CPIY = CPI – indirect taxes such as VAT, stamp duty and excise duty. This gives a guide to underlying inflation, stripping away the distortionary impact of indirect taxes. This suggests underlying inflation is lower than the headline rate.(CPIY statistics.gov) A big issue for the UK economy is the existence of inflation when theoretically, there …
Readers Question: why should nominal GDP be corrected for the effects of inflation? Suppose your annual salary went from £20,000 a year to £40,000 a year. Does that mean you are better off? Can you buy twice as many goods? If there is zero inflation, if prices stay the same, then the answer is yes. …
Readers Question: Why do most people prefer inflation to deflation? is it because such guys are business owners and they don’t to earn a little or what ? what about poor people. how can they make ends meet? think properly, think widely, think about the poor first. then I am sure, you are going to …
Readers Question: However I was intrigued by something I read on the internet regarding Conservative plans to include housing costs in the Bank of England’s inflation target. Mortgage interest payments are included in the RPI measure of inflation. However, the official measure of inflation is currently the CPI. The CPI excludes mortgage interest payments. It …
Readers Question: Why is Inflation negative when prices are rising? In 2009, there was a brief period of negative inflation (RPI measure of inflation was negative) Often people ask, how come the inflation rate is negative when I notice prices rising? Firstly, if prices in the basket of goods used to measure inflation are rising, …
UK Inflation Since 2000 Readers Question: How can we have both inflation and deflation in the economy at the same time? (the RPI falling to 0% and CPI rising to 3.2%) Deflation requires a fall in prices. We would need a negative inflation rate (e.g -0.3%) to have deflation Note if the inflation rate fell …
Readers Question: I have a question which confused me for a long time. Recently, Zimbabwe’s central bank decided to delete 12 zeros of their currency to deal with the Hyperinflation problem. I just have an intuition that this action doesn’t work as the purchasing power of the currency remains unchanged. Can you tell me the …
Readers Question: I have been learning about inflation for AS at the moment. I would like to know about whether inflation would be a short-term phenomenon as we were told inflation takes place when there is excess demand and price will rise, it will also encourage the company to produce more. Therefore, shouldn’t it be …