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Inflation drops to 2% - is it measuring what really matters ?

14th Jan 2014
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Rejoice ! Inflation has dopped to 2% .

Although the index is supposed to measure the cost of living does it really make a difference to us that plasma tellies and laptops has continued to plummet . The joke is that if this index is reflecting the cost of living but is actually wide of the mark, then the actions taken by the Bank of England in response to this news , are totally out of kilter with what they should really be doing.

Perhaps somebody , such as AWeb , needs to start a new index. A "fruit and veg" index ................

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By User deleted
14th Jan 2014 16:29

Household expenditure on food ...

We are told that in the 1950's the spending on food & (non-alcoholic) drink amounted to 33% of overall household expenditure. This declined to around 15% just prior to 2007 and rose to around 16.5% in 2011.

Since then prices have begun to rise over the past 5 years by around 12% and when coupled with falling real incomes, puts pressure on consumers and widens the expenditure gap

However, irrespective of actual prices, is the price of food nearly the lowest it has ever been as a percent of household expenditure; although all this does not really help if you have no food on the table?

Nevertheless, white goods have always been a good method of skewing any index to achieve a desired result

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By User deleted
15th Jan 2014 13:27

What is not low ...

... are utilities and rail travel, which have inflation busting increases year on year, as do building materials and the like. Food prices are too low, which is half the reason for the tonnes wasted every day!

The unavoidable necessities are going up relentlessly, way over 2%, as FS says, the fact luxuries that can be done without are in free fall , erm, well, isn't that what happens in a recession!

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Norman Younger
By Norman Younger
15th Jan 2014 16:42

Luxury goods

Well , yes and no ! The Luxury items , or rather , things that are not necessities have dropped because the cost of technology has plummeted

The top end luxury stuff is holding up well , such as designer fashion and hypercars

Where the luxury falls are noticeable is in a 3 year old luxury car - most can be got at 1/2 price or less with the exception of Range Rovers which seem to defy gravity . The squeezed middlers who would normally have purchased these goods are dropping at the margins esp vis a vis running costs

If we had a table of inflation for each class of goods then we can see more easily how we are affected and understand our spending choices better . There must be people out there who would be more careful with food or would leave the car behind and cycle or walk if it was clearly put the rising costs in front of them

And on the subject of food waste my lunch today consisted of Friday's leftovers and there's still some left in the fridge !

 

 

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Replying to atleastisoundknowledgable...:
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By User deleted
15th Jan 2014 17:02

If it meant ...

Flying Scotsman wrote:

There must be people out there who would be more careful with food or would leave the car behind and cycle or walk if it was clearly put the rising costs in front of them

... they still had their ciggies and booze!

We waste little food, there is a spate of ads at the moment telling you how to make your Sunday roast last 3 meals,we have been doing that for years - we have a number of bags of ham and turkey in the freezer which will make pies in due course, and any left over veggies are frozen, and when enough we will have bubble and squeak with our cold meat on a Monday.

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