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.

I'm not struggling per se - it just pisses me off paying a 10% increase or more on my food shopping from last month while the telegraph parrots that the inflation rate has stayed the same.

Private rents around me are going up and up and so given that a 1/3 of the population is supposed to be in private rents I would think these two costs (food and private rent) would be making inflation way higher.

I agree the dog grooming is a luxury cost and to be honest dog ownership has been far more costly than I ever imagined it to be.

Had the wee furry monster for 12 years though so I guess I must love him.
I on the other hand get my hair done 3 times a year at a cost of £35 each time although I do home dye it every 4 weeks at cost of £8.

You can see who's in charge in this household!

Thank you!!!!

That makes much more sense to me. It is a fiddle and misleading.

Yes I'm changing my food basket - no longer buy steak and instead buy more chicken cos it's cheaper. So perhaps my basket stays the same (cos my budget is the same) but the prices have still changed. Even the chicken used to be £5 but is now £8. Still a bargain compared to the steak but not the same price.

Also are the prices 'weighted' - don't know if know the answer.

I mean if my food bill is £6000 per year and my car insurance is £300 per year and one goes up 10% (food) and the other (ins) goes down 10% do they count this as no movement in inflation because that is seriously misleading.

I don't think the calculation is a secret or something no one is meant to question, the information around it is very transparent isn't it?

Id be amazed if it's being done wrongly and no one apart from you have noticed

thanks for your post.

Yes I do see the cheaper oats and I could change to them to offset the difference but then my cost hasn't stayed the same - I've just changed to a product I like less to keep within my budget.

i wouldn't mind the increases so much if the news were reporting what felt like a a realistic number. So if they said inflation is 12% then i think well that feels about right then. Parroting that it has stayed the same this month at 3.8% just feels like they are treating us like we are stupid.

At least you still have you sense of humour lol!

Yes I understand. I just want to know if food is up (what feels like about 20%) this year then what has come down in price to offset this so the rate is still just 3.8%

Did I mention that my name was Rachel and that I'm supposed to be in charge of the treasury lol!

Yes I get that it is 'transparent' but I doubt many people actually go onto the website and look at it.

So I feel like it has always been calculated in such a way that it is misleading.
So yes I'm not saying they are deliberately calculating wrong now to trick us - what I'm saying is it has always been calculated in a way that is not very realistic.

It's just now with big costs such as food going up so much that the number seems to really stick out as being unrealistic.

I mean if it's normally around 2% and now it's 3.8% that does not feel like too much of an increase. Yet that's not what I am experiencing in person with my bills.

I'm glad you so confident though that the people in charge are doing it right. I watched RR giving a speech in Birmingham and she inspires no confidence at all. Stammering and blushing through the entire thing. Waffling on about things that are meant to distract us.

Inflation figures aren't calculated by politicians, the system has been going for decades so whilst you might quibble about some specifics the methodology is at least consistent

Yes I know the methodology is consistent but it does not make sense.

I'm a retired qualified accountant (used to work for industry and commerce, not firms of accountants) and if they didn't like what the numbers said they would just 'flex the rules' to make it better.

Oh that profit is too low. How many years are we depreciating the new trucks over - 5. Oh lets make it 10 then so the depreciation figure is lower and the profits are higher.

How much did we spend on training this year - 2 million. Lets spread that cost over the next 5 years as we'll get the benefit over this time period (even though they knew this was unrealistic with technology moving so fast)

Net profit too low - lets just highlight the EBITDA number this year and try and hide the net profit figure away. (Earnings before interest, tax, depreciation and amortisation)

Our joke was always - what do want the number to be? Then figure out how we get to that while still following the same rules.

As a general comment, not just to the OP.
It's vital to understand the inflation rate is based on "basket of prices" from the same time last year, not just last month.

The basket is made up from a diverse range of things to give an indication of the state of the economy. However some sectors such as food, have risen significantly which generally has a bigger impact on the poorer.

I also struggle to see where things have come down in price, or have increased below the rate of 3.8%.

I have zero confidence in RR & SK to turn fix the economy, and fully expect us to need a IMF bailout within 12 months.

When you owe £3 Trillion to the Bond markets they are in charge, and they're hiking up the borrowing rates, as they want the money or them gone.

It feels like prices are going up at a pacing rate so I agree with you on that.

Figures are massaged a lot. There are a few ways to measure inflation, two ways that I'm aware of are the Consumer Price Index and Retail Price Index. One of those uses the 'typical weekly shop' with a basket full of groceries they think everyone buys weekly, which can conceal a lot of price inflation.

Another way to look at inflation, for what it actually is, is the devaluation of the currency. Prices don't go up, the value of your money goes down. The money you earn goes less and less of a way each time. That's where real the pain is. All the time we keep printing money to inject into failing businesses, the less money is worth.

Someone is buying steak though, I’m a farmer and just been paid the highest ever price I’ve ever received for some cattle! Baffles me

Actually your message has cheered me up. I like to hear about our british farmers being able to profit from what they do.

In all fairness I used to buy several steaks every week for my dog. Due to a problem with his stomach we had to switch to low fat proteins (venison, ostrich, fish, chicken etc). Glad someone else has picked up the slack!

If I thought higher prices were going to our farmers I actually wouldn't mind that. I just assumed Tesco was making more money while continuing to screw over farmers, dairies etc.

Wonder what is causing the extra demand then for steak?

Nothing needs to have gone down in price.

If item A has gone up in price by 5% and item B has gone up in price by 1% (both of which are an increase) the average increase overall is 3%.

I never thought I’d say this but actually Tesco are really quite fair to my sector of farming these days. They know our costs and as those move up and down they pay us relative to that - a guaranteed margin if you will

Google is your friend....Remember that your individual experience of a couple of products in your local supermarket does not mean the stats are bunkum;

Examples where annual inflation has accelerated (ranked by the size of change):
Passenger air travel: August down 3.5%, September up 5.5%
Chocolate: Aug up 15.4%, Sep up 18.1%
Margarine & other vegetable fats: Aug up 2.6%, Sep up 3.7%
Men’s clothes: Aug up 0.4%, Sep up 1.4%
Soft drinks: Aug up 5.2%, Sep up 6.0%
Hotels & similar accommodation: Aug up 2.0%, Sep up 2.7%
Ready-made meals: Aug up 6.1%, Sep up 6.7%
Women’s clothes: Aug up 1.9%, Sep up 2.5%
Fruit: Aug up 3.8%, Sep up 4.1%
Confectionery: Aug up 6.0%, Sep up 6.2%

Examples where annual inflation has eased:
Cinemas, theatres & concerts: August up 7.0%, September up 0.1%
Cleaning equipment: Aug down 2.9%, Sep down 7.5%
Crisps: Aug up 6.2%, Sep up 1.8%
Mineral or spring waters: Aug up 7.3%, Sep up 3.4%
Fruit & vegetable juices: Aug up 9.6%, Sep up 5.8%
Refrigerators, freezers and fridge-freezers: Aug up 2.6%, Sep down 1.0%
Fish: Aug up 0.5%, Sep down 1.6%
Yoghurt: Aug up 2.8%, Sep up 0.9%
Potatoes: Aug up 1.6%, Sep up 0.2%
Jams, marmalades & honey: Aug up 0.3%, Sep down 0.9%
Cheese & curd: Aug up 5.1%, Sep up 4.1%
Eggs: Aug up 4.8%, Sep up 4.0%
Bread: Aug up 2.2%, Sep up 1.5%

Some basics have shot up, by eg 50pc. Butter, crisps, packs of salmon, pasta - massive increases in the last few years.