Jump to content
House Price Crash Forum
Sign in to follow this  
Jason

Uk 'shopping Basket' Goes Hi-tech

Recommended Posts

http://news.bbc.co.uk/1/hi/business/4824798.stm

MP3 music players have ousted CD players in the "shopping basket" used by the government to measure inflation.
The Office for National Statistics (ONS) updates its list of goods and services annually to keep it up to date with consumer spending patterns.
As well as CD players, slippers and chocolate covered biscuits have been ditched from the 650-strong list.
Edited by Jason

Share this post


Link to post
Share on other sites

My my tastes change quickly, or is it the prices that are changing that is leading to decisions as to which will be included and which won't.

If chocolate coated biscuits are out maybe I should look to go long a few cocoa contracts. :lol:

2005 - Chicken nuggets in.

http://news.bbc.co.uk/1/hi/business/4369567.stm

2006 - Chicken nuggets out and chicken kievs in.

http://www.moneyam.com/action/news/showArticle?id=1224633

New technology is the main feature of this year's changes to the UK 'shopping basket' of goods used to measure inflation, as MP3 players replace personal CD players, the office for National Statistics announced.

Flat panel televisions, digital camcorders and music downloads are also included in the new basket, which is used to calculate the UK's main measures of inflation - the consumer prices index (CPI) and the retail prices index (RPI).

More refined tastes in alcohol and tobacco are also reflected, with champagne replacing imported sparkling wine, as well as the inclusion of mentholated cigarettes.

The increased use of childcare, meanwhile, means nanny fees and after-school club charges are now included in the basket.

Other changes include the replacement of chicken nuggets with chicken kievs. In-store cafeteria meals and bottles of lager purchased in nightclubs are also added, as are services provided by fast-fit auto centres.

Share this post


Link to post
Share on other sites

My my tastes change quickly, or is it the prices that are changing that is leading to decisions as to which will be included and which won't.

If chocolate coated biscuits are out maybe I should look to go long a few cocoa contracts. :lol:

2005 - Chicken nuggets in.

http://news.bbc.co.uk/1/hi/business/4369567.stm

2006 - Chicken nuggets out and chicken kievs in.

http://www.moneyam.com/action/news/showArticle?id=1224633

New technology is the main feature of this year's changes to the UK 'shopping basket' of goods used to measure inflation, as MP3 players replace personal CD players, the office for National Statistics announced.

Flat panel televisions, digital camcorders and music downloads are also included in the new basket, which is used to calculate the UK's main measures of inflation - the consumer prices index (CPI) and the retail prices index (RPI).

More refined tastes in alcohol and tobacco are also reflected, with champagne replacing imported sparkling wine, as well as the inclusion of mentholated cigarettes.

The increased use of childcare, meanwhile, means nanny fees and after-school club charges are now included in the basket.

Other changes include the replacement of chicken nuggets with chicken kievs. In-store cafeteria meals and bottles of lager purchased in nightclubs are also added, as are services provided by fast-fit auto centres.

I wonder if Ford Focus has been replaced by Porsche Carerra GT?

Share this post


Link to post
Share on other sites

MP3 players are brilliant items from a statisticians point of view, every time someone like Apple doubles the capacity of their basic music player, say from say 2gb to 4gb, this represents a massive deflationary plunge!

It's getting rather tough for them though, soon they will have to resort to measuring the drop in knickers in and around Swansea on a Friday night, that's about the only thing still going down thesedays.

Share this post


Link to post
Share on other sites
MP3 music players have ousted CD players in the "shopping basket" used by the government to measure inflation.
The Office for National Statistics (ONS) updates its list of goods and services annually to keep it up to date with consumer spending patterns.
As well as CD players, slippers and chocolate covered biscuits have been ditched from the 650-strong list.

We all know that MP3 players are likely to have a sharp drop in price now that the novelty has worn off and the World and his wife now have the technology to manufacture them.

In fact CPI is fundamentally flawed in that it will only ever register falling prices in new products such as MP3s and DVDs, and not the initial extra expenditure involved when you buy your first flat screen - that is the true inflation here.

To be accurate, categories should be made more far more generic eg 'home Entertainment' would have captured a change in price from £1000 tv sets to £4000 plasmas or "portable music" might have registered the change in price of the top of the range CD players at £100 to IPODs at £300 when they first became available.

Edited by Sisyphus

Share this post


Link to post
Share on other sites

In fact CPI is fundamentally flawed in that it will only ever register falling prices in new products such as MP3s and DVDs, and not the initial extra expenditure involved when you bur your first flat screen - that is the true inflation here.

The CPI certainly doesn't reflect higher expectations, it does the opposite in fact, as the price for a given item increases the index assumes people will make 'substitutions' for a cheaper equivalent. Of course, the weightings, hedonic and seasonal adjustments are equally dubious.

Share this post


Link to post
Share on other sites

Proposal to revise the CPI to reflect reality. Include the following:

1. Council Taxes

2. Petrol/Diesel Fuel

3. TV licence

4. Train/bus/air fares

5. Meat and Veg

6. Electricity/Gas/Heating Oil

Eliminate:

Consumer discretionaries such as MP3's as not everyone buys them and they drop in price the longer they are on the market.

Taking the above 6 items what do you think the TRUE rate of inflation is?

Share this post


Link to post
Share on other sites

MP3 players are brilliant items from a statisticians point of view, every time someone like Apple doubles the capacity of their basic music player, say from say 2gb to 4gb, this represents a massive deflationary plunge!

... hedonically speaking of course ....

Share this post


Link to post
Share on other sites

http://news.bbc.co.uk/1/hi/business/4824798.stm

MP3 music players have ousted CD players in the "shopping basket" used by the government to measure inflation.
The Office for National Statistics (ONS) updates its list of goods and services annually to keep it up to date with consumer spending patterns.
As well as CD players, slippers and chocolate covered biscuits have been ditched from the 650-strong list.

Outrageous! I demand to know whether this includes bourbons and takes into account the seasonally adjusted figure for dark digestives being priced differently to milk given the fluctuations in the futures of said commodity. Not withstanding that are they taking into consideration the variance between McVities own and Somerfield`s budget range?

Nu lab ..stoop to anything :angry:

On a semi serious note what`s the chances that the moronic national news make light of this "change in the basket" in the half hour news shows this evening? :D

Share this post


Link to post
Share on other sites

MP3 players are brilliant items from a statisticians point of view, every time someone like Apple doubles the capacity of their basic music player, say from say 2gb to 4gb, this represents a massive deflationary plunge!

My sentiments exactly. A few years ago I bought a 10GB iPod for £319. You can now get a 60GB iPod for £249. So the price, per GB, has dropped from £31.90 to £4.15, making it a perfect vehicle to help perpetuate the ONS's great inflation fiddle.

Share this post


Link to post
Share on other sites

http://news.bbc.co.uk/1/hi/business/4824798.stm

MP3 music players have ousted CD players in the "shopping basket" used by the government to measure inflation.
The Office for National Statistics (ONS) updates its list of goods and services annually to keep it up to date with consumer spending patterns.
As well as CD players, slippers and chocolate covered biscuits have been ditched from the 650-strong list.

Look, everything is getting cheaper..

We import from the far east and China now makes up a majot player in most things from clothes to electronics...

Which means that the cost of living in this country will drop..

but this greater reliance on imports hurst our employment, which means the GB (Brown) has increased public sector jobs and from there the tax burden..

Local government have increased taxes and fuel bills are up..

also we a bit of housing speculation in the big debt push..

Most things are getting cheaper, apart from food, tax, fuel, electricity, gas and housing..

But those are not a big part of expenditure..

the government are twisting it because people are dumb and believe it

Share this post


Link to post
Share on other sites

All this should make our inflation measure ultra sensative to currency fluctuations as it is predominently imported goods. If the pound slips a bit, we should see IR's go up sharply to maintain the value of the currency and to control the imported inflation. Wont be good for manufacturers/ exporters or home owners.

As US IR's are now overtaking UK IR's, it won't be long before BOE are forced to raise rates.

Share this post


Link to post
Share on other sites
As US IR's are now overtaking UK IR's, it won't be long before BOE are forced to raise rates.

On the other hand, the pound has been going up against the dollar lately. If the dollar continues to sink faster than the pound, the BoE may get away with holding rates rather longer.

Share this post


Link to post
Share on other sites

Most things are getting cheaper, apart from food, tax, fuel, electricity, gas and housing..

But those are not a big part of expenditure..

:lol::lol::lol::lol::lol::lol::lol::lol::lol::lol:

For those earning at least the mythical 'national average salary' perhaps. They are more than 80% of mine!

Plus, in the case of taxes and water rates - you're forced by law to pay them... you can't cut food out because you'll die if you don't eat... and consuming no energy would be extremely difficult too. It's the things we have least control over that are inflating most. Basically we are being held to ransom.

Share this post


Link to post
Share on other sites

Most things are getting cheaper, apart from food, tax, fuel, electricity, gas and housing..

But those are not a big part of expenditure..

Try telling that to my nan.

Her pension only stretches to cover her council tax, fuel and water rates, nothing left over after paying for these.

Cost of filling her oil tank £340 this year compared to £190 last year.

Share this post


Link to post
Share on other sites

Proposal to revise the CPI to reflect reality. Include the following:

1. Council Taxes

2. Petrol/Diesel Fuel

3. TV licence

4. Train/bus/air fares

5. Meat and Veg

6. Electricity/Gas/Heating Oil

...

Numbers 2, 4, 5 and 6 are included. If you spent as long checking your facts (www.statistics.gov.uk) as you did posting here you'd be a wiser bear!

T&T

Share this post


Link to post
Share on other sites

Numbers 2, 4, 5 and 6 are included. If you spent as long checking your facts (www.statistics.gov.uk) as you did posting here you'd be a wiser bear!

T&T

They may be included but their rate of inflation is not. Therein lies the problem for the pensioners and others on low incomes. With most of the items listed up anywhere from 30-80% in a year the core rate of 1.9% must be distorting the data hideously. How can you says its included? Do you honestly believe that it is included and that the rate of inflation is around 2%? Surely you are not that gullible?

Share this post


Link to post
Share on other sites

The main problems with official inflation is the weightings. They do not match reality. Take a look at this area graph for CPI over time: http://www.housepricecrash.co.uk/forum/ind...pe=post&id=2554

Also, the hedonic adjustment is a joke. So, I can get a faster PC for the same money this year compared to last - but am I more productive? Nope.

Share this post


Link to post
Share on other sites
So, I can get a faster PC for the same money this year compared to last - but am I more productive? Nope.

Indeed. My work PC today is notionally vastly faster than the Pentium-90 I was using ten years ago... but it's doing pretty much the same things.

Also, 'hedonic adjustment' doesn't seem to take into account reductions in reliability as companies cut costs. I may be able to buy a DVD player today for twenty quid rather than paying two hundred a few years ago, but if today's player dies after a year and the expensive one would last a decade, then there's no real saving: in fact, the cost is higher when you include the hassle of replacing it every year.

Share this post


Link to post
Share on other sites

Indeed. My work PC today is notionally vastly faster than the Pentium-90 I was using ten years ago... but it's doing pretty much the same things.

Also, 'hedonic adjustment' doesn't seem to take into account reductions in reliability as companies cut costs. I may be able to buy a DVD player today for twenty quid rather than paying two hundred a few years ago, but if today's player dies after a year and the expensive one would last a decade, then there's no real saving: in fact, the cost is higher when you include the hassle of replacing it every year.

This one I agree with, especially with the "Tescoisation" of retail. Is that £5 frying pan you buy in Tesco really substitutable with the £30 one you bought from John Lewis 5 years ago? According to the CPI it is.

Hedonics interprets the amortisation of capital investment, where the costs of a new factory to build DVD players is loaded onto the price of the earlier sales, as deflation. That also doesn't seem right to me. In effect it's a con to reduce our real wages without us realising.

But gas prices, etc, are fairly weighted in the CPI. For example, if you multiply the weighting for gas by average household income you get about £800, which is realistically equal to the average annual domestic gas bill.

Don't destroy a strong argument by mixing it with a weak one.

T&T

Share this post


Link to post
Share on other sites
Guest Guy_Montag

The main problems with official inflation is the weightings. They do not match reality. Take a look at this area graph for CPI over time: http://www.housepricecrash.co.uk/forum/ind...pe=post&id=2554

Also, the hedonic adjustment is a joke. So, I can get a faster PC for the same money this year compared to last - but am I more productive? Nope.

Looking at the graph, housing, water & fuel looks like c. 10% of what I spend. I spend at least 30% on these & I live pretty cheaply.

Share this post


Link to post
Share on other sites

Proposal to revise the CPI to reflect reality. Include the following:

1. Council Taxes

2. Petrol/Diesel Fuel

3. TV licence

4. Train/bus/air fares

5. Meat and Veg

6. Electricity/Gas/Heating Oil

Eliminate:

Consumer discretionaries such as MP3's as not everyone buys them and they drop in price the longer they are on the market.

Taking the above 6 items what do you think the TRUE rate of inflation is?

Proposal to revise the CPI to reflect reality. Include the following:

1. M3 data..

Edited by RobertPaulson

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.