UK inflation falls to lowest level (7.9%) in more than a year | Hacker News Reader

UK inflation falls to lowest level (7.9%) in more than a year

bbc.co.uk

22 pointssarreph37 comments

UK is unbelievably fucked. Real wages have collapsed since the last recession, now they're collapsing even further, and the Bank of England want everybody to just accept this and not ask for payrises. The middle class in the UK is evaporating.

I've long been considering leaving. I'm tired of feeding this system a significant chunk of my salary and getting nothing back.

We have a lot of UK expats at the shop, apparently it's very easy to poach the equivalent of MIT grads and some YOE with a wage that's barely above an intern over here...

I don't understand it either.

I hate how accurate this is. Imagine you are a UK resident, born and raised, who went to the UK’s top school for CS (4-year degree). You made American friends at university who later moved back home.

15 YOE down the road and you are making $80k as a good senior SWE. You are absolutely bewildered that your American friends who you studied with make comfortably double that.

Make it make sense.

Double? More like Triple.

My employer is now struggling to outsource our jobs to Europe because the prices are too high. I try not to think about it too much, but a move to Ireland looks enticing.

I don't know about inflation in the UK but I live in the EU and according to the article the inflation here is 5.5% and that's an absolute joke. Price of most things including food or energy has increased by 50% at least

My energy bill is up from 32 c per kWh pre-pandemic to 37 c per kWh now. Gasoline was 1.79 yesterday and was about 1.70 pre-pandemic.

Food prices have risen, but some more some less, but 50% seems too high. But maybe Germany is different.

Stupid Nestle cornflakes went 50% up in last 12 months, same for the milk.

Don't buy Nestlé then?

I'm also not doubting that some products went up by 50%. My point is rather that most products I buy have remained surprisingly stable in price.

This is by design. All of Europe has now followed the UK's lead in preferring the geometric mean over the arithmetic [1]. The philosophical justification for this is that when some products become more expensive relatively, then the consumer will switch to products which have a higher utility-to-cost ratio, so are less affected by the change. That's all bollocks of course, the real reason is the geometric-arithmetic mean inequality: for any set of positive numbers a,..., GM(a, ...) <= AM(a,...). So your way forward is clear: eat less food, use less heat, buy more surfboards (or whatever it is which hasn't gone up as much).

[1] https://ec.europa.eu/eurostat/statistics-explained/index.php...

lmao... so olive oil now costs double what it costed a couple of years ago... are they telling me I should switch to canola so my costs increase by 5.5% only? These people really deserve to end like the French monarchy.

... or melt down some margarine ...

Don't worry, you don't even need to use any energy for that, the heatwaves will sort it for you.

Isn't canola hugely more beneficial than olive oil in terms of nutrition anyway?

Wondering how the mediterranean countries succeeded in marketing olive oil as especially valuable/healthy oil.

Your linked site states:

> The harmonised indices shall be annually chain-linked Laspeyres-type indices.

And further down:

> Elementary aggregate indices for the HICPs are computed as the ratio of the geometric average of prices or the ratio of the arithmetic average of prices. The arithmetic mean of price relatives may only be applied in exceptional cases and where it can be shown to be comparable.

I read this as:

- individual indices for countries are calculated using the Laspeyres [1] formula, which is effectively an arithmetic mean of weighted prices of different products, not a geometric mean

- the individual indices of countries are then "aggregated" by calculating the geometric mean

That'd mean that outlier countries would not move the average much so there you'd have underestimation of inflation to a certain degree. But it wouldn't mean that individual products/components of the consumption basket that significantly increased in price would be undererstimated through the geometric mean.

Right?

Just calculating a geometric mean of countries' indices to get an index for EU wouldn't make much sense, though .. they'd have to weigh the indices with population, GDP or total consumption.

So the actual calculation to get the HICP is surely more complicated than that.

But if they really use Laspeyres then the underestimation due to geometric mean shouldn't be an issue here.

[1] https://en.wikipedia.org/wiki/Price_index#Paasche_and_Laspey...

The Retail Price index (RPI) is at 10.7% https://www.ons.gov.uk/economy/inflationandpriceindices/time...

Who needs shelter when it’s so warm outside?

At a tangent - I'm quite worried about software licencing costs due the divergence in fortunes of the USA and the UK.

As a UK small business, we've seen software licencing rises between 10 and 40% this year, on software purchased from US companies. Clearly, those companies must price for their home (and much larger) market. But, it is making it much harder to budget for software commitments, and to buy the tools needed to run and secure small and medium businesses.

I realise this isn't a problem to enterprise, and there's nothing anyone here can do - this is just my observation working in the SME space in the UK.

> Clearly, those companies must price for their home (and much larger) market.

I don't think that's true. They can be expected to price to maximise revenue and that can mean pricing differently in different markets. With software licensing that's relatively easy to do since the marginal cost is near zero and arbitrage across markets can be blocked. Just make geographical restriction a term in the license agreement.

Therefore, I don't think that any need to price for their home market should affect the UK market. If prices are high, it's because their costs are higher or it's because the competitive force isn't strong enough.

This is like cheering that we are killing fewer Dodos than ever.

That's right, All this pain and still 7.9%. Who knew that electing morons and voting for brexit to smash the system might have consequences?

They're not morons they know what they're doing, high inflation isn't harming rich people

Or fat boomers sat on unearned index linked pensions and houses they didn't pay for...

The morons were doing the electing.

Conservative members voting in Liz Truss?

Bojo the clown and Brexit being the two main examples. Liz and Rishi are just the dregs of the barrel.

My observation was that the rest of our recent prime ministers including Johnson appear quite calculated, making promises to the masses while doing what they can to allow wealth inequality to increase. Truss genuinely seemed to have no idea.

Unlimited migration from Schengen depressed UK wages, a lot of the people you're deriding had no chance to do skilled work and had to compete against people willing to work for pittance because it was more than in RO/BG.

(The fact that the government has replaced that with cheap labour from outside the EU doesn't help)

Weird how the places (and demographic groups) with any actual immigration voted remain. And how we were never on Schengen. And how we are still unable to control our immigration.

The truth is none of the main "reasons" Brexit voters claimed to be motivated by (free trade, sovereignty or immigration) actually matched any facts.

So either brexiteers we're really really stupid. Or they were lying about their reasons.

And given the total lack of affect of any facts on people's intention to vote leave, it sort of has to be the second right?

> Weird how the places (and demographic groups) with any actual immigration voted remain.

This sounds like interesting analysis - do you have a link?

> And how we are still unable to control our immigration.

You mean unwilling, and the "we" being politicians.

https://www.bbc.co.uk/news/uk-politics-36616028

https://en.wikipedia.org/wiki/Results_of_the_2016_United_Kin...

Percent of votes [b]

City Remain Leave

Edinburgh 74.4% 25.6%

Brighton & Hove 68.6% 31.4%

Glasgow 66.6% 33.4%

Bristol 61.7% 38.3%

Aberdeen 61.1% 38.9%

Manchester 60.4% 39.6%

Cardiff 60.0% 40.0%

greater Belfast 59.9% 40.1%

Greater London 59.9% 40.1%

Liverpool 58.2% 41.8%

York 58.0% 42.0%

Leicester 51.1% 48.9%

Newcastle upon Tyne 50.7% 49.3%

Leeds 50.3% 49.7%

--------------------------

Birmingham 49.6% 50.4%

Nottingham 49.2% 50.8%

Sheffield 49.0% 51.0%

Swansea 48.5% 51.5%

Southampton 46.2% 53.8%

Bradford 45.8% 54.2%

Coventry 44.4% 55.6%

Salford 43.2% 56.8%

Derby 42.8% 57.2%

Portsmouth 41.9% 58.1%

Plymouth 40.1% 59.9%

Sunderland 38.7% 61.3%

Wolverhampton 37.4% 62.6%

Wakefield 33.6% 66.4%

Kingston upon Hull 32.4% 67.6%

Stoke-on-Trent 30.6% 69.4%

Funnily enough Romania and Bulgaria are not part of Schengen. Neither was the UK, ever.

Please don't mix up terms, it shows cluelessness and undermines your argument.

>Unlimited migration from Schengen

The Schengen area had nothing to do with who could or couldn't migrate to the UK when the UK was in the EU.

Especially since UK was never part of Schengen

When the worldwide supply of goods and services becomes scarcer, and the lower and middle classes have too much money. Then the middle and lower classes create inflation for the things they buy. Tackling inflation isn’t even the job of the actual politicians you elect, it is entirely the job of the Central Bank, which is independent of the politicians you elect. Power was ceded to the banking system quite a long time ago, because politicians didn’t trust themselves.

https://www.statista.com/statistics/1311945/uk-inflation-rat...

If you look at this excellent chart, it appears the UK central bank allowed inflation to grow for a year before it started tackling it. An earlier intervention would have meant lesser pain now.

> Tackling inflation isn’t even the job of the actual politicians you elect, it is entirely the job of the Central Bank, which is independent of the politicians you elect

Except whe the inflation was created by the policies put in place by politicians, where the Central bank does not have much influence.

Especially since inflation should have been a self-solving problem. There were shocks to the system (Brexit, oil, Ukraine) that raised prices, but they should have priced in quickly. The government claimed last year to get inflation under 8% in 6 months, which was a trivial claim -- and they still failed.

Reply on news.ycombinator.com