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OnlyMe

The Myth Of Middle-class Inflation

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Get a load of this. :lol:

http://money.guardian.co.uk/businessnews/s...1859669,00.html

The myth of middle-class inflation

The bleating that prices rise faster for the rich is not just wrong - it's a pay demand

....

The Office for National Statistics, a much-maligned but world-class stats office, still produces all three measures every month, and provides a detailed breakdown of each one. (See for yourself at www.statistics.gov.uk.) Each year the statisticians make alterations to the basket of 650 goods they cover, and adjust the "weights" they assign to them, to allow for the amount a typical person spends. This is best practice. They are trying to find the typical inflation rate faced by the typical family and, without any doubt, give a good approximation of what is encountered by most of the people, most of the time

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ONS gimp extraordinaire.

Kick out the slippers and choc biscuits. iPods and surfboards catch the spirit of today's Brits

http://www.guardian.co.uk/britain/article/0,,1735664,00.html

It's official: Britain has entered the 21st century. Once this was a nation whose spending habits were best characterised by slippers, chocolate biscuits and frozen chicken.

.....

The changes reach into the family kitchen too. Coleslaw and muesli will join chocolate biscuits in the waste bin. The ONS said it had nothing against chocolate biscuits - merely that the price changes in that category were well enough represented by other biscuits and chocolate-coated products.

Chicken kiev and frozen chicken breasts will be added to the list, alongside the chicken nuggets that were included in last year's revamp.

They will replace frozen roasting chicken and frozen boneless chicken thighs. None of this food is likely to be eaten at family dining tables, however. According to the ONS, they are passé too.

....

Rounding off the list of casualties is the TV licence fee - recently reclassified as a tax and therefore ineligible.

.....

In

Frozen chicken breasts; chicken kiev; bottle of champagne; 3-litre wine box; mentholated cigarettes; men's 3/4 length casual coat; women's 3/4 length casual coat; girls' trousers; wood screws; home office desk; nanny fees; cold/flu drink powder; exhaust fitting in fast-fit auto centre; brake fitting in fast-fit auto centre; personal MP3 player; flat panel television; digital camcorder; water sports equipment; child's swing; tricycle for under-5s; music downloads; in-store cafeteria meal; bottle of lager in nightclub; liquid foundation; after-school club charges; money transfer fees.

Out

Small brown sliced loaf; muesli; chocolate-coated biscuits; frozen cake/gateau ; home-killed minced lamb; frozen roasting chicken; frozen boneless chicken thighs; sliced salami; flavoured milk; coleslaw; hot milk drink; multipack of orange juice; imported sparkling wine; specific brand of cigarettes; long/short sleeved men's casual shirt; men's 3/4 length coat; women's overcoat; girls' dress; baseball cap; adults' slippers; children's sandals; bedside cabinet; dining room table; dishcloths; grass/edge strimmer; contact lens solution; personal CD player; flea drops; children's car seat.

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Good clear article.

"For the record, the CPI is at 2.4%, the RPI 3.3% and the RPIX, 3.1%. "Core" CPI, which excludes volatile energy and food prices, is at just 0.9%."

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Guest wrongmove

I actually think that their is some truth in this article. Has anyone here actually worked out their personal inflation ? I think the less you earn, the higher your personal inflation because fuel and tax consume more of your wages.

I only spend about 2% of my take home on gas and electric, and another 4% on petrol. Council tax is another 4%. So about 10% of my takehome is suffering high inflation. I am on above average income, but not by much. The rest of my income tends to go further each year. I still budget the same for weekly expenditure as I did 3 years ago. My annual pay rises can go straight into savings.

Can someone show me a typical budget for an average earner that has seen 10% inflation ?

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School fees are my problem in that they do rise at around 10% per year and as for the top 10% sending their children private that is simply not true, at our school there are many parents, like ourselves sacrificing everything to keep their kids away from the greedy chavvy, rude, dumbed down state schools.

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not quite sure what the point of the article was but seemed to want to hit the middle classes whilst desperately trying to justify why inflation is supposedly low when it isn't

in the list of ins and outs there seemed to be quite a few essential 'outs' like food and clothing and not that many essential 'ins' - does anyone know anyine who recently bought 'water sports' equipment?

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not quite sure what the point of the article was but seemed to want to hit the middle classes whilst desperately trying to justify why inflation is supposedly low when it isn't

in the list of ins and outs there seemed to be quite a few essential 'outs' like food and clothing and not that many essential 'ins' - does anyone know anyine who recently bought 'water sports' equipment?

personal MP3 player; flat panel television; digital camcorder, music downloads - yeah all really "essential" items :rolleyes:

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I think we were all waiting for a variation on that joke. :lol:

i deliberately avoided!

ok, things like t.v.s are maybe valid items, but what is their weighting? - i bought a big t.v. just over 5 years ago - the picture is as good now as then, so whilst the prices of t.v.s may have fallen, that has no deflationary impact on myself at all

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This is a war of belief - what do you believe?

http://money.guardian.co.uk/businessnews/s...1859669,00.html

"The CPI is not some hocus-pocus measure dreamt up by Labour to con us about inflation. It is widely used across the world and recognised as a pretty decent measure."

http://en.wikipedia.org/wiki/Hyperinflation

Governments will often try to disguise the true rate of inflation through a variety of techniques. These can include the following:

...

Adjusting the components of the Consumer Price Index, to remove those items whose prices are rising the fastest.

IMO THIS is what they are really worried about...

"But there is a serious point to all this. The Bank is worried that expectations of inflation may have started to rise. If people believe that it has lost control of inflation, they could demand higher pay rises and thereby create a genuine inflationary risk. The myth that middle-class inflation is running at 10% is as dangerous as it is false."

Peoples AWARENESS of inflation is more damaging than inflation itself (IIRC BOE Merv said that)

Edited by dnd

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i'mnot sure why he / she kept referring to 'middle class' inflation - part of the article was saying that inflation was the same for everyone, so why single out a particular group?

the public's perception is usually correct - if they see they have less money to spend after bills etc., then the chances are that prices have risen

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It might have a point in saying richer people should stop moaning... but it doesnt go on to indicate that poorer people are being hit harder by rises in essentials like taxation and fuel bills, which is surely more important. No, it seems your average Grauniad journo doesnt actually give a stuff about ordinary people, its more interested in snapping at the heels of the next socially aspirational level of its readers. Deflecting the inflation debate by making out its just rich people trying it on is poor form.

This:

"For the record, the CPI is at 2.4%, the RPI 3.3% and the RPIX, 3.1%. "Core" CPI, which excludes volatile energy and food prices, is at just 0.9%."

is uber b0llocks. Yes lets remove everything and hey look inflation is 0%. I'm sure l could cherry-pick-remove a few things from CPI and hey presto make it 10%.

Oh and the house price increase is also b0llocks. That rise has been a national phenomena, and ultimately is only a borrowing allowance not new wealth.

Edited to add:

Yes interesting that the only thing this rag is attempting to address is wage inflation expectations. As long as we are all getting paid feck all, doesnt matter what happens to inflation elsewhere. I dont remember this rag (yes l'm a regular reader of said rag) ever talking about any other form of inflation (tax, hpi) with such proactive fervour. Maybe the plan is that inflation doesnt really exist unless the plebs think it does and want more money?

Edited by DabHand

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Guest wrongmove

the public's perception is usually correct - if they see they have less money to spend after bills etc., then the chances are that prices have risen

There is a monthly survey carried out to measure the public perception of inflation. I cannot find a link, but the last figure I read was less than 4%, so higher than CPI, but about the same as RPI. Can anyone supply a link ?

In the meantime, can anyone show us a sensible household budget for an average household that is experiencing 10% inflation ?

:unsure:

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In the meantime, can anyone show us a sensible household budget for an average household that is experiencing 10% inflation ?

That's the beauty of manipulating inflation - it's so subtle and permeates everything - who has got time to sit down and work their individual figure out?

I can see why GB/BOE have let it go unchecked (aside from trying to surpress our wages/spending through immigration) rather than control it through headline grabbing IR rises...

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Guest wrongmove

That's the beauty of manipulating inflation - it's so subtle and permeates everything - who has got time to sit down and work their individual figure out?

I can see why GB/BOE have let it go unchecked (aside from trying to surpress our wages/spending through immigration) rather than control it through headline grabbing IR rises...

But if no-one has actually worked in out, how can they shout about how high it is ?

And what effect would IRs rises have on fuel and council tax ? Exactly none. Well, council tax may rise to cover councils increased interest costs.

Edited by wrongmove

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But if no-one has actually worked in out, how can they shout about how high it is ?

And what effect would IRs rises have on fuel and council tax ? Exactly none. Well, council tax may rise to cover councils increased interest costs.

Look at your bank account at the end of the month?

How many loans have you taken out?

It's a FEELING for most people....

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Guest wrongmove

Look at your bank account at the end of the month?

How many loans have you taken out?

It's a FEELING for most people....

But this is just self-delusion. They should be thinking "I have spent too much, and now I must pay the price", not "It's all the fault of the government for cooking the figure".

And how exactly would borrowers benefit from higher published inflation. It would lead to higher IRs and even more pain for them.

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Wrongmove, all depends on how much of your consumption is sawayed towards consumer items that reguallry swap in and out of the CPI and how much is non-discretionary - some of which are totally ignored by the CPI.

UK no different to the Irish in many respects.

aibaug232006.jpg

http://news.scotsman.com/scotland.cfm?id=1268842006

Boardroom: The truth about inflation

27 August 2006

John Beggs of AIB produced an interesting analysis last week of our inflation figures, with the top-line rate now at 4.2 per cent.

John Beggs of AIB produced an interesting analysis last week of our inflation figures, with the top-line rate now at 4.2 per cent. Beggs did a calculation on what he termed ‘‘non-discretionary items’’ - ones that you have to buy, such as housing, energy, transport, healthcare, childcare, insurance and education - and concluded that inflation in this category was heading for 10 per cent.

Edited by OnlyMe

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Look at your bank account at the end of the month?

How many loans have you taken out?

It's a FEELING for most people....

have you any evidence to show people are borrowing to just make ends meet on the necessities of life, I'm sure if people didnt buy into the consumer bullsh1t and just bought essentials, I dont think the average person would need to borrrow. Or do you consider TV, booze, processed readymeals, and a car essentials. Most people I know who are maxed out in debt(excluding house payments) are surrounded by crap and are always out on the p1ss.

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Maybe some of that claimed 10% is an illusion, but the problem is that people are feeling more than 2-3% worse off than they were last year, and headline grabbing rises in essentials like petrol, mortgage repayments (IRs), loan and credit card rates (IRs), gas and electricity, not to mention an increase in various taxes over the past 5 years make people feel poorer, and poorer by substantially more than 2% a year.

The BoE can tell everyone they are only experiencing 2-3% inflation as long as they like, but if my personal perception is that I am 8% worse off than last year, I will be spending 10% less on discretionary items and postponing the kind of major purchases (new car, bathroom, etc) that our economy now depends upon.

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Guest wrongmove

Wrongmove, all depends on how much of your consumption is sawayed towards consumer items that reguallry swap in and out of the CPI and how much is non-discretionary - some of which are totally ignored by the CPI.

I absolutely agree. The worst off are going to be pensioners. There income is linked to RPI, but a big chunk of their outgoings are non-discretionary.

As I stated, I am on earnings a bit above average, and I reckon my personal inflation is 0-2% (my fuel and council tax only consume about 10% of my take home). I estimate someone on average earnings will see a slightly higher rate, some on low earnings is getting hammered, but people on high earnings will probably be experiencing deflation.

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But this is just self-delusion. They should be thinking "I have spent too much, and now I must pay the price", not "It's all the fault of the government for cooking the figure".

And how exactly would borrowers benefit from higher published inflation. It would lead to higher IRs and even more pain for them.

I don't believe most people think that deeply (certainly not about the Govenment - unless the papers tell them to)

They think - "I need to borrow some money to buy X" - that's the problem with GB attempt to dampen demand through wage supression - people are not cutting back spending - they are borrowing to make up the shortfall and continuing to push up inflation - hence the additional recent pressure of IR rises to dampen borrowing/spending (until MORE immigrants are squeezed in)

High REAL inflation and higher IR don't go hand in hand - botched CPI figures see to that... ;)

Edited by dnd

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Guest wrongmove

Maybe some of that claimed 10% is an illusion, but the problem is that people are feeling more than 2-3% worse off than they were last year, and headline grabbing rises in essentials like petrol, mortgage repayments (IRs), loan and credit card rates (IRs), gas and electricity, not to mention an increase in various taxes over the past 5 years make people feel poorer, and poorer by substantially more than 2% a year.

The BoE can tell everyone they are only experiencing 2-3% inflation as long as they like, but if my personal perception is that I am 8% worse off than last year, I will be spending 10% less on discretionary items and postponing the kind of major purchases (new car, bathroom, etc) that our economy now depends upon.

Redalert, what percentage of your takehome pay (roughly) goes on fuel and debt ? It must be very high for you to be seeing 8% inflation, though I accept that this could be the case.

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I'm sure if people didnt buy into the consumer bullsh1t and just bought essentials, I dont think the average person would need to borrrow. Or do you consider TV, booze, processed readymeals, and a car essentials. Most people I know who are maxed out in debt(excluding house payments) are surrounded by crap and are always out on the p1ss.

Our country is getting richer - you can tell as the countries moraility has dropped - a classic symptom (and slightly off topic - Human Rights is in place to decriminalise and cope with the rising crime)

Standards of living/expectations change...

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Wrongmove,

Another item that is often forgotten is the cost of pension funding - the withdrawal of generous company pension schemes is leading people to have to fund a much higher proportion of pension entitlements out of their salary - some are sidestepping it altogether by not having one at all. It is an effect of wage pressures if not directly related to inflation - again not recorded in the CPI.

I think those being hardest hit are families with children, lots of travelling for work and shuttling their children around and ones who have overdosed on mortgage / other debt and yes pensioners on fixed (low) income.

Edited by OnlyMe

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  • 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%



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