Economic indicators, useful or meaningless?

antrobus

padington wrote: »

Rent has gone up in London about 5 - 10 % a year for the last few years. That's 30 - 40% of normal income. Travel has gone ballistic in London, now near 10 % of normal pay. ....

An appeal to anecdote is a common logical fallacy.

wotsthat

padington wrote: »

Rent has gone up in London about 5 - 10 % a year for the last few years. That's 30 - 40% of normal income. Travel has gone ballistic in London, now near 10 % of normal pay. The amount you have to save to buy your first house has gone ballistic. For generation rent inflation is astronomical.

Aren't you just looking for a bit of confirmation bias to prove London is the centre of the Universe and you were very wise to buy when you did?

Generali

padington wrote: »

Rent has gone up in London about 5 - 10 % a year for the last few years. That's 30 - 40% of normal income. Travel has gone ballistic in London, now near 10 % of normal pay. The amount you have to save to buy your first house has gone ballistic. For generation rent inflation is astronomical.

RPI is a nationwide not a London calculation.

The fact is that inflation is different for each individual. The price of meat is included in the RPI calculation, hardly relevant if you are a vegan. The price of cigarettes isn't a problem for us non-smokers. The cost of rents doesn't imapct you if you have a mortgage and the cost of a mortgage doesn't change your rent.

RPI is what it is: a national average of how changes in prices are changing the average cost of living. It's a very broad brush but it's hard to see what a reasonable alternative is and how useful it would be.

padington

Generali wrote: »

RPI is a nationwide not a London calculation.

The fact is that inflation is different for each individual. The price of meat is included in the RPI calculation, hardly relevant if you are a vegan. The price of cigarettes isn't a problem for us non-smokers. The cost of rents doesn't imapct you if you have a mortgage and the cost of a mortgage doesn't change your rent.

RPI is what it is: a national average of how changes in prices are changing the average cost of living. It's a very broad brush but it's hard to see what a reasonable alternative is and how useful it would be.

Maybe we should have a more personalised interest rates based on what we buy ?

padington

antrobus wrote: »

An appeal to anecdote is a common logical fallacy.

The opening gambit I made was concerning the idea of knowing what the 'London inflation' rate was. So highly relevant what the London experience seems to be like.

padington

wotsthat wrote: »

Aren't you just looking for a bit of confirmation bias to prove London is the centre of the Universe and you were very wise to buy when you did?

No, its just that inflation and interest rates and our use of them seems to be quite blunt and simple. Just trying to get my head around why this is.

The notion of deflation in London, for example, is laughable.

michaels

padington wrote: »

No, its just that inflation and interest rates and our use of them seems to be quite blunt and simple. Just trying to get my head around why this is.

The notion of deflation in London, for example, is laughable.

Really? Petrol and energy costs have fallen as much in London as they have in the rest of the country. TV prices are down about a third in the last 12 months, similarly laptops etc. Food is down, not sure about eating out, hard to tell with so many voucher offers available these days. As far as I remember council tax has been close to frozen for 5 years, water and rail ticket increases similar now.

padington

michaels wrote: »

Really? Petrol and energy costs have fallen as much in London as they have in the rest of the country. TV prices are down about a third in the last 12 months, similarly laptops etc. Food is down, not sure about eating out, hard to tell with so many voucher offers available these days. As far as I remember council tax has been close to frozen for 5 years, water and rail ticket increases similar now.

Travel - seventh yearly hike in a row ....

http://www.cityam.com/1415725137/2015-season-ticket-and-travelcard-price-rise-how-much-will-london-train-tube-and-bus-fare

Cinema tickets up 26% when wages are down 6.4%
http://www.dailymail.co.uk/news/article-2634415/Families-priced-cinemas-ticket-prices-soar-26-2007.html

Cost of flat sharing up 30% in three years ...

http://www.theguardian.com/money/2015/oct/02/cost-of-flatsharing-in-uks-priciest-towns-rises-by-30-in-three-years

Rental costs for businesses the most expensive in the world ...

http://www.savills.co.uk/_news/article/72418/192663-0/10/2015/london-ranked-most-expensive-world-city-to-live-and-work--but-hong-kong--shanghai-and-mumbai-look-least-affordable

How RPI misrepresents the costs of living in London ...
http://www.ft.com/cms/s/0/435c21ce-6925-11e0-9040-00144feab49a.html#axzz3oVO7LW8U

michaels

Travel tickets up between 2.1 and 2.5%, less than the increase in average wages.

Cinema is a luxury not essential purchase, which is moving to a model of higher 'standard' prices but lots of discounts for those not too lazy.

Higher rents? What else could happen with more people and no more houses?

High business costs surely reflect that businesses are doing well enough to pay more or is London full of empty shops and offices?

padington

michaels wrote: »

Higher rents? What else could happen with more people and no more houses?

High business costs surely reflect that businesses are doing well enough to pay more or is London full of empty shops and offices?

Im not really critiquing the higher rate of London inflation, just pointing out that London is still quite far from deflation and begining to wonder if the interest rate mechanism that currently exists is too dumb given the personalised possibilities of the digital age.