HOW is inflation only 3.8%

[RachelNeedsToGo]

Big hooray in todays telegraph because inflation has 'stuck' at 3.8% which was unexpected.

How can inflation only be 3.8%? Anyone......?

Tesco shopping this week - porridge up from £2.7 to £3 so that's a 10% rise. Fish that I buy regularly up from £3.5 to £4. So that's more than 10%

I looked at the ONS and it seems they look at a bunch of stuff we all buy all the time and compare how the prices have moved.

So if food prices have gone up and council tax has gone up and my groomer has gone up please can somebody tell me what is going down to make inflation only 3.8%

I really, really want to know where all these reducing prices are that I don't appear to be benefiting from.

Only specific things are taken into account in calculating inflation, probably some random basket of staple foods for that part of it. Nothing needs to have come down. If you really want to know:

www.ons.gov.uk/aboutus/usingpublicdatatoproducestatistics/learningaboutdata/learnmoreaboutwhoweareandwhatwedo/whatisinflationandhowdowecalculateit#:~:text=The%20rates%20of%20inflation%20we,as%20repairs%20and%20home%20improvements.

Don’t forget it’s compounding. So the rises keep coming.

Businesses will also put prices up above inflation to preserve profits

There is a calculator on the ONS site, so I assume you can see if you are a typical consumer or not.

Food inflation is higher?

I actually looked at the ONS website for the defination and it says it uses items people buy the most. So food things, haircuts, travel etc

If food things are going up over 10% and that's just since my last shop of them then surely some things must be getting cheaper to end up at 3.8%

I guess I don't pay much attention to the price at the pumps as I don't fill up that often so has it gone down?

Utilities - I'm on a fixed rate so have they gone down or something?

Everything I pay pretty much has gone up - food, ctax, vets, groomers, virgin bill, even the books I buy on amazon seem to be more expensive.

So please I want actual costs that people are experiencing that have gone down?

You say 'nothing needs to have come down' - how can this be if some prices are going up by over 10% and nothing is going down how can inflation be 'sticking at the same level this month'

It just feels like a pile of crap that we are being fed.

Yes so the compounding makes it even worse. I'm sure the fish was £3 not that long ago and so it must have went up to £3.5 at some point and then £4 this month.

Yes I bet businesses do - so if inflation is 4% roughly and they put there prices up to 10% does that 10% that we pay extra not feed back into the inflation calculation.

Or does nobody actually understand the number and sssshhhh we're not supposed to ask!

Prices don't need to have come down. Imagine that prices of some food items have gone up by 10% as in your example, but e.g. the price of a new car (an expensive thing) has only gone up by 1%. All the prices could be going up, but if some go up by more than 3.8% and some go up by less than 3.8%, the average can still be 3.8%.

This year my car insurance and house insurance went down. Nursery costs stayed the same (although in reality down as the new funded hours came in September), food costs gone up but I haven’t noticed a huge rise recently.

I know. You can't really miss it. lol.

I just noticed quite a few big increases in my Tesco shop this week and given that none of my bills have come down, how is inflation sticking at the same level.

It's a bleedin mystery to me.

okay thanks I'll take a look. I feel like I am a normal consumer but maybe I am not!

I see. Thanks - that sort of makes sense.

Most of us don't buy a new car each month but everybody buys food each month.

I haven't bought a car for over 6 years so I don't feel any benefit there but my food bill is killing me.

Thanks for explaining it to me though.

My dog groomer is now £80.

Was paying £45 five years ago.

Oh well here's hoping that my next car insurance bill is lower then.

It just sounds like things we pay out all the time (rent, food) are going up and things we buy once a year or once every few years might be coming down.

It feels misleading.

That's a big jump over 5 years and certainly more than 4% each year.

I think mine was £45 5 years ago and now it's £60 every 6 weeks.

I hope your dog looks like furry royalty for £80 (although I guess if he/she is a big dog that might explain the expense more as mine is a tiny wee thing)

Agree. I see food going up weekly and wonder how some families are coping. The inflation figures just don’t make sense to me

How have prices changed over time? | Bank of England

I guess it depends what you spend money on and how you pay for things. For me, I pay car and house insurance monthly so those reductions offset higher food costs. I have a mortgage rather then rent, interest rates have gone down so when we remortgage in a few months time our mortgage payments will go down.

I guess it depends what you spend money on and how you pay for things. For me, I pay car and house insurance monthly so those reductions offset higher food costs. I have a mortgage rather then rent, interest rates have gone down so when we remortgage in a few months time our mortgage payments will go down.

So on the bank of England site - looking under housing costs - there is no mention of private rents which have gone up by about 100% over the last few years. Yet they have daft things like the price of a showerhead. Yip £1500 per month for private rent v £8 for a new shower head once every 8 years. That's the same!

They do take into account local authority rents but I don't see private rents. Unless the line that says RSI rents are supposed to be it. Don't know what this stands for but if it's meant to be private rents no way is that increase right.

I have to stay though that paying £60-£80 every 6 weeks for dog grooming is a huge expense if people are struggling with food costs.

I'm glad someone else is confused. I mean I get that somethings might have come down but it seems to be things we pay out less often.

The way in which it is calculated is a fiddle

For example, If steak gets expensive and people buy chicken instead, the ONS says consumers “substitute” cheaper goods — so the basket’s weight shifts. That means inflation looks smaller, even though you’re forced to downgrade what you buy.

And another example, the main CPI excludes mortgage interest payments — even though those have soared.

Also, weights and averages are updated annually, so price shocks (like fuel or food) get diluted or appear later than they’re felt in real life.

I think we all know that it is not 3.8% in the real world

Surely though your car and house insurance paid monthly are quite small amounts. Like my car insurance is about £300 per year and my house insurance is about £200 per year (always seems strange that it is cheaper to insurance my house than my old runabout car but anyway.....)

Food bill is about £500 per month so £6000 per year.
If it goes up 10% (and I think it's more than that quite honestly) then that's £600 per year or £50 per month increase.

If my car insurance goes down even 10% (to keep it simple) then that's still only £30 over the whole year or £2.5 per month.

So how does the reduction in insurance offset the food.

I understand if the interest rates go down your mortgage payments will go down (unless you are on a fixed rate) but rates have been pretty static recently and so can't be contributing to how inflation is the same this month.

I just don't get it. It feels like a misleading figure to trick us.

Thanks for trying to explain it to me though.

Value Porridge Oats are 85p!

Try Sainsbury's, as they price match Aldi on so much including Fish, and the quality is good.

Our good bills haven't gone up as we have just become more savvy / changed our habits / shopped elsewhere.

Note to self: misses point of thread entirely 😅

key point to note is that inflation is a measure of prices rising, inflation falling means that the rate of rise is lower - not that prices are falling.

-ve inflation ( or deflation) is when prices are falling ( and that causes a different set of economic pain)

UK inflation: What is the rate and why are prices still rising? - BBC News