Inflation rates - should they be stratified?

[wrighty]

There’s a recent Twitter thread doing the rounds on how the inflation rate for low cost ‘value’ ranges is much higher than the standard single figure that is the CPI. It got me thinking. 
 

There are many reasons why the cheaper goods may increase in price more than more luxury goods, for example a higher proportion of the purchase price may be fuel or transport costs, and not related to the direct cost of the food itself. Those rises will be fixed, so higher cost goods will go up less, as a percentage, than cheaper stuff. 
 

Also, supermarkets aren’t stupid. They know which products are in the ONS standard bag. If they leave them alone, and put up prices elsewhere inflation stays low, but profits go up as the wages of their workers are linked to official inflation rates (too conspiratorial?)

So, should there be 3 or 4 official inflation rates, based on goods and services typically purchased by those on benefits/low earners/average earners/high earners? This would seem fairer to me, as these rates could be linked individually to benefit rises, pension rises, and wage negotiations. If, as it seems, official inflation figures are low because decreased costs of foreign holidays have offset massive rises in value baked beans, then with stratified inflation rates we could have benefits rises based on inflation in basic goods, and wage cuts for the highest earners (or at least sub-inflation rises) based on cheaper Range Rovers. 
 

Discuss!

 

ETA - this was the subject on R4’s More or Less programme this morning. 

Edited January 26, 2022 by wrighty

[Declan]

A later Tweet ...

"And just to add: - an upmarket ready meal range was £7.50 ten years ago, and is still £7.50 today. - a high-end stores ‘Dine In For Two For £10’ has been £10 for as long as I can remember. - my local supermarket had 400+ items in their value range, it’s now 91 (and counting down)"

[Passing Time]

It's always interesting that when T***o have an offer on items, when the offer finishes, the price is always dearer that before

[A fool and his money.....]

What a thoughtful and reasoned thread Wrighty. I agree with what you suggest. 

I'd never thought of the supermarkets manipulating prices based on the items on which items are measured, but it does make sense.

I think the whole idea was conceived before computers were in general use and doesn't seem to have changed much since with the exception of items being removed and added, although I might be wrong about that. I wonder if the computerisation of, well everything, would make it easier to broaden the sample to make it fairer, especially in targeting it to different earners as you suggest.

The other way of course would be to scrap blanket percentage pay rises altogether, give high earners inflation minus 1%, low earners inflation +1%? Your way is probably fairer, but given the wage bracket the decision makers are in, and given the recent revelations of their actions both here and across, I think it's probably most likely things will stay as they are. 

[Chinahand]

I pretty much agree with Adam Tooze on this. 

He's well worth following on Twitter.