Comments on: inflation ?! or why are rolls so expensive? http://www.volkerballueder.com/inflation-or-why-are-rolls-so-expensive/ Life of a family man in digital marketing. London. Thu, 17 May 2012 04:05:31 +0000 hourly 1 http://wordpress.org/?v=3.3.2 By: big brother http://www.volkerballueder.com/inflation-or-why-are-rolls-so-expensive/comment-page-1/#comment-69 big brother Sun, 24 Aug 2008 15:51:33 +0000 http://ballueder.wordpress.com/?p=317#comment-69 Well, 4% inflation is a tad on the high side, though it would only increase the rolls from 32 pf to 47 pf over 10 years. More likely inflation was around 3%, which translates to a 32% price increase over 10 years. What you are seeing is something else I believe. First, UK prices were always higher than German ones, different countries, different prices. That's why economists like to compare living standards and incomes at PPP (purchase power parity) - google the Economist's Burger Index for a simple measure. Second, the pound has fallen dramatically against the Euro - from 1.5 to 1.25, that is about 15% (hurts me on my savings). So any comparison against the Euro is pointless as such currency fluctuations don't immediately translate into rising prices. Lastly, just to get scared, take the 3% inflation and project it over 30 years - you get a price increase of approx. 242%, so everything gets about 3.5 times as expensive. Or, the other way round, your savings will be worth less than a third of what they are now - then, think retirement. :-( Well, 4% inflation is a tad on the high side, though it would only increase the rolls from 32 pf to 47 pf over 10 years. More likely inflation was around 3%, which translates to a 32% price increase over 10 years.

What you are seeing is something else I believe. First, UK prices were always higher than German ones, different countries, different prices. That’s why economists like to compare living standards and incomes at PPP (purchase power parity) – google the Economist’s Burger Index for a simple measure. Second, the pound has fallen dramatically against the Euro – from 1.5 to 1.25, that is about 15% (hurts me on my savings). So any comparison against the Euro is pointless as such currency fluctuations don’t immediately translate into rising prices.

Lastly, just to get scared, take the 3% inflation and project it over 30 years – you get a price increase of approx. 242%, so everything gets about 3.5 times as expensive. Or, the other way round, your savings will be worth less than a third of what they are now – then, think retirement. :-(

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