Sorry, I’m afraid that I really don’t find this very surprising:
Inflation for some families could be running as high as 10 per cent, according to figures from the Government.
The
Office for National Statistics today releases a new inflation
calculator that reveals that for families with high mortgage and
utility bills, the cost of living could be increasing by double figures.
The
calculator – available on http://www.statistics.gov.uk, the ONS website —
underlines how hard-pressed families have found their disposable
incomes dramatically eroded over the past year.
Some of the other stuff mentioned, that disposable incomes are falling etc is more newsy, but the idea that some people are facing inflation rates higher than the official one isn’t. For, you see, the official inflation rate is an average. There will thus be people both above and below that average, just as there are people above and below the relevant averages in intelligence, in income, in height and in body weight.
It’s sort of one of these mathematical things you see.
As to why there should be a divergence in the inflation rates for different things, well, given that average wages are set across the economy and are influenced by average productivity, when increases in productivity diverge (as we expect them to between services and manufacturing), then services will, in general, have a higher inflation rate than manufactures. Baumol’s Cost Disease is the name for this.
Now, there are ways to try and deal with this, things that can be done other than simply shrugging our shoulders, things like supply side reform. But it is true, for example, that we expect health services, education, child care, to have a higher inflation rate than say, computers, food and clothing.
The other thing about averages and inflation is that if some families are facing inflation rates double (?) the average, there must also be those facing one well below, even a negative one.
Purely off the top of my head I would suggest that playing with that calculator and using examples without children might reveal who those people are.
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