Inflation low for the chavs...but high for the middle classes
30th July 2006

It's puzzling how Gordon Brown can proudly announce an era of low inflation and yet prices rise so rapidly. The best expanation for this is Brown's "basket" of cheaper items to guage inflation. The Office for National Statistics (ONS) blames the selection of goods in this basket, where many of them are in fact cheaper goods.

There have been many examples of rising prices such as passport fees, energy prices and luxury items but the government can still boast about the 2.5% rate of inflation.

But the basket of goods tell a different story which shows that a mere 2% of household spending goes towards funding school and university fees. The cost of public transport only accounts for 3% of expenditure.

For the less well-off people, this basket known as the Consumer Price Index (CPI) seems to fairly represent their financial habits but for families who spend a large amount of money on other services such as education, health and transport, the CPI certainly ignores them.

As well as transport costs increasing, entertainment costs have also gone up. The cost of electric goods has fallen by approximately 25% and processed foods have increased by 65%.

The problem with the CPI is that it places far too much importance on goods such as electrics and clothes, which have fallen in price, while placing less weight on items such as education and health and in the case of mortage and council tax bills, they are not even included.

Nevertheless, as argued by a spokesman for the ONS, it would be fairly difficult to find an average that would fit every person. But that is no comfort to the middle classes as they find them selves measured quite cuttingly referred to by an economic commentator as the "Chav Price Index".

Sources - summary of:
The Times - Inflation is low...but on the Chav Price Index