Sunday, April 06, 2014

UK Inflation is significantly understated

In a post on the ConHome website today Mel Stride MP celebrates Britain's "low" inflation and castigates Labour for getting it wrong. But it's Mr Stride, not Labour, who is being delusional about the Cost of Living. 

The CPI and RPI measures of inflation significantly understate the inflation that most of us experience. It will emerge in the weeks ahead that real consumer inflation is nearer 8% than the 2% the indices suggest. Some wages are increasing as well but not at this level. For those living on Pensions the CPI cap means that their standard of living is reducing and many are suffering. An inability to afford food means that the poorest are and will increasingly be suffering from malnutrition as they spend what they have on cheaper food with empty calories. Food Banks in our cities have to provide emergency relief for increasing numbers of the poor. Meanwhile the inevitable return to normal interest rates though maybe not in this Parliament for electoral reasons will further exacerbate inflation and make a bad situation worse.

This Government has nothing to boast about on prices. The figures are fixed - not least because the inflation of assets like housing costs are excluded from CPI. There are lies, damn lies and statistics. And politically nuanced statistics are the biggest lie of all. 


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