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Uk Inflation

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Does what ever inflation rate the bank use also measure the increase in taxation and public service related costs of living that are unavoidable? Or is it measured indirectly by government demand increasing prices within the economy. Should inflation not be measured on unavoidables such as food, heating, taxes, housing and exclude all choice expenditure such as DVDs, cars, holidays, luxuries, computers etc. How does CPI and RPI relate to what businesses experience as inflation, as surely they are diff? Is this the factory gate price in the papers today?

For example if I increase the budget of the Binmen by 20k for year 200X, then they will happily spend 20k extra, be it on wages new unecessary uniforms, free biscuits etc. As such where as my council tax bill should fall as organisations cut costs, become more effificent, or at last remain the same the cost actually will go up year on year. However if inflation is static as such costs are not included in inflation figures then I cannot demand a payrise, even though my tax has increased and hence the cost of living

One condundrum is due to the spineless government, and the large chips that weigh down the unions and its members, increases in inflation if they were to include such costs would lead to higher pay demands and then higher taxes and spiraling inflation.

So how does it all work people? Of course tax etc is deliberatly complicated and hard to analyse so rises and true costs can be spun, hidden and dismissed based on the political agenda, so I wondered if any economists could provide some insight.


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  • 302 Brexit, House prices and Summer 2020

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      • down 5% +
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