CPI is 2%.

grizzly1911

DaveTheMus wrote: »

I

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

The problem with commodity prices is that they are only a fraction of the cost of the finished article. The cost of manufacturing, processing, transport, retail costs etc far outweigh them.

I remember as a kid the retail price of instant coffee going up markedly and sugar. We ended up with something called Nescore, a coffee chicory blend, for years that was disgusting, but mum commented on how nice it was. I wonderer if those prices ever fell back to trend or whether they just continued from the then new high, the commodity price being a convenient cover?

DaveTheMus

grizzly1911 wrote: »

The problem with commodity prices is that they are only a fraction of the cost of the finished article. The cost of manufacturing, processing, transport, retail costs etc far outweigh them.

I remember as a kid the retail price of instant coffee going up markedly and sugar. We ended up with something called Nescore, a coffee chicory blend, for years that was disgusting, but mum commented on how nice it was. I wonderer if those prices ever fell back to trend or whether they just continued from the then new high, the commodity price being a convenient cover?

This is true, however it does show a general trend...

I'd say real inflation is 7%+

IveSeenTheLight

Loughton_Monkey wrote: »

BTW. Much talk of deflation etc.... Seems this is a fantastic time to get a BMW.

The retired father in law is about to buy a merc slk 200.
He found it holds value better than a BMW.

That said, from now until March is a good time to buy a car as you can get better deals whilst the dealers try to clear stock ahead of the new registration plates coming in.

purch

IveSeenTheLight wrote: »

The retired father in law is about to buy a merc slk 200.

Is he a retired hairdresser ? :eek:

N1AK

grizzly1911 wrote: »

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

Is it about CPI or is it higher or lower?

There's far to much noise in any individuals spending to measure CPI. What I buy in one year varies considerably from another. Additionally if my income fell then I would stop or down-shift some purchases, but if my income increases I may make additional purchases.

We actually spent considerably less on normal expenses last year than in the previous two years. Our fuel cost was actually ~£1,000 lower because of slightly decreased personal mileage, a more fuel efficient vehicle and more work mileage.

Fella

N1AK wrote: »

There's far to much noise in any individuals spending to measure CPI. What I buy in one year varies considerably from another. Additionally if my income fell then I would stop or down-shift some purchases, but if my income increases I may make additional purchases.

We actually spent considerably less on normal expenses last year than in the previous two years. Our fuel cost was actually ~£1,000 lower because of slightly decreased personal mileage, a more fuel efficient vehicle and more work mileage.

Surely most of that is irrelevant to a discussion of inflation? Any worthwhile measure compares like-for-like. It's perfectly possible to spend less during periods of massive inflation by doing less or doing things differently. But that doesn't make the inflation any less.

IveSeenTheLight

purch wrote: »

Is he a retired hairdresser ? :eek:

LOL, he mentioned it was referred as a hairdressers car.

To be honest, pretty good car for a hairdresser.
Just as good for a retired gentleman who held a number of senior positions in his career

mayonnaise

DaveTheMus wrote: »

I'd say real inflation is 7%+

Thanks for this bit of data, I'll pass it on to the ONS so they can amend their reports.

N1AK

Fella wrote: »

Surely most of that is irrelevant to a discussion of inflation? Any worthwhile measure compares like-for-like. It's perfectly possible to spend less during periods of massive inflation by doing less or doing things differently. But that doesn't make the inflation any less.

No because CPI is a weighted basket of products. If, to take an extreme example, peanut butter increased in price by 10x then sales would crash and if it had been in the index it certainly wouldn't be anymore.

However, my main point, is that you can't look at something like CPI by looking at one individual because there is simply too much noise in the data, if they even have it.

grizzly1911

N1AK wrote: »

No because CPI is a weighted basket of products. If, to take an extreme example, peanut butter increased in price by 10x then sales would crash and if it had been in the index it certainly wouldn't be anymore.

However, my main point, is that you can't look at something like CPI by looking at one individual because there is simply too much noise in the data, if they even have it.

I take your point about noise nut in the extreme example you put forward simply taking it out of the index makes a mockery of the index.

It would be like stopping collecting taxes because it is too difficult and then attacking benefits because it is easier.

It also makes a mockery of saying we have increased state pensions by cpi when for a good many pensioners their individual CPI is much higher with items like energy being a much bigger proportion of their spend.

Beggars the question, why discretionary items are in the basket in the first place, which is often where reductions are seen.