl::rotfl::rotfl:

A car for £100 may be considered to cost you nothing ........ a new BMW? Nah!

It is costing me 'nothing' this year. But only because the money I put away from now on is for the next car. It cost me a substantial amount last year, the year before that and so on....

Try the same thing yourself. Get a nice big pink pig with a slit in it and put it on your mantlepiece. Put a shilling in faithfully every week. That's 5 pence. In your exercise book that you use to record your pocket money and spending, write down "Toys: 5 pence".

In a year or so, you will be able to take all the money out and buy yourself a Vintage Action Man GI Joe 1/16th scale hammer to go with your Action Man.

It will have cost you "nothing".

A BMW7 will need a little bit more being put into the pig. But you can always ask for a bit more pocket money.;)

Thrugelmir

grizzly1911 wrote: »

In your experience how does this relate to you in your opinion?

Is it about CPI or is it higher or lower?

As a household public sector pay freezes and caps , plus 3 years of increasing pension contributions are squeezing disposable income. So CPI is a secondary concern.

DaveTheMus

IMO it works in many ways............

a mars bar is 5p more expensive but 15% smaller.....

a beef stroganoff used to be just beef, now we have some horse included to save money......

I posted this in an earlier discussion about inflation and it still holds true:::

DaveTheMus wrote: »

In the last 4 years gold is up 70%, or 14% per year at an annualised rate, that is a single commodity...The Reuters CRB commodity index states energy, coffee, cocoa, copper, cotton are up 38% in 4 years or a compound annual rate of 8.6%....bit more than the Governments 2.8%