Lies, damned lies, and - Government Inflation Figures

Inflation has been much in the news recently. It will probably feature frequently enough it the months and years to come. It is of course an official government measure despite it’s (probably intending to) sounding like it could be done by Which. The Consumer Price Index (CPI), Apparently annual inflation – the Government’s target measure – was up from 2.5% in March to 3.0% in April.

Not all that much one might imagine. And what is inflation anyway? Inflation is rising prices and costs. Anything that puts up a cost, such as an increase in road tax, or the cost of electricity, or the cost of your mortgage. Effectively it means your money is worth slightly less. You can also get the reverse.

So an accurate measure of inflation really tells you something about what is going on in the economy. The only trouble is the government figures are effectively a lie.

In almost standard New-Labour operating rules the measure and the target have become all important. Reality seems to come a poor second. They are basically fiddling the figures, like they do with ‘A’ level passes and it seems, almost everything else.

The official measure of inflation depends on what particular prices and costs are being officially kept track of. If they aren’t being measured then they don’t contribute to official inflation figures. If you only kept track of the price of video recorders and Ladas for instance inflation would probably be pretty low, maybe falling.

The real inflation experienced by us all in our daily lives bears little resemblance to what the New-Labour amusingly attempt to claim are accurate figures. I expect they will have arguments marshalled to justify why they leave some things out and measure others, probably almost as good as those Gordon Brown used to deny the promised referendum on the Lisbon treaty.

As disposable incomes become squeezed, people are increasingly forced to limit their spending to essentials like food, energy, housing. These are the things going up the most steeply. As our spending shifts more towards “non-discretionary” items and services our experience of inflation also get worse. If you spend a larger portion of your income on energy bills, for example, you will then also experience a much higher rate of inflation.

The index is also biased towards relatively cheaper goods like clothing, CD players, etc. rather than more expensive services like transport and childcare.

Who cares how much a new flat screen TV costs when they can put the purchase off, you have to buy groceries and have the energy to cook them. You may not be able to avoid paying for child care if you want to work. You need petrol to get to work. The rate of inflation as experienced by many households in the UK is probably multiple times more than the official figure.

Probably the CPI's worst omission is that it doesn’t factor in domestic costs like council tax and mortgage interest. There will not be many people who’s council tax has not risen well over inflation over the past 10 years.

Oh – and if you try to save for a rainy day inflation slowly (or maybe not so slowly) eats into your savings.

At just 2% it will reduce the value of £5,000 put away to £4,712 after just 3 years and that's with inflation of 2%. Imagine what's happening to your savings if your personal inflation rate is running at 5%, or even 10%. If the return you are getting on your money is less than the inflation you experience you might as well spend it all now because it will have less buying power later.

Zimbabwe’s 'elections'

The results of Zimbabwe’s elections have still yet to be announced. The longer they take the more one worries.

It is clear that the old fraud Mugabe has stacked things as much in his favour as he can get away with - but will that be enough to keep him and his cronies in power?

The much abused opposition are certain they have won, but that is based on the counts at the polls, the results after they have been 'officially counted' may not necessarily be the same, or reflect reality.

Mugabe has managed to turn a country that was the breadbasket of Africa when he first became it’s ruler into the basket case of Africa. South Africa has been reluctant to intervene or criticise his regime. Most other African states have taken a similar or even more equivocal stance.

It would probably be the best result for Zimbabwe if Mugabe did the decent thing and stepped down. If the country could begin it’s probably long recovery, free of his corrupt racist incompetence.

I am sure the ‘Islington Tendency’, don’t even want to think such a thing – but he is clearly racist and/or cynically uses and panders to racism for his own purposes. I am not sure what is worse.

If this does come to pass, the UK should be very reluctant to become involved.

Zimbabwe was in a very strong position when it declared UDI. The UK worked to try to ensure a peaceful transition of power to majority rule, the country was prosperous and had an honest fair and functioning legal and political system at that point.

The terrible state of the country today is entirely due to the dishonesty, incompetence and corruption of it’s rulers since the advent of majority rule - and not the responsibility of the UK.

Though one feels for the ordinary people, when the time finally comes that the country gets the chance to recover, let Zimbabwe make reparations to their citizens who they have driven off their farms and let Africa repair the damage in their own backyard. The UK should not become any more involved than any other country.

Zimbabwe should not expect any more from the UK than any other country, except perhaps their immediate neighbours.

Gordon Brown. His hand - in your pocket.

The PM Gordon Brown is on target to personally drive UK petrol prices to record levels.

A delayed tax hike he introduced on fuel in this year’s budget, when he was still chancellor, is due to bite next week. It is likely to push the average price of a litre of unleaded petrol to 98p. These levels are astronomical compared to the European average.

But wait – there is more good news. Lurking like a terrorists second bomb is a further little present. In that same budget he lined up yet another 2p fuel tax hike for next April. Plus yet another tax hike the following year.

The gift that keeps on giving.

Don’t forget - that is before you allow for the effects of VAT (Value Added Tax). You get to pay VAT on the tax that you pay for fuel.

On the face of it this looks like yet another instance of NU-Lab’s trick of gradual and preferably initially limited, hits designed to limit opposition to unpopular measures. Broon will have been anxious to avoid a repeat of the popular and widespread fuel price protests of 2000.

This little fillip to inflation will in turn work it’s way via road transport costs into the cost of almost everything we eat, drink and use. It may also go on to help drive higher interest rates.