Was inflation negative in recent months?

zagfles

Pat38493 said:

zagfles said:

eskbanker said:

Pat38493 said:

eskbanker said:

Pat38493 said:

According to this site, inflation between September and January was actually negative (actually negative in all months in between).

Does this make sense given that inflation was said to stay the same the last 2 months?

Who said that, and what measure were they using?

It was reported that way by the BBC when the January figures came out.

It's rare for any reporting of inflation to refer to month-on-month calculations, in that the norm is to use rolling annual figures, so you're comparing apples and oranges if mixing two different methods!

Which is quite misleading reporting really - prices can be falling but the headline inflation figure could rise if prices fell by more in the same month a year ago, as it did between Dec 2022 and Jan 2023!

The rolling annual figure is useful for stuff like annual rises in pay, benefits, working out real gains or losses on investments etc, but for a measure of how prices are changing at the moment it's pretty useless. It's like measuring the speed of a car by how many miles it covered since an hour ago.

Yes and this is I guess what was initially confusing me - if inflation was negative over the last 5 months, we do we keep hearing that it's higher or not changing.  

I guess the counter argument would be that like investment returns, quoting monthly inflation would introduce a lot of relatively unimportant volatility.

The point is the context the figure is used in. If you're driving and want to know if you're on track to get to your destination, knowing you've covered 50 miles in the last hour is useful. But it'd be stupid to use that measure to determine how fast you're going right now.

Same with inflation. Saying that inflation is falling or rising, or staying the same, because of how the 12 month rolling rate has changed, is misleading.

dealyboy

People might be interested in ONS data just published 'Economic insights latest on Household Cost Indices' ... 
https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/householdcostsindicesforukhouseholdgroups/october2023todecember2023.

Itsme01x

Inflation is measured against the same month previous year - a lot of people get confused with this.  I did unitl a few years ago.   Lets just say that in the year the inflation rate was Jan 3%, Feb 3%, Mar 3%.  Prices have still risen +3% over the three month period compared to last year, ie the cost of items has gone up.

If take the rolling months then you say the there has been no increase in inflation as there has been no change from 3% over a rolling three month period.  But the item that you paid £1.00 for last year is now £1.03 (maybe a bit higher with compounding).  But whichever way, the cost of items has gone up. 

If Jan 3%, Feb 2%, Mar 2%: inflation is still rising - the cost of the item is still going up.  The rate of increase can be said to be falling.  But prices (and inflation) are still rising.

zagfles

Itsme01x said:

Inflation is measured against the same month previous year - a lot of people get confused with this.  I did unitl a few years ago.   Lets just say that in the year the inflation rate was Jan 3%, Feb 3%, Mar 3%.  Prices have still risen +3% over the three month period compared to last year, ie the cost of items has gone up.

If take the rolling months then you say the there has been no increase in inflation as there has been no change from 3% over a rolling three month period.  But the item that you paid £1.00 for last year is now £1.03 (maybe a bit higher with compounding).  But whichever way, the cost of items has gone up. 

If Jan 3%, Feb 2%, Mar 2%: inflation is still rising - the cost of the item is still going up.  The rate of increase can be said to be falling.  But prices (and inflation) are still rising.

The point here is that prices actually fell between Sept 23 and Jan 24 as you can see from the index figures posted above. But the headline rate of inflation is still positive because the rolling 12 month figure is still positive. So prices are more expensive than 12 months ago, but cheaper than 4 months ago. 

Itsme01x

zagfles said:

Itsme01x said:

Inflation is measured against the same month previous year - a lot of people get confused with this.  I did unitl a few years ago.   Lets just say that in the year the inflation rate was Jan 3%, Feb 3%, Mar 3%.  Prices have still risen +3% over the three month period compared to last year, ie the cost of items has gone up.

If take the rolling months then you say the there has been no increase in inflation as there has been no change from 3% over a rolling three month period.  But the item that you paid £1.00 for last year is now £1.03 (maybe a bit higher with compounding).  But whichever way, the cost of items has gone up. 

If Jan 3%, Feb 2%, Mar 2%: inflation is still rising - the cost of the item is still going up.  The rate of increase can be said to be falling.  But prices (and inflation) are still rising.

The point here is that prices actually fell between Sept 23 and Jan 24 as you can see from the index figures posted above. But the headline rate of inflation is still positive because the rolling 12 month figure is still positive. So prices are more expensive than 12 months ago, but cheaper than 4 months ago. 

and the price of gas and electricity (well the cap for the average household) fell 8% & 9% during that period, but you were still paying a lot more than 12 months ago. The price of vegetables reduced in price in winter compared to their earlier autumn prices.  There were still a number of items/food that were increasing above the declared rate.

I could argue that it is not a 12 month rolling figure as each inflation number (headline inflation) is distinct for that month as it directly compares that month to the same month 12 months ago, but that is another discusssion for another day.    

zagfles

Itsme01x said:

zagfles said:

Itsme01x said:

Inflation is measured against the same month previous year - a lot of people get confused with this.  I did unitl a few years ago.   Lets just say that in the year the inflation rate was Jan 3%, Feb 3%, Mar 3%.  Prices have still risen +3% over the three month period compared to last year, ie the cost of items has gone up.

If take the rolling months then you say the there has been no increase in inflation as there has been no change from 3% over a rolling three month period.  But the item that you paid £1.00 for last year is now £1.03 (maybe a bit higher with compounding).  But whichever way, the cost of items has gone up. 

If Jan 3%, Feb 2%, Mar 2%: inflation is still rising - the cost of the item is still going up.  The rate of increase can be said to be falling.  But prices (and inflation) are still rising.

The point here is that prices actually fell between Sept 23 and Jan 24 as you can see from the index figures posted above. But the headline rate of inflation is still positive because the rolling 12 month figure is still positive. So prices are more expensive than 12 months ago, but cheaper than 4 months ago. 

and the price of gas and electricity (well the cap for the average household) fell 8% & 9% during that period, but you were still paying a lot more than 12 months ago. The price of vegetables reduced in price in winter compared to their earlier autumn prices.  There were still a number of items/food that were increasing above the declared rate.

I could argue that it is not a 12 month rolling figure as each inflation number (headline inflation) is distinct for that month as it directly compares that month to the same month 12 months ago, but that is another discusssion for another day.    

Energy due to go down another 13% or so in April.

Rolling figure means exactly that. It rolls on so current figure is Jan 23-Jan24, then it'll be Feb23-Feb24, ie it rolls on. The equivalent of a rolling ball, the front of the ball moves forwards 1cm and so does the back but the difference between the two ie the diameter of the balls stays the same.

snowlaser

There has been very slight deflation in recent months, but inflation is very seasonal and is usually higher over Feb-Aug than it is over Sep-Jan, so I'm not sure how much you can really read into that.

lib21by

Sorry, but the measure of inflation that sits in the front of my mind are the increases in costs that I cannot escape from [ many others I deal with by doing without ]

And top of the list of the inescapable are the standing charges for energy.

March 2023 to March 2024, the increases are - gas 4% and electricity 28%

And from April 2023 to April 2024 they will be - gas 9.5% and electricity 8%

hugheskevi

lib21by said:

Sorry, but the measure of inflation that I sits in the front of my mind are the increases in costs that I cannot escape from [ many others I deal with by doing without ]

And top of the list of the inescapable are the standing charges for energy.

March 2023 to March 2024, the increases are - gas 4% and electricity 28%

And from April 2023 to April 2024 they will be - gas 9.5% and electricity 8%

Looking back at my inescapable costs, the average p/a percentage change from April 2020 to April 2024 are below.

Water: 10.2%
Gas/electric: 13.8%
Council Tax: 7.3% (in a Local Authority permitted to increase bills above 5%)
Broadband (incl landline): 7.1%
House insurance: 6.6%
2 * Mobile phone contract (not including phones): -12.9% (price reduction)

Over the period, CPI (all items) increased by 5.2% p/a
Across all the categories above, the increase was 9.6% p/a

Although the cost of gas/electric is the highest increase, it is still only £3.97 per day. For all my heating and electric I still consider it a great deal. I place water in the same category. In these days of having apps showing the daily cost of utilities, I'm probably more inclined to use gas/electric due to having that information readily available, as the cost of it is so low in comparison even to basic things like a take-out coffee or a bottle of soft drink.

Broadband is not a like-for-like comparison as the speed of my current contract is much higher. Mobile phone data allowance is higher, so that is also a superior product. So telecommunications has been the best-performing area of expenditure on inescapable costs.

In comparison, Council Tax has 'only' increased by 7.3% p/a over the period, but the service provided has deteriorated and I benefit from only a fraction of what I have to pay for it (about 16%). That is the inescapable cost that gets most of my attention, due to resenting the shocking value it provides, the size of it in relation to other inescapable costs, and having no way to avoid it.

michaels

Of course apart from the water and council tax all the others you can 'shop around' so the actual cost also depends on how good a deal you get.