Erm, inflation?

Meanwhile, Defra statistics show the price of meat has risen by 26 per cent since 2007, bread, cheese, eggs and milk by 27 per cent, and butter by a massive 40 per cent – driven by the spiralling cost of oil and poor harvests.

Umm, if we had 5% inflation per year over those 4 years, wouldn\’t that be, with compounding, about a 30% rise?

Sure, we\’ve not had 5% inflation for four years, but shouldn\’t we be showing price changes relative to hte general inflation level, not just nominal?

The Institute of Fiscal Studies (IFS) this week reported that household expenditure is down, with money spent on groceries and eating out significantly reduced.

For if we don\’t do that we don\’t know whether that fall in grocery spending is a good or a bad thing, do we? Might be (unlikely at present but still could possibly be) that food is getting relativeley cheaper so people have to devote less of their budgets to getting the same amount.

3 thoughts on “Erm, inflation?”

  1. You’re assuming that the 5% retail price inflation is mirrored in wage inflation; but that hasn’t happened. Wages have lagged far behind. Therefore food isn’t relatively cheaper.

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