Monday, December 04, 2006

The REAL rate of inflation

The Telegraph reports that the rate of inflation is far higher than the headline rate claimed by the government with pensioners facing rates of up to 4 times the 2.4% official level.

Pensioners are the hardest hit, with inflation rates of almost nine per cent, as record gas and electricity bills take a massive slice out of their budgets.

I think most of us were finding it hard to believe that the rate of inflation was as low as the government claimed. I know I find it harder each month to meet ever increasing bills while my wage falls well short of keeping pace. It must be desperately difficult for those of more modest means to balance their budgets.

It is of course the ever increasing number of "kidults" - adults still living at home with their parents - who are benefiting most (at the expense of pensioners and families) as the things they spend their money on continue to drop in price.

Meanwhile, the increasingly large number of young Britons living at home with their parents — and not paying mortgages or bills — experienced deflation of 2.1 per cent, since many of the items they spend their money on, such as clothes and electrical goods, are falling in price.

The way the inflation rate is calculated is old fashioned and unreliable. With modern technology it is now possible to get a far more accurate picture of the true rate of inflation. It's time this was done - along with giving the job to an independent body who will not bow down to the demands of government - and I don't mean yet another quango! I'd recommend giving the job to a respected city finance company.

2 comments:

Snafu said...

How can any rate of inflation be accurate when it excludes house prices!?!

Stan said...

That's a very good point. After all, housing is an essential - as is energy.