Prices are going up, for some of us more than for others.
Inflation is the word economists use to describe changes in the price of goods and services. The inflation rate is an estimate of how much all the prices in an economy have risen over a period of time. There’s a few different ways this rate can be measured, but the most popular one is via a Consumer Price Index (CPI).
To make a CPI, economists create an imaginary shopping basket containing items that they think are representative of what people generally buy. This includes things like staple food items, clothing, rent, entertainment services like concert tickets and a couple of big-ticket items like flights or a new car. Once the shopping basket is made up, the economist looks up how much the items in the cart cost, and tracks how these prices change over time.
In general, economists, politicians and the general public all see increasing inflation rates as a bad thing. After all, if our wages don’t increase by the same amount (which they usually don’t), we won’t be able to buy as many things as we previously could. For those at the bottom of the socioeconomic ladder, the extra increase can be disastrous. It might mean they can no longer make rent payments or buy enough food for their family.
That sounds glum enough. But things may actually be worse than the annual inflation figure makes them seem. Because the thing about taking the prices of 700 items and averaging them out is that this can hide the fact that some items have become much more expensive than others have. And not all price increases will have the same impact on people's lives. The economic impact of, say, cinema tickets quadrupling in price will be very different to the economic impact of everyday groceries doing so.
The ONS say they plan to try and capture this issue by significantly expanding the amount of data on prices that they collect, and by segmenting it via things like the income bracket of buyers. Doing this could have a real-world impact. The inflation statistics that the ONS puts together are used by all sorts of people, from politicians to advocacy groups to the media, as the rationale for where society should peg things like minimum wages, tax rates, and social housing costs.
…and who’s getting the bill for all this? Money is such a core part of the economy, and a lot of economic power lies in the hands of those who print it, earn it, and spend it. But money’s not just as a tool for exchange; it’s taken on a value in itself, and there’s a whole economy around money alone…