What is your experience of prices rises as compared to the rate reported by the media? The official ratein the UK is 3% but nearly all prices in the supermarkets I shop at* have gone up by between 10 and 30 percent in the last month. That’s cat food, tomatoes, pasta, booze! So what gives, how come there is this huge gap between the prices rises I am seeing and 3 bloody percent? Petrol recently is (or was) going down in price, but it was going up by several percent a month in the middle of last year and the official inflation rate was still stable at about 5%. I think house prices are excluded from the calculation so that doesn’t explain it. Anyone any ideas?
I’m going to Aldi next week to see if things are a bit more sensible there. Waitrose* and Tesco if you must know.
**Waitrose, as the late Linda Smith said “reassuringly, slightly more expensive”.
Central banks often report “core” inflation separate from the CPI. Core inflation excludes energy and food prices because in the short term, those prices can be very volatile in including them in a short-term measurement of inflation leads to wild swings in inflation.
Look at cd’s dvd, games and all aplyance playing them…these items have dropped in price so they will have had a compensatory effect. they calculate the average price change for a ‘basket’ of goods, some of which became more expansive while other became cheaper.
I found some useful info here about how the CPI and RPI are calculated, I am inclined to trust figures that come directly from the ONS (my dad used to work there) but. . . The “basket” they use includes things like flat screen TVs which as they say (in the PDF document) are going down in price rather drastically. Surely what they describe as “audio visual equipment” shouldn’t be included along with the price of petrol and cat food? Clothes and energy prices, fine, home cinema systems and computers WTF? In any case with the pound dropping I guess the price of plasma screens will bottom out soon, that will solve the problem the Bank of England seems to be predicting that inflation will drop too low.
Part of the problem has to do with perceptions. This occurs when small, frequently purchased items (such as groceries and petrol) are going up, but large, infrequently purchased items are going down. If you buy the same brand of bread every week, you very quickly see when the price changes. With a TV, most people only buy one every few years, and even then it is an entirely different model than the last time. Thus, it is harder to see that the price has gone down since the start of the year.