Inflation CPI vs RPI & Money supply M4

ianmr65

Gripping title, but i thought i'f have a stab at the numbers, off the national audit sight.

Rather than beliving that inflation is 2.5%, or whatever, when everyone knows its not.
I took the RPI index that the gov stoped using some time back, but which contains, council tax, and other house-linked expenses, took a sensible base, and calculated.

Bottom line inflation as we have always known it is actually running at about :

6.7%

Also money supply the measure by which the actual amount of money is in circulation has gone up by 80% since april 2006.

Now it's not likely that all the increase, is the gov printing money. But it is hard to explain just by saying people are cashing in long term investments or whatever.

Something to bear in mind when looking at savings rates.

As the more money in circulation, and the higher real inflation, the less your savings will be worth in real terms when you withdraw them.

Whats the betting that now house prices have started to come down, they'll want these included in the the inflation index? :rolleyes: :rolleyes:

1echidna

Yes as I see it governments across the western world are massaging inflation rates downwards to prevent an inflationary spiral of wages chasing inflation and possibly just as a virility symbol to show how good they are. Unfortunately us people with savings are hit too.