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according to everything I read inflation is at an all time low. So low that the authorities in the reserve bank seem to think it should be higher. apparently it would be better for the economy if it was higher. that's something I don't understand.

from a personal point of view I don't see inflation being lower. every time I purchase something it seems to be more expensive than what it was before.

a classic example is I just got the insurance renewal for my car. the premium has gone up 9%. but the sum insured has gone down by 16%. the net effect is a 25% increase in insurance.

when thinking about this I realised that in any government inflation figures, it would only show as a 9% increase. that I'm getting less for my money, is not factored into inflation figures.

a number of years ago we had someone come to our house and got us to fill in some forms in relation to household expenditure survey. we had to record what we spend money on for a short period of time. this is done by the Australian bureau of statistics, so that the basket of goods and services can be taken into account when calculating inflation. another words what people are spending their money one.

but what is not taken into account is how businesses and life in general changes such that even though the price may not go up, what you get is less.

having worked a little bit in marketing I know this applies to a number of products. for example chocolate bars will decrease in size rather than increase in price because the marketers know that consumers are price sensitive. therefore when you buy a bar of chocolate you pay the same amount but you are getting less. if you're consuming the same amount of chocolate you would actually be paying more. but this is not to taken into account in the household expenditure surveys, as far as I'm aware.

this is probably the reason why we seem to be paying more yet inflation is supposedly going down.

the metrics that are used to record how economy works don't send it to take into account the realities of how our economy is working.

inflation.txt · Last modified: 2021/01/31 10:22 by geoff