Tuesday, June 17, 2008

Contrived Price Index

Government's measure of inflation might as well stand for Chinese Prices Index

Inflation is rising so rapidly that, contrary to what most experts predicted just a few months ago, interest rates may soon have to go up - not down. The Government's favoured measure of how fast prices are rising - the Consumer Price Index (CPI) - has today registered inflation hit 3.3 pc last month. But that is so far removed from most people's experience of prices in the shops and at the petrol pump that CPI might as well stand for the Chinese Prices Index. This is why The Daily Telegraph has launched the Real Cost of Living Index (RCLI).

Posted by flintster1994 @ 10:53 AM (1523 views)
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17 thoughts on “Contrived Price Index

  • Well done T-graph… that is a wonderful headline… how amusing.

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  • planning4acrash says:

    Or the Corporate Price Index!

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  • Better still the Corrupt Price Index

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  • “Cough Please” Index

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  • Careless Price Index

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  • Complete p*sstake index?

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  • How long before people ignore this index altogether. There will be no point publishing CPI if only a couple of politicians pay any attention to it. They are not going to get away these lies this time.

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  • the haunted says:

    Lets face it the CPI is actually just government properganda used to foll the masses into thinking that everything is all right. The very fact that CPI is bieing used to reflect inflation across the country is bordering on the criminal. Quite frankly the CPI allows the gevernment to lie to the public.

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  • Agree with all of the above.
    I think most economists would say that the idea is to get peoples’ expectations of inflation low so they don’t expect big pay rises (which would translate into more inflation).

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  • Cyril – do you honestly think that people will even be in a position to get increased wages thereby creating a wage price spiral if the raw materials are expensive, there is in effect a squeeze on demand, and reduced margins? I’m just wondering what companies would be able to pay increased wages without pushing themselves into the red. Lets leave out the public sector and our favourites the banks. Both of those are debatable but im just wondering who else? Estate agents?

    There won’t be wage inflation because the goods and services that would be able to supply the companies income from which these would be paid will suffer a decrease in demand.

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  • Cyril, you are right. The government deliberately conceals inflation to keep its own bills down! Everything the government pays out is index-linked: salaries, pensions, jobseekers’ benefits, etc. If the official inflation figure was 4% or 5% then public-sector unions would be on strike all the time. Instead we just get the odd grumble about pensioner poverty, which the government can relieve more cheaply with targeted benefits and means-testing.

    Imagine if the salaries of public-sector workers increased at 4% per year instead of 2%. After ten years, that would be up 48% instead of 22%! That money would have to come from more tax rises. This affects millions of people: teachers, nurses, police officers, civil servants, quango workers, local council busybodies, pensionners, unemployed, disabled, etc.

    The fundamental problem is that this country is slowly getting poorer. The price of oil is up 50% in a year – there’s no way we can compensate for that kind of growth. The government can print more money, but it can’t print more food or oil.

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  • The government deliberately conceals inflation to keep its own bills down!

    just look at mp’s wages,

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  • Bananasplit says:

    It will be alright in a couple of years because we can all buy Tata nano’s

    tatanano.inservices.tatamotors.com

    But I think I would rather walk !! so that I can fall over laughing.

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  • planning4acrash says:

    Guys its worse than what you suggest. I use the word Corporate Price Index, because it is a Coporatist, Corporate Fascist tool, that identifies costs that affect corporations, such as computers, etc. It is a rate of inflation that is ideal for Corporations, in their attempt to steal wealth from us. It lets them print money for themselves to the point where it does not pump up their own prices. This is a Corporatist dictatorship, no shadow of a doubt.

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  • 9. drewster said…
    The price of oil is up 50% in a year

    Which reminds me of an epiphany I had the other day. For ages now everyone on this site has been having a go at David Smith, saying lots of nasty things about him, like the fact that he is the worst economist in the world, and he hasn’t got the brains of seaweed, and stuff like that. Most of the abuse centres around his prediction that everything would be OK when oil became $40 a barrel. This is obviously an absurd prediction that only a complete fuggwit would make, but I realsied that our abuse of Mr Smith is totally unfair. His comments were clearly reported incorrectly – it’s all a typo!! What he must have meant is that everything will be ok when oil hist $140 per barrel.

    So. Not long now then.

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  • ontheotherhand says:

    8. techieman – you are right to say where are the higher wages to come from without pushing companies in the red? If there is a fixed amount of money in the system, how can all companies raise their wages? The Old Labour answer to this was to print lots of money (increase the money supply). Of course that led to inflation but in the short term kept employment high.

    Now over the last ten years BOTH government and individuals through MEW have been borrowing and spending lots of money. However, supressed Chinese currency exchange rate, low cost production, and Chinese soaking up all of the extra money being created by buying the debt kept inflation low for a long time. This was the Goldilocks economy.

    Now all that extra money just can’t find a home anymore. Every country has been producing money out of thin air and the Chinese can’t buy it all up anymore. The price of oil and wheat hasn’t gone up, it’s just that the value of our fiat currencies have gone down.

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