What Is It With The 20% Increases On Food?

[El Cid]

1 hour ago, Dromedary said:

I can't see why you have included that data in a discussion on the increase in food prices though.

Increasing the money supply faster than the growth in real output will cause inflation. The reason is that there is more money chasing the same number of goods. Therefore, the increase in monetary demand causes firms to put up prices.

[Dromedary]

1 hour ago, El Cid said:

Increasing the money supply faster than the growth in real output will cause inflation. The reason is that there is more money chasing the same number of goods. Therefore, the increase in monetary demand causes firms to put up prices.

Yes providing it is in circulation, that no quantitative easing is being used and that its supply is greater than any economic growth. At the moment you have stated that RPI inflation is at 7.8% which is correct but the wrong measure as it should be the CPI value at 5.5% but... as the UK growth rate atm is at around 7.5% even if you use the 7.8% RPI figure it almost balances out. If the money available increases at almost the same rate as output then prices hardly increase unless there is a sudden surge on demand as we have seen recently with fuel etc, which is the main reason we have the high inflation rate we are seeing now. Because of Russia and its war we will see much higher prices in fuel and also in wheat and grain which has nothing at all to do with government borrowing or printing money and yet the effects of that will cause even higher inflation.

Edited March 5, 2022 by Dromedary

[El Cid]

9 hours ago, Dromedary said:

 you have stated that RPI inflation is at 7.8% which is correct but the wrong measure as it should be the CPI value at 5.5%

The CPI measure of inflation does not include housing costs, so CPI only applies to you, if you are homeless. Are you homeless?

[El Cid]

9 hours ago, Dromedary said:

as the UK growth rate atm is at around 7.5% even if you use the 7.8% RPI figure it almost balances out.

The 18% growth in the latter part of 2020 was just making up for the 19% decline at the start of 2020.

 

https://tradingeconomics.com/united-kingdom/gdp-growth

Edited March 5, 2022 by El Cid

[Dromedary]

3 hours ago, El Cid said:

The CPI measure of inflation does not include housing costs, so CPI only applies to you, if you are homeless. Are you homeless?

No are you?

 

So why not use the one that does include housing costs and one that you already know about and that is CPIH which is only at 4.9% then after all you are a homeowner. Is it because it is even lower than you want to believe it is?

 

Just to remind you a quote from ONS:

 

"CPIH is the most comprehensive measure of inflation. It extends CPI to include a measure of the costs associated with owning, maintaining and living in one's own home, known as owner occupiers' housing costs (OOH), along with council tax."

 

Having said that you will also find that not everybody is a owner occupier and not everybody rents and that is why CPI gives a fairer picture on overall inflation.

 

2 hours ago, El Cid said:

The 18% growth in the latter part of 2020 was just making up for the 19% decline at the start of 2020.

 

https://tradingeconomics.com/united-kingdom/gdp-growth

Which means it's now about the same so borrowing money according to you should have no impact then.

Edited March 5, 2022 by Dromedary

[Anna B]

5 hours ago, Dromedary said:

No are you?

 

So why not use the one that does include housing costs and one that you already know about and that is CPIH which is only at 4.9% then after all you are a homeowner. Is it because it is even lower than you want to believe it is?

 

Just to remind you a quote from ONS:

 

"CPIH is the most comprehensive measure of inflation. It extends CPI to include a measure of the costs associated with owning, maintaining and living in one's own home, known as owner occupiers' housing costs (OOH), along with council tax."

 

Having said that you will also find that not everybody is a owner occupier and not everybody rents and that is why CPI gives a fairer picture on overall inflation.

 

Which means it's now about the same so borrowing money according to you should have no impact then.

Putting a roof over one's head is a non-negotiable expense, as is council tax, and for most people takes the largest slice of their income, therefore ought to be included when calculating inflation. 

Food, water, heating, lighting, and travel (to work) are also essential, and similarly should be taken into  account. Yet a shopping basket of random goods seems to be the government's way of conning convincing us that inflation is only 7% Not very scientific way of calculating is it....  

[fools]

If they weight the rise in energy costs properly, inflation should be well above 10% next month, but that's going to cost the exchequer... Time will tell.

 

The size of those 3 or 4 chocolate bars in a pack for a pound is getting to silly levels now, some of them are thumbsize, (obfuscated by the misleading packaging of course)

Edited March 5, 2022 by fools

[Dromedary]

37 minutes ago, Anna B said:

Putting a roof over one's head is a non-negotiable expense, as is council tax, and for most people takes the largest slice of their income, therefore ought to be included when calculating inflation. 

A problem then come to light because some homes are rented, some are owned outright and some are on a mortgage so there is not parity between them. Someone who rents say from  a LA or housing association may see a small increase in rent while others who privately rent may see big increases. Those on a mortgage will be subject to interest charges and those that already owned will see very little rise in any housing costs. Someone like me pays no CT and have no housing costs as do those few that are homeless. Unless you can come up with a way of taking those problems into account then CPI is the best measure to use as that is a common denominator for all and one of the reasons it is the internationally accepted method. 

 

37 minutes ago, Anna B said:

Food, water, heating, lighting, and travel (to work) are also essential,and similarly should be taken into  account.

But they already are and that's why the inflation % has risen, so expect inflation to rise even further given the Russian war. Don't try and make out it is the government's fault that the cost of petrol, diesel, food, electricity and gas have risen when they have no say in the matter. 

 

37 minutes ago, Anna B said:

Yet a shopping basket of random goods seems to be the government's way of conning convincing us that inflation is only 7% Not very scientific way of calculating is it....   

Do you have a better method?

 

 

[El Cid]

7 hours ago, Dromedary said:

Having said that you will also find that not everybody is a owner occupier and not everybody rents and that is why CPI gives a fairer picture on overall inflation.

Most households pay council tax, which is not included in the CPI measure of inflation. Many dont own a vehicle, but those figures are still included in the CPI measure of inflation.

[El Cid]

1 hour ago, fools said:

If they weight the rise in energy costs properly, inflation should be well above 10% next month, but that's going to cost the exchequer... Time will tell.

 

The size of those 3 or 4 chocolate bars in a pack for a pound is getting to silly levels now, some of them are thumbsize, (obfuscated by the misleading packaging of course)

The ONS are looking into doing an inflation figure for different income bands. If food is increasing by 20% yet tech is only increasing by 5%; then the poor will have a different level of inflation to the rich.

The CPI measure of inflation is predicted to reach 8% this year. With council tax and house prices maybe increasing at less than real inflation, CPI and RPI could come closer together.

On average RPI is only 0.9% higher than CPI