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Cost of Living Up 5% (or actually a lot more? )

wulbert

wulbert

pfm Member
Estimates now predicting cost of living increase of around 7%. However if you are a poorer family, spending nearly all your money on heating and food, the real increase in your costs is far higher.

Food writer Jack Munroe pointing out that some essentials like pasta and rice are up 100% - 300% plus. Energy costs have risen 30% over last year with perhaps another 50% uplift in the pipeline.

Joseph Rowntree Foundation are now talking about "Deep Poverty" in Great Britain.
https://www.jrf.org.uk/report/uk-poverty-2020-21


Food writer Jack Munroe said:

"It infuriates me the index that they use for this calculation, which grossly underestimates the real cost of inflation as it happens to people with the least. Allow me to briefly explain.

"This time last year, the cheapest pasta in my local supermarket (one of the Big Four), was 29p for 500g. Today it’s 70p. That’s a 141 per cent price increase as it hits the poorest and most vulnerable households.

"This time last year, the cheapest rice at the same supermarket was 45p for a kilogram bag. Today it’s £1 for 500g. That’s a 344 per cent price increase as it hits the poorest and most vulnerable households.

"Canned spaghetti. Was 13p, now 35p. A price increase of 169 per cent.

"Bread. Was 45p, now 58p. A price increase of 29 per cent.

"Curry sauce. Was 30p, now 89p. A price increase of 196 per cent.

"A bag of small apples. Was 59p, now 89p (and the apples are even smaller!) A price increase of 51 per cent.
 
I know inflation is calculated from a 'basket' of goods and services so as to more accurately reflect the whole economy, but I think there's a compelling argument to monitor a basket of basics and essentials, along the lines of the above, so as to see how the poorest are being affected. I'd include basic foodstuffs, gas, electricity, petrol, diesel, and a basic broadband and TV package.
 
It's becoming very, very concerning. I notice a rather significant difference when visiting the supermarket, and I don't buy particularly expensive stuff. The cost of meat seems to have risen significantly (don't know a before / after but I know that a small pack of chicken thighs never used to cost upwards of £4.) Fuel is consistently high, energy bills going up, NI to rise soon. There's probably more, and I expect that all of this combined is going to be problematic for millions of people across the country. Not sure where it leads to or where it ends.
 
Devil's advocate, any single index is going to be inaccurate for smaller demographics (the poorest, the richest etc.) It's used by the BoE to set policy for interest rates and QE, so they are going for "centre mass". And I would if I were them.

But if your point is that inequality is getting worse, it shouldn't be, and the inflation index is being misused to hide this problem, then I totally agree!
 
From that article, "Natural gas is plentiful in the US, but prices have doubled this year from pandemic-era lows in-part because the country failed to stockpile enough last winter" - wasn't the Donald in charge last winter?
 
Loadsamoney printed, the rich have taken the lion’s share, currency debased. It was always going to result in inflation or taxation, and you don’t need a ready reckoner to know how that one works out.
 
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Internationally important comodities - rice, wheat, maize, soya, oil, gas, electricity - are traded at internationally-set prices, dictated by market forces, NOT by here today gone tomorrow, or otherwise short term politics.
Sea freight, which carries these commodities, has increased in prices by around 10-fold since early in the pandemic.
Fertiliser prices have gone through the roof because they require natural gas as one of the raw materials. Anything that takes a lot energy - cement, brick, plaster, steel manufacture, has been hit by soaring energy prices, or halted or slowed production.

Given that Brexit has made trading far more difficult with, by far, the UKs largest trading partner, Brexit should see a glut and price fall of some UK-produced products, at least in the short term.
 
wulbert said:
Estimates now predicting cost of living increase of around 7%. However if you are a poorer family, spending nearly all your money on heating and food, the real increase in your costs is far higher.
Click to expand...

I absolutely agree with this. Though I also wonder how sustainable 13p is for a tin of spaghetti.
 
darrenyeats said:
Devil's advocate, any single index is going to be inaccurate for smaller demographics (the poorest, the richest etc.) It's used by the BoE to set policy for interest rates and QE, so they are going for "centre mass". And I would if I were them.

But if your point is that inequality is getting worse, it shouldn't be, and the inflation index is being misused to hide this problem, then I totally agree!
Click to expand...
I wouldn't argue with the BoE's requirements, but I'm sure there's no rule that says you can only have one measure. So somebody ought to produce the one that shows the inflation for the poorest deciles who are reliant on benefits, can't afford to buy a house or a new car or any of the other 'middle class' benchmarks in there. Arguably the DWP needs a good handle on this, but I'd probably be happier if one of the charities (like Oxfam or Shelter, perhaps) or maybe, heaven forfend, the Church of England, did it because I wouldn't trust government not to mess with the data if the DWP was entrusted with it.
 
It must be quite difficult to work this stuff out as the price increases probably vary considerably depending on what shops you have access to. For example in that article it mentions Pasta going up from 29p for 500g to 70 for 500g. However if you have access to an Aldi then their 500g Penne Pasta is currently 29p, and also it looks like Tesco have 500g of Penne Pasta at 29p currently. In fact even Waitrose have 500g of pasta for 55p.

I think his point is a good one, but based on that one example at least, I'm not convinced about his numbers!
 
Sue Pertwee-Tyr said:
I wouldn't argue with the BoE's requirements, but I'm sure there's no rule that says you can only have one measure. So somebody ought to produce the one that shows the inflation for the poorest deciles who are reliant on benefits, can't afford to buy a house or a new car or any of the other 'middle class' benchmarks in there. Arguably the DWP needs a good handle on this, but I'd probably be happier if one of the charities (like Oxfam or Shelter, perhaps) or maybe, heaven forfend, the Church of England, did it because I wouldn't trust government not to mess with the data if the DWP was entrusted with it.
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ONS had a try at this in 2020.

https://www.ons.gov.uk/economy/nati...nflationandincomeinequalityintheuk/2020-11-02
 
ks.234 said:
Pay people more.

Problem solved.
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Though if you pay the people who make the Pasta more, the price of pasta rises.

The forthcoming rise in NI is going to be passed on by all sorts of businesses, the NHS being the biggest employer in the UK will have the largest bill to pay.
Yet the rise is designed to fund the NHS and Care sector.

20 years ago my brother who lives in the USA had to pay $ 250,000 up front to put his mother in law in a care home..
 
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