UK inflation worsens.

[Justin Passing]

Nah, I'm happy to leave you with Carmans sound argument that if inflation is 10%, prices go up 10% per month resulting in a 280% increase over 12 months.

EH?

Assume Inflation is quoted as measured over the last 12 months, and they take a new measurement every month.
SO they'd say inflation was 10% in Feb
10% in March

But that doesn't mean prices went up by 10% in those months.
Each month, it was approximately 10/12ths of 10% so roughly 1% (0.923%)

If prices really did go up by 10% each month, they would be at 1.10^12 = 3.14 times, or 314% of what they were, in 12 months' time.

Or put it like tihis..,
if inflation (annual) was at 12% for a while, prices would be close to £100, 101, 102,103 each month.
If it then changed to 6% you'd have about half a percent each month, so the prices would go 103.5, 104, 104.5,105 ...
so inflation is lower but prices still go up


Ummm, 30 second graph...

Fat chance it'll be as quick to drop as that.

This took longer - haven't used "Paint" for years

 

[carmanmemoranda]

Nah, I'm happy to leave you with Carmans sound argument that if inflation is 10%, prices go up 10% per month resulting in a 280% increase over 12 months.

If something cost £100 in January.

£110 in Feb (10%)
£121 in March (10%)
£126 in april inflation has FALLEN to 5% but the price still went up

You still don't understand the point made via an imaginary example. Ok

 

[fillyboy]

EH?

Assume Inflation is quoted as measured over the last 12 months, and they take a new measurement every month.
SO they'd say inflation was 10% in Feb
10% in March

But that doesn't mean prices went up by 10% in those months.
Each month, it was approximately 10/12ths of 10% so roughly 1% (0.923%)

If prices really did go up by 10% each month, they would be at 1.10^12 = 3.14 times, or 314% of what they were, in 12 months' time.

I agree, perhaps you could direct that at Carman who said:


"If something cost £100 in January.

£110 in Feb (10%)
£121 in March (10%)
£126 in april inflation has FALLEN to 5% but the price still went up"

Which I said at 10% would amount to about a 280% increase over the year, your workings look more accurate than mine.

Or put it like tihis..,
if inflation (annual) was at 12% for a while, prices would be close to £100, 101, 102,103 each month.
If it then changed to 6% you'd have about half a percent each month, so the prices would go 103.5, 104, 104.5,105 ...
so inflation is lower but prices still go up

That makes more sense than anything Carman has come up with but I'm still not totally convinced it's allowing for the fact that the inflation rate for any month for the basket of goods is based on the same cost 12 months earlier.
Assuming inflation in your example has been constant at 12% for over a year, when it reached £103 and inflation dropped to 6%,, at £103.00 the value 12 months earlier would have been 12% less, ie. £90.64, assuming approx 1% inflation per month the previous year the following month would show the value at £91.54, at 6% inflation, value following your £103 would be £97.03 based on the 12 month prior figure.

I like your graphs but to me I think the 2nd graph needs two lines, a 12 month 'previous' line shadowing the current line, wouldn't that show more of a convergence in the later stage and draw the top line down.

I do genuinely believe that if in your example inflation dropped from 12% to 6%, that would show a fall in prices, not from the previous year obviously, but for a month at least.

Thank you for taking the time to engage sensibly.

 

[noseall]

but the price still went up

That was the point everyone was making.

 

[carmanmemoranda]

Semantics on this site among the idiots is beyond ridiculous.

If inflation falls, prices are lower than the preceding month, which is a good thing. The rate of inflation is measured against prices 12 months earlier, so in short, prices are lower (or should be subject to retailers or forecourts passing on the savings) than the previous month but still higher that the same month 12 months prior to that.

Howling at the moon and screaming brexit won't alter that fact.

Let's remind ourselves of fillys position. Post 74. Way before the imaginary example I gave that he trys to make out is answer to this.

His exact quote

If inflation falls, prices are lower than the preceding month

I said it was absoloutely wrong. And it is. It is basic schoolboy stuff.

 

[Roy Bloom]

Hello.
I'm really surprised that no-one has used the analogy of speed and acceleration to represent prices and inflation.

The rate of acceleration will affect how fast the speed increases. The higher the rate of acceleration, the faster the speed will increase.
Over a journey, the rate of aceleration (or even deceleration) will rarely be constant, and so the speed will vary accordingly.
Over the length of a journey, an average speed can be calculated.

Similarly, with inflation, the rate of inflation for each given measured period will vary, but over a different measured period an average can be calculated.

Roy

 

[gant]

Like a start and finish point.

 

[Roy Bloom]

Like a start and finish point.

Err, yeah, but you could choose waypoints if you wanted.
And if you wanted to be disengenuous, you could choose waypoints that illustrate a figure that distorts the usually quoted figures. (aka selective reporting)

Roy

 

[Brigadier]

Think of it like going for a (very) long walk.

Over the course of the walk, the incline changes; sometimes gentle, sometimes steeper, but always uphill.
That's inflation.

In may 2023, you think "steep, but it was steeper this time last year".
In June 2023, you think "still steep, but it was steeper this time last year".

The slope is getting less steep each month, but you're still going uphill.

 

[fillyboy]

Think of it like going for a (very) long walk.

Over the course of the walk, the incline changes; sometimes gentle, sometimes steeper, but always uphill.
That's inflation.

In may 2023, you think "steep, but it was steeper this time last year".
In June 2023, you think "still steep, but it was steeper this time last year".

The slope is getting less steep each month, but you're still going uphill.

More or less agree with that, except my walk has a few short 'downhill' stretches.

 

[gant]

Err, yeah, but you could choose waypoints if you wanted.
And if you wanted to be disengenuous, you could choose waypoints that illustrate a figure that distorts the usually quoted figures. (aka selective reporting)

Roy

Yer basket starts at £70, 365 days later it's £77 how much has it inflated by.
Cuts out six pages of arriving at this point.?

 

[Roy Bloom]

More or less agree with that, except my walk has a few short 'downhill' stretches.

Perfect example of "you choose your waypoints to distort the real situation."

Err, yeah, but you could choose waypoints if you wanted.
And if you wanted to be disengenuous, you could choose waypoints that illustrate a figure that distorts the usually quoted figures. (aka selective reporting)

Roy

Roy

 

[Roy Bloom]

Yer basket starts at £70, 365 days later it's £77 how much has it inflated by.
Cuts out six pages of arriving at this point.?

Errr £7
Is this a maths question, or an economics one?

Roy

 

[Brigadier]

More or less agree with that, except my walk has a few short 'downhill' stretches.

Which each would be deflation

 

[Roy Bloom]

Think of it like going for a (very) long walk.

Over the course of the walk, the incline changes; sometimes gentle, sometimes steeper, but always uphill.
That's inflation.

In may 2023, you think "steep, but it was steeper this time last year".
In June 2023, you think "still steep, but it was steeper this time last year".

The slope is getting less steep each month, but you're still going uphill.

Wouldn't you eventually die from lack of oxygen?