Inflation is the measure of the relative change in prices over a 12-month period.
No, it isn’t. Inflation is a change in the general price level, not relative prices:
An increase in the price of used cars cannot generate or “drive” inflation for a simple reason: it works the other way around. Inflation, which is defined as a continuous and sustained increase in the general price level, causes all individual prices (including wages, interest rates, etc.) to rise more or less proportionately, over and above the change in relative prices caused by changes in demand or supply on specific markets. To the extent that used car prices were partially caused by both inflation and a relative price change, they could not be a cause of inflation.
Relative price changes are when prices change in relation to each other. Inflation is when all prices move.
The problem here is that Spud is using his ignorance of what inflation is to explain inflation to us all.
He’s the Eric Morecambe of economics: the right words but not necessarily in the right order.
He doesn’t strike me as the touchy feely type but maybe he’s channeling Markle/ Harry and will say this is ‘his truth’ – so what if the reality is different?
‘Anything less than a full, inflation-matching pay rise for working people in this country is at this moment an abuse of this who work, undertaken with the two fold objective of making employers richer and cutting the national debt, wholly unnecessarily.’
So the head of an Equities Desk, earning 7 figures potentially deserves a pay rise in line with inflation – I had no idea Murphy was such a big fan of the City! wow! Ditto for partners at Consultancies or the big accountancy firms. Surprising turn of events or more evidence of his declining mental faculties? but Lo, and behold – he is at it again!
One-off pay deals have to be rejected in that case. They have no part to play in the current cost-of-living crisis that the UK is facing, which can only be solved by the government paying what people are worth for their work, which is, at a minimum, an inflation-matching deal.
I am reading this as EVERY employee needs an inflation matching pay rise at minimum. Again I had no idea Murphy’s sources of income were organizations like the CBI or IOD – quite a turnaround.
By God the man is a cretin. I don’t think I’ve ever seen anyone more stupid in my life.
You don’t pay people for what *they* are worth, you pay them for what the *work* they do is worth.
If Fred makes 100 widgets and Jim makes 100 widgets, you pay them the same, I don’t care if Jim is the Dutchess of Denver, they’ve both made 100 widgets, they both “deserve” the worth of making 100 widgets.
Your last sentence, “The problem here is that Spud is using his ignorance…” What else could he use?
He’s not wrong here. While he does refer to relative prices, its clear what he mens is inflation is prices today relative to the prices some time ago – not relative to other prices today.
And do they have a whole bunch of inflation measures because none of them is accurate?
《So the head of an Equities Desk, earning 7 figures potentially deserves a pay rise in line with inflation》