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

Cpi = Chav Price Index

Recommended Posts

Good morning everybody!!

The Times has an interesting article on the CPI which seems to underestimate inflation. Funny that.

http://www.timesonline.co.uk/article/0,,2087-2291868,00.html

The Sunday Times July 30, 2006

Inflation is low ... but only on the Chav Price Index

Jon Ungoed-Thomas and Anna Mikhailova

Middle classes hit hardest by price rises that official statistics ignore

IT’S one of the conundrums of new Labour: why in this “historic” era of low inflation are prices rising so quickly? Now the government’s own figures suggest it might be because Gordon Brown’s typical “shopping basket” used to assess the cost of living is chock-full of bargain items.

While passport fees have risen 57% in less than a year, energy prices have risen by more than 25% and the cost of some luxury items has spiralled, most consumers are baffled by the government’s insistence that inflation is still only 2.5%.

The chancellor commonly cites low inflation as among new Labour’s greatest achievements. However, data compiled by the Office for National Statistics (ONS) suggest that the government’s typical shopping basket, used to assess inflation, has been piled high with cheap goods while other expensive items and services are bought more sparingly.

The data show that “recreational goods”, including CD players and televisions, account for more than 9% of household spending in the government’s typical shopping basket of household expenditure while school and university fees account for less than 2%.

The costs of public transport are said to be only about 3% of expenditure and the cost of a mortgage and council tax bills are not even included.

For consumers who rent their home, have a staple diet of cheap processed food and who shop primarily for clothes and cheap electrical goods at weekends, Brown’s basket, known as the Consumer Price Index (CPI), is said to be fairly accurate. Even rising fuel prices for these families are unlikely to outweigh the savings made as a result of the dramatic fall in shop prices in recent years.

But families who spend significant amounts of money on education or health services, or who have a long commute to work by train or who spend money on gym fees or tickets to the theatre, are likely to experience “personal inflation” at significantly higher levels than the official rate of 2.5%.

Jon Schryer, 48, an insurance broker from London who commutes to Manchester for work, said: “Most things have gone up noticeably in price — such as transport, fuel, healthcare and education — even though the government says that inflation is only 2% or 3%.

“I don’t travel by train any more unless I have to, because the prices are now ludicrous. It costs £200 a day to commute to Manchester by train.”

It is not just transport costs and education fees that have risen dramatically. Over the past two decades the cost of entertainment such as trips to the theatre and “personal services” such as a visit to the hairdresser have more than tripled.

Over the same period the cost of electrical goods has fallen by about 25% and the costs of new clothes has fallen by about 8%.

Processed foods such as biscuits and cakes have increased only by about 65% while the cost of a meal out at a restaurant has more than doubled.

Critics of the CPI argue that it gives undue weight to items which have fallen significantly in value such as electrical goods and clothes.

One economic commentator last week cuttingly referred to the CPI as the “Chav Price Index” and said it did not reflect the true inflation level experienced by many people.

The cost of most fees and services since Tony Blair came to power has risen significantly. The cost of private education rose by more than 50% between 1997 and 2005 while the average cost of hiring a full-time nanny rose from £16,000 to £29,000.

Andrew Oswald, professor of economics at Warwick University, said he believed the government did a good job in reflecting the expenditure of the average Briton but more affluent people could experience higher levels of inflation. He said people were paying higher prices for “top quality goods” and services.

Analysts say the CPI is consistently lower than it should be because it does not include property purchases and council tax. Brown has urged employers to use this inflation measure when working out staff wages, which means salaries are unlikely to keep pace with the cost of running a home.

A spokesman for the ONS strongly denied it was producing a “chav index” and said the shopping basket of 650 goods and services was carefully compiled to reflect the spending habits of a typical Briton.

He said: “It is just not possible to obtain an average figure which is going to fit every person. It would be good to have a personal price index in which people could input their expenditure to obtain a rate of inflation but it would be very complicated.”

I wonder what the The Times economic editor David (Drop Rates Now) Smith thinks of this.

Comments please. I would especially like to hear from Chavs to see whether the Chav Price Index is accurate in their opinion. Hmmm, I wonder if Asbo costs are included.

:huh:

Share this post


Link to post
Share on other sites
Guest Bart of Darkness
The costs of public transport are said to be only about 3% of expenditure

Even sufferes from agoraphobia must spend more than that at today's prices.

Share this post


Link to post
Share on other sites

What's so good about Andrew Oswald?

:huh:

He's the ultimate perma bear, called a crash years ago and is still wrong. Has he changed his outlook.

Anyway, I started out reading the article hoping for a good old fashioned slating of Mr. Brown (would be rude not to on a Sunday morning), but the article really states what most know...inflation effects people in very different ways.

I would presume that the basket is catered to the average person, are we typically chavs in the UK?

:huh:

Share this post


Link to post
Share on other sites

Inflation is harder to understand than IR - inflation can be measured, it seems, in a variety of ways

IR are just a single figure

It's easier, in PR terms, for GB/BOE to continue to let inflation rise, keep IR down and encourage people to MEW/borrow to bridge the gap between their incomes and rising prices

I don't think the public will cotton on until it really hits them hard and GB has secured Labour another term....

Share this post


Link to post
Share on other sites

Inflation which erodes people's standard of living is of no particular concern to Gordon Brown. His is mainly interested in wage infation. So what about wage inflation? When Hampshire Council advertises 8 jobs at £80K+ in one week, you have to conclude that information about public sector wage inflation is not being reported honestly.

Share this post


Link to post
Share on other sites

Inflation which erodes people's standard of living is of no particular concern to Gordon Brown. His is mainly interested in wage infation. So what about wage inflation? When Hampshire Council advertises 8 jobs at £80K+ in one week, you have to conclude that information about public sector wage inflation is not being reported honestly.

...or perhaps that these jobs reflect the recent/future rises in inflation - they are simply keeping pace - what was the job? cleaner?

Share this post


Link to post
Share on other sites

He's the ultimate perma bear, called a crash years ago and is still wrong. Has he changed his outlook.

Anyway, I started out reading the article hoping for a good old fashioned slating of Mr. Brown (would be rude not to on a Sunday morning), but the article really states what most know...inflation effects people in very different ways.

I would presume that the basket is catered to the average person, are we typically chavs in the UK?

:huh:

You are right when you say that inflation effects us in different ways, the only inflation that is really effecting my life is HPI, and that has gone up 200% over the last 5 years .

In the late 80's i could afford a nice 3 bed roomed victorian on a wage where i was still only starting out, today i cannot hardly afford anything on a wage that puts me in the top 5% earners.

I would gladly go out with the plasma tv for the rest of the life if i could afford a decent home

Share this post


Link to post
Share on other sites

You are right when you say that inflation effects us in different ways, the only inflation that is really effecting my life is HPI, and that has gone up 200% over the last 5 years .

In the late 80's i could afford a nice 3 bed roomed victorian on a wage where i was still only starting out, today i cannot hardly afford anything on a wage that puts me in the top 5% earners.

I would gladly go out with the plasma tv for the rest of the life if i could afford a decent home

If where you live has appreciated by 200% I must admit you should expect a price correction. To give you an example of prices where I am , a 1 bed flat I viewed was on the market for £110k which now advertise for £150k ish. I bought a 2 bed split maisonette needing work for £93k which is why I have made quite a bit of profit. Where I am the rises are not as spectacular which would explain why prices are still slowly rising...but will not reach 200% for a very long time.

Have you got any land registry examples of these 200% rises? A postcode or road name possibly?

Share this post


Link to post
Share on other sites

My theory is that things like council taxes, and complex service provision such as public transport, healthcare (wheres the money gone in the NHS) and private schooling are the best proxy for real inflation. They have to cost in just about everything from energy, transport of ancilliary goods and services, to facilities maintenance and all associated operational tax burdens.

Thats why all these have gone up multiple times over and above inflation. Just look at the increase in the cost of TV license! Now stop and think how much higher these increases would be if wages hadnt been suppressed by lies and the globalisation of labour, given that every extra £1000 pounds gross pay rise actually costs your employer approx £2000 in various other contributions.

Now wonder if some of these services would be aproaching hyperinflation rates of increases if they didnt use labour wage suppression. (technically hyperinflation is 50% per month, but surely 50% per year would be still be worthy of the name).

When all the chav stuff starts jumping up...Chinese inflation and the rather unfortunate crop failure for basic foodstuffs the future is certainly going to be interesting.

Share this post


Link to post
Share on other sites

Thats why all these have gone up multiple times over and above inflation. Just look at the increase in the cost of TV license! Now stop and think how much higher these increases would be if wages hadnt been suppressed by lies and the globalisation of labour, given that every extra £1000 pounds gross pay rise actually costs your employer approx £2000 in various other contributions.

Wage surpression hasn't stopped people borrowing to bridge the gap between wages and prices

Edited by dnd

Share this post


Link to post
Share on other sites

Wage surpression hasn't stopped people borrowing to bridge the gap between wages and prices

Indeed, which is about the only way IR increase could combat inflation. By stopping people borrowing so much credit which itself is fuelling inflation.

At the moment the economy and just about everything else is reliant on a ponzi scheme of ever increasing borrowing. How amusing..and of course unsustainable.

Share this post


Link to post
Share on other sites

Only Sun readers believe Government statistics - but of course they never read them.

Edited by othello

Share this post


Link to post
Share on other sites

Indeed, which is about the only way IR increase could combat inflation. By stopping people borrowing so much credit which itself is fuelling inflation.

At the moment the economy and just about everything else is reliant on a ponzi scheme of ever increasing borrowing. How amusing..and of course unsustainable.

I'm not sure if a big IR rise could stop the borrowing - people have got a taste for high living - you can't just take that away or stop it - it's human nature

Share this post


Link to post
Share on other sites

It would break something. It would certainly stop HPI in its tracks and prolly lead to many people getting repossessed or declaring bankruptcy from other borrowings.

Share this post


Link to post
Share on other sites
He's the ultimate perma bear, called a crash years ago and is still wrong. Has he changed his outlook.

If you read that Guardian article, you'll note he predicts (in May 2004) a considerable 'overshoot' yet before any bear market. Looks like he's got that just about right!

I don't think the public will cotton on until it really hits them hard and GB has secured Labour another term....

What! We've got to wait 'til 2010 for the crash?!

This shower deserve the "Major '97" treatment come polling day.

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.

  • 334 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.