According to the 'Real Cost of Living Index' inflation is 9.5%, not 3% as our honourable and truthful Govt claims.

[Callisto]

Link here: www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/06/13/cmcostofliving113.xml

It also says that despite wage increases we are all worse off as tax has risen more in the last 10 years.

yes and my salary increases will be little more than 2% for the next 3 years.
I assume by then we'll be eating grass, living in a tent and walking everywhere.
am so looking forward to it.

shocking!This will mean interest rates need to rise sharply to tackle this.They have lied for years to keep rates artificially low and boost house prices and now look.

Hardly surprising

No shit sherlock.

Doesn't surprise me a bit. I would be shocked if you could find someone who felt that inflation was 3%. Maybe a teenager with their first job, living with Mum and Dad and spending all their free money on technology....

it's not true though. income tax has just gone down by 2% whwere NI contributions (which the article mentions) only went up by 1%. Plus tax allowances went up, and will go up again in september. a comparison between 1997 and 2008 will see pretty much everyone paying less tax (except stamp duty, but we pay more of that because house prices have gone up).

Also, it's dishonest to simply include food, transport and bills as everyone also has to buy clothes and other non food comodities, which have mostly decreased in cost.

The true cost of living has probably risen by more than 3%, but it isn't as high as 9%. this article is nothing but a load of space-filling, government-bashing nonsense.

SenoraPostrophe - I think it is at least as true as the ONS measures. If council tax is to pay for local services which are becoming more expensive, surely that should be included?

I think there is some justification for weighting essentials like food and fuel more highly than non-essentials like electronics. If I can't afford a new DVD player it is not a crisis, if I can't afford food it is. And how many DVD players does the average family really need to buy in a year?

Senora - which bit of we are paying more in bills and more in taxes is not true? For sure my tax bill has increased substantially since 1997. And that's just in direct taxes.

I am not counting the stealth taxes - the fact that I have had to double payments into my pension scheme just to stay level.

All the cheap imported electricasl should not be included as they are non essentials.And they have kept house prices out although wouldn't be surprised to see them included again shortly.It is def not 3%

Even clothes aren't that essential are they? We can stop buying clothes for us for a year or two (and we can swap clothes with friend/family and go to charity shops for DD).
According to my MSE budget, we spend 53% of our budget on housing, 18% on food and 11% on transport. Only 1% goes on clothes... And we haven't bought any new technology, except a £20 DVD player, for years.

I'm not at all surprised.

I don't like The Telegraph at all, but I think it is talking about what a lot of people are thinking.

How are wages going to keep up with it, ar we going to get a 10% pay rise...

What gets me is no one seems to be doing anything constructive about it, and we all have to sit here as banks/power companies do exacty what they want. Or am I being naive?? (and perhaps dense as well ) Do the banks have to set their interest rates so high and lock first time buyers out? Am sure some of this may be needed, but can't help feeling they are cashing in somewhat.

Is everything just going to keep going up and up whilst we are all paid less and less?

quattrocento - If you read all of my post, I did say that things have gone up, but they haven't gone up by 9% a year since 1997, or even 9% since 2007 (the article isn't clear). I also objected to other figures quoted in the article.

mrstittlemouse, so all your weekly shop is on food is it?

noddy I've read that the next interest rate move is up!

Isn't there some gov organised calculator you can use to calculate your own personal rate of inflation? We did ours can't remember it was about 9% or 11 or something.
Have they stopped it because everyone's is higher than they say? I think you were right it is only the teenage nerd whose rate is at approx3%

poor nurses

I don't see how it can go any other way and all of the bank of englands recent speeches and sound bites seem to be hinting this too.I think things have gone up about 9% in the last year Bills about 20 petrol god knows and bread etc 20% pasta is no longer cheap!When did that happen?

Yeah all those thigs, pasta rice bread milk the staples you can't really not buy. Huge price increases over the last few months.

Oh, it probably happened about hte same time everyone's electicity and gas bills went through the roof.

So..... our mortgage fixed at 4.6% until 2010 is now looking like a good deal....

Some people thought we were mad...

SP the price of groceries has not gone up 9% a year since 1997 and I don't see that being claimed anywhere. But when you factor in the extraordinary increases in accomodation costs over that time the cost of living in the UK has increased dramatically.

The ONS have been fudging the figures by assuming improvements in quality - e.g. in computers. This computer may well be theoretically more powerful than the one I had in 1997 but I use it to do the same things. I had no choice about upgrading to a more modern version of windows to maintain security and that requires a more powerful machine. The benefit I get from that is negligible.

Clothes and other goods are going to go up as well. Oil is needed for all of things things. It is the raw material in a lot of textile items, and eletronic casings and stuff. Then there is the cost of factory bills, and shipping.

Perhaps it would be cheaper to manufacture some of these in the Uk again, as transportation costs will be high.....Crikey that could mean Britain could end up with a manufacturing base again[Hhmm]

SenoraPostrophe - we go to a regular shop, not a super-duper-extra supermarket, so we don't throw in magazines/vests for DD/CDs/toys and all the other stuff that most people do. It includes toilet paper and washing powder, but not anything else.

My biggest fear right now is inflation, as I don't think that the government want to do anything about it. They'll have to put up interest rates, which will squeeze a lot of people even more, and be very unpopular. But if they don't then inflation could sky-rocket and not just shaft the economy - it'll be a disaster for anyone on a fixed income (people on benefits, people on a pension etc.) and anyone who is trying to save (including people saving for their retirement).

But what I can't work out is whether they don't want to do anything, or whether they can't do anything.

If they don't want to, are they happy to see the entire population of Britain (apart from a select few, which probably includes MP's)struggling.

My fixed rate mortgage ends in Sep. We are looking at an increase of about £180. Our power bill has gone up by £40.00 pr months, and food bill up about £8.00 per week. I will get a £35.00per month pay rise from September and dp gets nothing. My peronal inflation rate seems to be very high.

I have voted Labour all my life, but Gordon Brown seems to be doing nothing. Have I missed something?

I know what you mean fizzbuzz - I'm sure that the people in power will find a way to come out of all this smelling of roses.
From what I gather (and I'm not an economist), they should have done something about it a couple of years ago. Everyone felt really good because borrowing was cheap and everyone's house price kept going up (so they could easily increase the mortgage to extend/put in a new kitchen etc.). And the economy was booming on the back of all the borrowed money. So they let interest rates go down to silly levels, and the economy became really overheated. But sooner or later, the chickens come home to roost.