alcazar

iTrader: (2)

Or is it just ANOTHER government scam? I seem to remember Thatcher's mob finding about 6 different ways to calculate it, in their early years, not that it did them any good Just as they did the number of unemployed

But come on..........what IS the rate of inflation based on? And HOW ON EARTH can it be only 2% pa, when houses are rising at !5%+, fuel is up 15%, a passport went up over 20%, energy is up on average 15%, etc etc.

IS it a scam? If not, what's it based on? Owt we, the common folk buy?

Alcazar

Dracoro

It used to be based on many things that you buy and pay for. AFAIK, since labour have come in they've removed wages and house prices from the equation.

ODB

iTrader: (1)

Depends which measure you use.

The basic definition is the general increase of costs producing goods/services which erode consumer and business spending power. In other words the increase in the cost of making something.

The government's official rate tends to ignore things like House Prices and the retail price index so generally gives a too low rate (This is Brown's favoured rate). The retail price index tends to look at a basket of essential and some luxury goods (which are changed and updated to reflect current trends) and compares one year's cost to another. This gives a better reflection as it shows the day to day expenses of people and businesses (its also currently higher than the government's official line).

Others include Average Earnings Index (based on the average income of employees) and there are European and World Bank measurements too but I can't remember them off the top of my head.

To sum up, basically the 'official' rate is a con and deeply misleading. It doesn't include many factors such as some you have queried and should be taken very loosely. I do recall reading that the real rate was around 4-5% not the 2% the government is quoting. Which as a slight side note outstrips growth forecasts which means the UK is stagnating in its growth.

Petem95

Shockingly this is correct, wage inflation used to be a major factor, so to lower the inflation figure Labour have simply REMOVED wages (and other things) from the calculation, so of course it looks lower as a result!!

As a result we have an artificially low inflation figure, meaning interest rates can be kept low as a result of this!

The results have been great in the medium term, the low interest rates have allowed house prices to rocket, and loans to be cheap - meaning people "feel" richer, and go out spending which is good for the economy....

But in effect its created one MASSIVE unsustainable boom, and there has to be a bust at some stage - and it wont only be house prices which crash, theres likely to be a deep economic recession too.

Suresh

Chaps, even more shockingly , the UK "CPI" inflation figure conforms to Eurostat/EU standards and is therefore an HICP (harmonised index of consumer prices). New Labour have standardised the inflation measure in accordance with international practice, just like they did the unemployment measure (now ILO), after two decades of Tory tomfoolery - when the definition of the unemployment rate was altered no less than 18 times!

HTH

Suresh

fast bloke

It is base mostly on the price of broccoli. As Shuresh say - it is a harmonised Eurostat. That means the the French and Germans have already had it divided by at least a factor of 3. B.Liar gets it and waters it down a bit.


p.s. - Shuresh - most of your posts seem to be intelligent, except the ones supporting Labia. Is that a mental block or some subversive brainwashing?

Suresh

I doubt that - the point about such a harmonised statistic is that individual governments can't **** around with the definition of it. They can only do that collectively!


Shhureschh

alcazar

iTrader: (2)

And they HAVE

It's pure bullsh*t then. Just as I thought.

Alcazar

John Catlin

Have a look here.

http://www.statistics.gov.uk/cci/nugget.asp?id=19

MikeCardiff

iTrader: (2)

As far as B.liar and friends are concerned, its based on the figure they think will make them look the best and keep them in office.

Removing house prices and wages ( probably THE two most important financial figures for the majority of the population ) means the current rate is basically meaningless.

As a short term ruse to make the UK's economy look great, and fool stupid people into thinking they are better off ( in the long term ) its a great political idea.

Unfortunately once everyone has borrowed as much as they can and used up all the equity in their overpriced houses the only way left to go is downwards very quickly.

I bet the French, Germans etc... pi55 themselves laughing at how gullible most of the UK public are.

Leslie

What Petem and MikeCardiff said. There is no way that the officially produced statistic ties in with what the effect that we actually see on our pockets.

You can make figures say what you want them to with a bit of judicious rearranging and the right words to make it look good of course.

Les

pslewis

I must congratulate Labour for maintaining such a level rate .... however they are worked out, it's still bobbing about a low figure!

What was it under the Tories again??? 15%, 19% ??????

Step back into HELL, vote Tory!! HA HA HA HA

Pete

Suresh

I'll type this s l o w l y so even the hard of thinking can understand. CPI is an international standard measure. The French and Germans measure inflation the same way! They might be laughing, but only at the fact the uk public repeatedly fail to grasp something as simple as this . Even if you look at RPI which includes house prices etc - it's not that much different!

Petem95

I would rather see a high REAL inflation figure, than a low FAKE figure

I wonder what the REAL rate of inflation is today? One things for certain its a hell of a lot more than ~2% [the current massaged figure].

Leslie

We shall know when the big bust comes because of GB's mismanagement of the economy. With the tax increases as well of course.

Les