Is the Real Inflation Rate Actually Much Higher?
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- Опубліковано 2 сер 2024
- A look at various reasons why people may think inflation is higher than official methods. Different personal inflation rates, different methods of calculating inflation and private methods of calculating inflation.
Text version
www.economicshelp.org/blog/21...
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Sources:
www.fullstackeconomics.com/p/...
globalmarkets.statestreet.com...
econbrowser.com/archives/2008...
www.bls.gov/opub/mlr/1999/06/...
www.ons.gov.uk/economy/inflat...
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There are lots of interesting reasons why inflation can be higher than official figures - some dubious, some real. Towards the end of video, graph on how the poorer had higher inflation. Also text version of video here. www.economicshelp.org/blog/214679/economics/is-the-real-inflation-rate-actually-higher/
My wife and I track our spending to the pound, and have been doing so since 2015. And even though we have been reducing our consumption habits, and defining ourselves as rather frugal compared to "people like us", I can testify that our rate of inflation so far, as of the end of Nov 2023, is 14.89%. We rarely eat out, rarely buy clothes and our rent has only gone up by 5%.
What puzzles me, is when we say that wages are keeping up with inflation or, as we saw recently, rising higher than inflation. This is all well and good in theory, but most of us who are employed full time only get a pay rise once a year. So when I hear that wages are rising faster than inflation, I really want to say "so what?" as it only represents a snaphot at a point in time (and what is the wage data based on?).
It is actually much higher than that. Please look at Truflation which is more realistic. Milk in 07/21 £1.55, 01/23 £2.35. That itself is 50%. It has slightly reduced now.
Don't forget about fiscal drag. When wages go up, and tax free allowance is not, every pound of pay rise is taxed ( for most people 32%). So if inflation is 6.5% you need 10% pay rise just to keep same purchase power.
Whilst you are right about most of what you say, and only getting pay increases annually. inflation is also a daily thing rather than annual. So when they say yearly inflation was 10% it would have gradually progressed there throughout the year.
Loads of examples of extreme rises. Small ground white pepper pot by Saxa was 25p only 8 years ago. It's now 80p. This is in Tesco, same shop for both prices, and long term pricing, not sale price. That's a 300% rise.
I remember Tesco putting up the price of lamb chops overnight by 66%. In one day, 66%. I thought there was a pricing error. 4 lamb chops went from £3 to £5, 66%.
I'm staying on the exact same product and store. No variance except for the prices.
It's also worth noting that the rich can choose to buy cheaper products but if you're poor and reliant on cheap food etc, you don't have much of an option but to put up with the rising prices.
A loaf of bread used to be around £1 before the lockdowns. It is now £1.80. By my simple calculations that is 80% inflation. My wages have barely changed.
A channel called Damien Talks made an excellent video on how the government manipulates inflation data.
Damien Talks is a great channel indeed!
Depends on how you measure inflation, what goods you buy/use, it is different for each person.
Call me an old cynic, but you mentioned that the method of calculating inflation was changed both here and the USA in the eighties, that would make an interesting topic.
I remember Thatcher's government fiddling the employment numbers, also in the sixties and seventies the balance of payments were very news worthy but lost importance during the eighties, could that be due to the fact that despite the first four years of her premiership the UK had very good positive balance of payment surplus. I think over her entire term in office the BOP was about 72,000 million pounds in deficit and UK trade has never recovered.. Anyhow thank you and keep up the good work.
real inflation is something like 50%
No it’s not
It measured the way the US did in 1980 it is around 12% right now. Not sure where you are from.
The thing is people notice the prices that have gone up dramatically, they stand out and people remember them. But the prices that haven’t changed are harder to notice and because they don’t cause such a big emotional reaction they aren’t remembered very long even when they’re noticed.
That being said as someone with on benefits and therefore in the lowest bracket just looking at my weekly spending budget I can say that my inflation has been over 10% over the last year. But then most of that spending is on food. I can’t include energy because a year ago I moved from a drafty Victorian flat with a gas fire as it’s only source of heating to a double glazed house with central heating, so my energy bills have actually been lower this last year than they were the year before
Well explained Sir
Great channel
I'm just 30 seconds in. This issue was checked by economics. Why the official data don't represent the felt inflation. And they did a study for that to find out 🥁🥁🥁🥁 that that's true. Because a general inflation values all goods and services. And that counts in stuff the normal consumer doesn't need or only needs once or twice a lifetime. While the products of everyday use (esspecially the cheapest once) increase dramatically in prizing. So if the premium cheese moves up by 0.05 but the cheap one goes up by 0.50 that's a difference inflation value. And if you could afford to buy the premium cheese for 8.20 it doesn't matter to you that it now is at 8.25.
Inflation in America is over 55%. 90% of need based goods are not attainable. Forget about luxury goods. No chance!
I think NYC was especially hit with higher costs due to office workers missing forcing businesses to raises prices even more but here in Seattle at least in the suburbs where during COVID I was still eating out just sitting outdoors the prices went up a little but not much. For example there is nice higher end Grill restaurant I go to maybe once a month and the cost of a fancy hamburger was around $15 before COVID and today it is around $18 so it went up by $3 which is 20% I think so about what you would expect.
Magic of statistics. With assumed outcome I can pick specific data and method to achieve that outcome and "statistically" prove it right.
The ONS are very open with how they calculate inflation and on their website they actually show 4 different measures of inflation and how that inflation is different for different incomes.
@@Alex-fm5ke They are so open that there are no details about data and method, just overall description.
Olive oil in particular is being affected by a disease spreading through the trees of the Mediterranean. It takes so long to grow them, I doubt it'll get better anytime soon sadly.
The basket of goods used in the inflation figures is not weighted for what people actually purchase (for example CDs are in the UK basket but hardly anyone buys CDs). Fuel is weighted lower than what people actually use so as a whole the numbers aren't reflective of people's expenditures
The ONS actually updated its basket of goods this year
You shouldn't be using an iphone as an example. Apple is notorious for its inflated prices which bear little relation to the actual manufacturing cost of the product. Iphones are a status symbol. Top end Android phones such as Samsung or Google Pixel would provide a better example of price related to the quality of a product.
I think his point still stands, smart phones in general are way more expensive than old Nokia's as they've become especially miniature Swiss army knife computers rather than mobile telephones. I agree that apple over inflates their prices though, I guess you can get away with it when you're top of the NASDAQ with a cult following...
This really should be called Talking sense about inflation. As you rightly say people want bad news. It’s also true to say most peoples knowledge of anything to do with economics is close to zero and they fill the void with all kinds of nonsense
Privatization of core services doesn't help either. Such businesses just want to cream off higher and higher profits for the CEOs, Board members, and shareholders, all at regular peoples' expense. Fortunately, we haven't been hit by any notable increases in our energy usage. Where we live, the electricity company is government run, and the rates are about 1/6th of what family members pay in the UK. In UK terms we pay a monthly standing charge of £5.81, and a KWh rate of 5.9p
Unless you are an expert in examining the basket used to determine CPI, there is no way to disentangle such changes. But pro-Tory media pick on them soundbites to claim "inflation is slowing down".
Also each household's consumption habits differ and a single headline rate doesn't capture the diversity of situations. If you rent and your monthly rent suddenly rises, your experience of living costs is completely different from that of an owner.
If you were buying olive oil for 2 pounds, then you were buying crappy olive oil🙀
Has anything increased by 600% since 2000 - pretty much all fast food, delivery etc
I remember the days when you got a can of coke, packets of Tudor Specials and a chomp for £1 !!
It’s not been like that for well over 10 years
@@Alex-fm5ke It's longer than that lol, I am 40 and that was when I was a teenager !! When you brought the glass bottle back for money off the next one, oh damn the world has moved on help lol
Thr market decides.
Before Germany was reunited both currencies were officially at parity.
But the black market decided thar the East German mark was only worth 1/7 th of West German mark.
real
Where did you get an iPhone 14 for £500 that's what I wanna know😂
Contract with phone company - i.e. pay for phone calls on the side!
olive oil prices are going up due to crazy droughts in spain , main ikporter of olive oil in uk , and obviously inflation
TV - what was the % of income for a TV? Flat screen TV have collapsed in price and are below £100 per 10 inches, you can buy for as low as £50/10 inches. It was £150/10 inches just 10 years ago. I think you've picked the wrong sector/product to measure, or you're not using % of income, or % of available money after higher housing, higher energy, higher food costs.
Stupid to monitor inflation by ignoring energy and food...for yhe majority of earners those are the majority of expendature...tvs, sofas, new cars are irrelevant to inflation. Real inflation should only include food energy and rental prices
Butter is better than any olive oil
Not on a salad !
@@ratttttyyy Salad? Give me real food
I partially agree with that. We still cook with butter or"desi ghee" for kids at home. We stopped using butter for a year, replacing it with sunflower oil. And kids started to get allergies/sick. We're back at it and it's much better.
I personally use olive oil for my breakfast and butter for lunch. Both have their own uses/benefits I can tell.
@@FGC-replays I certainly wouldn't use vegetable oils for cooking. Lard is the healthiest for cooking, seconded by butter. The latter tastes much better.
If the price of oil goes up will the producers be happy?
the inflation in uk since 2019 jumped up in steps on several products and each jump was at least 20-50% sometimes even 100% and we talk about 4 % yes and pigs fly in the sky maybe is 4 % for someone that doesn t even bother to go to a damn supermarket and has 6-n (where n ->infinit) digits in his account for average joe like most of us prices doubled especially on food electricity went up gas went up taxes went up insurance went up all the basic services went up quality of services went down on several things but we still say it was under 10 % ok let s pretend we have 0 % inflation .:)))
Not to mention all the money that they printed in covid period went to corporations and from what i know full time employees didn t get a shiet from them now question is if 80% get money (corporations)governments want to get extra money from all private sector u as population barely got 20% (not even that ) in form of grants from governments so responsibility should be at least 50/50 now that interest went up corporations don t pay ofc but raise prices ,landlords don t pay but increase rent and so onn .... so the people the normal ones without 6 -n figures in account , are they drained from all directions(Corporations ,government, services, products etc) yes or no ? so where is their responsibility(morally speaking or at least ethically ) or most of them like to pretend they have one until they receive money in the name of normal people and when comes to give something in return or lose something byby righ?
Ps
even I can type I went on mars and type my own statistic about the atmosphere over there that doesn t mean isn t all bullshiet like the data the government provides us doesn t reflect the reality of the people that actually keep this economy going and all of these fat guys that prefer to lie instead of showing the reality and say at least a sorry .
The title for this video should be " they are lying to you..AGAIN
I went to my local Iceland in the EU my fish pies cost £1.50.
Today my fish pies since Brexit is now £3.50.
And it just keeps
on rising 😡
Has inflation halved per Sunak's objectives? In this video Jeremy Hunt states that the objective was based on core inflation and not CPI so inflation hasn't halved: ua-cam.com/video/pbUZFssO-ZE/v-deo.html.
Tell me why they lie!!!
Not one has told the truth yet about owt.
The inflation rate is always higher than the inflation figure. Take microwaves, they were put on the list of products used to calculate inflation when they cost hundreds of pounds and taken off the list when you could buy one for thirty. You do this with every piece of consumer tech that comes out and you can artificially keep the inflation figure lower.
there is a very simple way to measure REAL inflation, from guys that never lose money.
Check your insurance bill from 2015-2018-2021-2024
Britsh politicians never lie to their electorate !! never forget that !! HAHAHAHHAH
No its much lower!
Office of National Statistics isnt really independent since its a government department still. (Non ministerial yes, but still has budget set by the government) It has also had departments removed such as the General Registry Office. This enables them to control figures around deaths, covid or underfunding of the NHS... I feel the moves and appointments around it have been very political. Its all about Neo Liberals making the government shrink and tax the rich less. Its now part of the National Statistics Authority (Run by former head of the OBR) alongside the "OBR- Office of Budget Responsilty". All aimed at fiscal "resposibility" and basically starving the UK of investemnet (via tax), so we become desperate for "foreign investment" from their offshoring networks.
When you can pick & choose what goes in the basket it is completely fake.
You need to update what is in the basket of goods each year which the ONS does
olive oil is horrible
They lie whenever they flap their gums.
get me outta here …
What "they" are lying about is not so much the rate of inflation but the CAUSES!
A recent Central European Bank report put the single largest cause of inflation in 2022 as "excessive company profiteering", using somewhat elevated inflation as a cover to jack up prices, creating RECORD PROFITS.
A British report has just confirmed this and the Americans are just waking up to the fact that price gouging has been through the roof in the US for two years, again creating RECORD CORPORATE PROFITS.
What happened in Argentina is irrelevant. The "old method" of calculating inflation is irrelevant, if it doesn't reflect the change in circumstances. This is all conservative AND left-wing moaning propaganda.
So it's conservative (right wing) & left wing moaning. If everyone is moaning there is likely to be a problem. 🙄
@wokelefty there certainly is a problem. I've been tracking politics since the late 1950s and I'm currently watching the UK, USA, the EU, Canada, India, Israel, Russia / Ukraine and China among others. As far as the UK is concerned, having lived through the same number of PMs as Her late Majesty's reign, I am convinced that the Conservatives and Labour are both PART of the problem.
They spend so much time and resources pursuing their political policies and unwinding each others with every change of government, it's not surprising that we languish in a sort of limbo. While the general concensus is that they can't both be right, which is why support is split between them, my own opinion is that they are both wrong... hence the mess. The same argument can pretty much apply wherever democracy is opposed by aggressive capitalism. Capitalism should be harnessed to support the many not to enrich the few.
Are you ideologicall biased?