So do the men in suits ever go to the shop and buy things,seems as if everything has gone up and is going up further,Fuel, bike parts, bikes, cars, electric and gas and almost everything else.

So perhaps somebody with an o level in ecconomics, and absolutely no idea about the real world, and is probably still living with mummy and daddy explain how inflation has only gone up half of 1 percent.

well……………… it all depends on how you calculate it

http://www.bankofengland.co.uk/education/targettwopointzero/inflation/whatsInflation.htm

Someone needs remedial maths classes…

You could calculate it using various repeatable valid statistical methods – or you could just go on “omg have you seen teh price of everything”

Half of one percent is the same as half a percent isn’t it?

In other words 0.5%.

It’s no wonder inflation is up if numpties keep using too many words.

Thats how they say it on the news channels.

It’s no wonder inflation is up if numpties keep using too many words.

😆

It’s gone up one quarter of two percent 😀

If we’ve all been giving 110%, what does that make inflation?

I’ve only been giving 90%

You could calculate it using various repeatable valid statistical methods – or you could just go on “omg have you seen teh price of everything”

Yeah but how many people, when baulking at the increased cost of their weekly shop, will sit down and calculate it using various repeatable valid statistical methods? I won’t. I’ll just notice I’m spending roughly on average a fiver a week more on food than last year. So about a 12.5% increase there. And I notice a particular headset I bought off CRC a couple of years ago for £45, is now £70. And that petrol seems to have gone up by a fair chunk. Etc.

Y’know, stuff that actually has a real impact on my finances, not some mythical figure spouted on’t news.

Perhaps me and TJ balance out…

the inflation rate has gone up by 0.5 % inflation is not 0.5% it is 0.5% higher than it was.
They use a basket of goods and see what the price of this is there is much debate in what should be included. I am pretty confident that neither bike parts nor bikes are in the basket of goods considered reflective of society.
just checked my bad tyres used to be in it but they could not agree on which tyres for inflation [IGMC]

The annualized rate of change in price of a basket of goods has increased by 0.5% from 4.0% to 4.5%pa, a 12.5% change in a rate of change. OMG! 🙂

Then again, my new cyclocross bike is £149 cheaper than it was last year, so may be inflation is a bit trickier to work out…

included. I am pretty confident that neither bike parts nor bikes are in the basket of goods considered reflective of society.

bikes are in

just checked my bad tyres used to be in it but they could not agree on which tyres for inflation

Splendid 🙂

Stoner – Member
The annualized rate of change in price of a basket of goods has increased by 0.5% from 4.0% to 4.5%pa, a 12.5% change in a rate of change. OMG!

ZOMG!

2nd derivatives! Not seen those since A level (and weren’t they beautiful things!). I love it when they approach zero from below or above and you could tell if it was a local minimum or maximum 😉

:wakes up: sorry geek alert off…

If something goes up in price, people compensate by buying less of it eg using less fuel, taking trains instead of driving – so the basket adapts to price changes…

footflaps – Member
If something goes up in price, people compensate by buying less of it eg using less fuel, taking trains instead of driving – so the basket adapts to price changes…

How often do they update the weights in the basket?

Sorry, I guess I am being lazy as I imagine it is publicly disclosed information, but I was just wondering if you knew.

If something goes up in price, people compensate by buying less of it eg using less fuel, taking trains instead of driving – so the basket adapts to price changes…

not necessarily, petrol has gone up I’m still using the same amount.

I love the fact that inflation has gone up so it is costing us more for everything and the way to combat this is to put the base rate up which, for those with mortgages etc, puts the price up further.

Was glad that someone with a modicum of sense, on the radio, said that the VAT rise and other tax rises as well as fuel costs are the main driver, if you take these out the costs are pretty much level. Although he went on to say we may undershoot the inflation rate of 2(point whatever it is)%.

fuel just went down bu 4p/l round my way

Undershoot – didn’t understand that bit. Well, I understand what it means but not why it is considered a bad thing. Would it not be refreshing when so many of us have had or are about to have a pay freeze for prices to be the same at the end of the year as the beginning?

onehundredthidiot – Member
I love the fact that inflation has gone up so it is costing us more for everything and the way to combat this is to put the base rate up which, for those with mortgages etc, puts the price up further.

Was glad that someone with a modicum of sense, on the radio, said that the VAT rise and other tax rises as well as fuel costs are the main driver, if you take these out the costs are pretty much level. Although he went on to say we may undershoot the inflation rate of 2(point whatever it is)%

Yes, we seem to have a classic case of supply push inflation at the moment rather than demand pull inflation and monetary policy does not control it very well. The Bank of England believes that the price of commodities is likely to fall in the medium term and bring inflation back down without changing the base rate. However, raising interest rates will boost the exchange rate to a degree and therefore bring down the cost of imports including commodities and end up with lower inflation.

convert – Member
Undershoot – didn’t understand that bit. Well, I understand what it means but not why it is considered a bad thing. Would it not be refreshing when so many of us have had or are about to have a pay freeze for prices to be the same at the end of the year as the beginning?

The Bank of England is charged with keeping inflation within 2% of the 2% inflation target. An undershoot or an overshoot results in the Governor having to write to the Chancellor of the Exchequer explaining why it happened and what he/she is going to do about it.

Zero inflation or deflation can be very damaging to an economy. The effects are quite complicated and if you are interested you should read about what happened to Japan after the early 90s. I think they call it “the lost decade”.

The problem is people will look at the price of, for example, fuel and say ohhh it’s gone up 20% how can that be.

They paid 119.9p last year.

They paid 143.9p today.

Last years price was a local minimum (say the average was probably nearer 126p over the year).

This years price was when they filled up at the services on the M1. The in reality (well in this example) average price for the year is 132p.

132/126=1.05=5% inflation.

But people don’t like common sense, they like sensationalist headlines.

Another example.
“Train fares reach £1000”

Yes, lands end to John O’Groats was £1000, but it still £2 from here to the next village.

Or to put it statisticaly, “OMG! Train fares have gone up 50,000%”

TINAS has it.

If inflation stays the same, prices will STILL BE RISING!
(Rising by a constant %age)

If inflation goes up, the RATE of change changes, so something that was £100 a year ago will be £105 at 5% inflation

Something that is £100 now will be £105.50 at 5.5% inflation.

Simple really.

And of course some things are falling in value – House prices for instance!

I think some people need to redo their GCSE maths if they are having trouble understanding %.

Also the inflation you feel may not be what someone else feels, that’s why there is a “typical basket”. It’s not complicated.

Has the BOE completely given up on the 2% target and accepted stagflation as the norm or can you expect appropriate interest rates soon?

Depends on how/whats being calculated doesn’t it. THey took mortgages out of one calculation, so there are more than two methods being used.

And it could be “seasonally adjusted” too where another basket of produce is replaced by another, depending on season.. Substitute salad for potatoes as an example..

And old ladies bloomer for thongs.

Has the BOE completely given up on the 2% target

No, it’s just that the people who set the interest rates are smart enough to know that putting up rates won’t affect the inflation rate at the moment due the causes of inflation being rising costs on the supply side and VAT rises.

or can you expect appropriate interest rates soon?

For a greater or lesser value of soon, yes interest rates will go up.

And it could be “seasonally adjusted” too where another basket of produce is replaced by another, depending on season.. Substitute salad for potatoes as an example.

well inflation is measured on an annual basis – ie the cost of a basket this year vs the cost of the same basket last year. This should take out the need for seasonal adjustments as May this year is just as ‘on season’ for strawberries (or whatever) as May last year.

Sounds plausible, Fishin.

Went topump up the car tyres today used to be free now 20 p, hows that for a high inflation rate.

Ho hum,

You’ll possibly find this interesting http://www.statistics.gov.uk/CCI/article.asp?ID=2659