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Inflation in the UK

There IS inflation in the UK, even though the figures say there isn't. Prices in the shops are going up, and they have been going up for a while. So let's not pretend there's "no inflation". Maybe it's a government spin lie, a cynical shenanigans with the figures, or just some innocent mistake or statistical misconception. Nevertheless, with prices going up, there's no point in pretending that they are not.

At the time of writing, April 2009, milk in Asda, Tesco, and Iceland, (and presumably supermarkets) had gone up several times. Corned beef had doubled in price, and chocolate had become more expensive by about 20% at a glance. And look at the price of cheese! The fact that prices are going up means that inflation is there. It's obvious.

So, how can the government claim that there is no inflation, or very low inflation, or that there is "a danger of deflation"? So I asked someone who is knowledgeable about politics, and here is, as I understand it, the reason: Inflation is not measured on the basis of whether specific products have gone up or not, but on how much someone's shopping basket costs. So, a typical person in the Credit Crunch will be a bit more careful with money, so instead of buying top-end good-brand Coffee, they'll buy no-name coffee or generic supermarket's own brand cheap coffee. Taken as a whole, the total price of someone's shopping basket is less, because they are scrimping and saving on what they buy.

Well, that may or may not be the way they measure it, but if they do, then it's a conjuring trick sleight-of-hand under-the-table misrepresentation of the truth. It is about as credible as claiming that "the price of motoring has gone down" when in fact people were so poor that they could not afford to buy any fuel and were using bicycles to get around instead, thus leading to a reduction in the amount of money spent on fuel.

It's this type of thing that brings the noble name of Statistics into disrepute, as in the famous quote "There are lies, damned lies, and statistics". The problem with statistics is that although it should be a science and should represent the truth, it's easily possible for governments, corporations, and organisations with a particular agenda, to devise ways of conjuring the statistics to make it look different to the truth. (This is made much easier because of the level of ignorance in the population).

There is another reason for inflation appearing to be low, even though anyone with a grain of sense and a memory good enough to remember prices from week to week can see prices are going up. Some of the ways of measuring inflation include a variety of other things apart from the prices of goods in shops. If you start including mortgages, and a few other financial things, it gets even easier to swing the figures around to make it appear different to the experience of people working it out for themselves.

Here's a fictional example of how iffy some of these things are. Supposing someone wanted to pretend there was no such thing as global warming, they could say "Even in the places which environmentalists claim are worst affected by climate disaster, temperatures measured by scientists were found to have fallen". Sounds credible as a newspaper headline. However, it's not good science. Such figures could be got by going to New Orleans, and in the worst affected areas (where houses have been flooded out because of water levels and the climate), doing scientific measurements of the temperature inside people's houses. Now as a lot of the houses are abandoned because they've been flooded and are uninhabitable, there are no people living in them, so no heating, and so the temperature is lower measured inside the houses. Note: This does not mean there isn't global warming, climate change, or imminent disaster. The statement quoted in the notional paper is true, from a lawyer's point of view, but it is actually a misrepresentation, or to put it another way: It's a LIE!

The statistical fakery of the inflation being made out to be not as bad as it really is, has the advantage from the Establishment's perspective, that the recession doesn't look as bad as it really is. But how bad is it really? One way to look at it is to consider how much your shopping costs in real terms, (assuming you were buying the same items as you were buying last year). In such an assessment, the true inflation rate in 2009 is probably in the 10%-20% region. Whilst not as bad as the Weimar Republic, the Zimbabwe disaster, or even Argentina in the recession, inflation in the UK is still much worse than the government pretends it is.

"Inflation" sounds like blowing up a balloon, and it refers to the inflation of prices. But really it's devaluation of the currency. It's a hidden tax on savers. Another way to think about it is to look at the devaluation of Sterling internationally, against other currencies. Never mind the US Dollar, because that's also being devalued and politically adjusted. Look at how the British Pound has been devalued against the Euro, or the Thai Baht, or some other currency which hasn't been subjected to the same recession influences as the Dollar or the Pound. It's very sad to see a currency which had been as good as Sterling, being demoted so badly in the world scene, and is like watching Britain "going to the dogs". Let's not be too hasty, though. It may yet recover. The Credit Crunch might be only a temporary thing, and as time goes on it the economy will get back to being based on solid wealth. Hopefully this will happen before all of the rich people leave the UK

One of the things which would help the recovery would be to have realistic measures. I mean, if you were very fat and wanted to lose weight, something that would really help would be an accurate set of scales so you could see how you weighed initially and then later how much weight you'd lost. Having a false measure of weight would be no help in your flab-fighting endeavours. It's a principle of Science that stuff is measured against a true scale of measurement rather than something that's been twisted around to make it look how people want it to look. It must have been a shock to scientists when the science of statistics got so badly misused that it got a bad reputation. It was never meant to be like that. It's supposed to be a way of having an insight into truth.

Unfortunately, government estimates about the dreaded inflation are about as reliable as looking at a piece of Red Leicester cheese in the shops and making a decision about the quality by how RED it is. (The more red the Red Leicester cheese, the more yummy it would be, and the better scrog it would make after it had been left to go stale by just the right amount). That worked quite well until they started adding dye to the cheese, after which the colour test ceased to be reliable in the estimation of the quality of Red Leicester cheese. Blesséd are the cheesemakers, but more so if they can avoid cheese cheating.

If you'd like to do your own measurement of inflation, it's easier if you are a collector of receipts. You can look at the prices of items from the past and compare them to the present day. Then draw a graph, do some calculations, and work out the average rate of price-increase per year. For example, if you bought a packet of a decent brand of tea six months ago and it cost £2, and you bought the same product today and it cost £2.10 , then it's gone up by 5% in 6 months, or a factor of 1.05, which means that in a year it would go up by 1.05^2 = 1.1025 = 10.25%

(I can explain more about how to do such calculations if you like).

The mismanagement of statistics has also produced the myth that you're more likely to be struck by lightning than to win the Lottery. However, if you look at the real statistics, you can see the true situation (as explained on that page).