August inflation two percent: Are prices stagnant?

Statisticians following prices have update basket of goods consumers buy to keep data accurate. Photo: Diana from Pexels.com

Consumer price inflation overall remained unchanged in August 2018, for the third month running, with an annual rate of 2.0 percent, according to the final stats office figures published on Thursday, meaning there is no change from the early readout released at the beginning of the month.

Click here to read an analysis from Poland in English.

According to the stats office, increases in household bills of 0.3 percent and petrol hikes of 0.4 percent brought were the biggest influencers.

Clothing prices and food prices fell in comparison with August last year by 1.7 percent and 0.7 percent respectively.

source: GUS, bankier.pl

Comment:

An editorial in finance website Bankier.pl this week suggested that the inflation rate would be higher if the seasonal differences in prices for clothes were treated differently by the Polish Statistical Office, following the lead of the British statistical body ONS.
BR> Looking at the cumulative decrease in prices of clothes since 2004 according to the published statistics, one is left with the impression that clothes now cost half of what they did at that time, when in actual fact any shopper will tell you that individual items like shoes or winter coats – when they come into the shops at the beginning of the season - cost more each year.

Statisticians counter, however, that consumers are buying better quality goods than they used to and that’s why they have the feeling that they are paying more. GUS measures prices like for like. So if you bought a non brand pair of trainers a few years ago and you now buy the most fashionable labels, you might indeed get that impression your wallet is lighter. Similarly, if you now buy Parmesan and you used only to buy something labeled “Yellow cheese”, your trip to the shops may leave you feeling poorer.

Nevertheless, the British specialists changed their methodology a few years ago, after noticing a similar tendency. They now take seasonal price changes into account and in their calculations clothes and footwear inflation is closer to three percent per year.

Inflation is calculated by examining a basket of goods and each type is given its own weighting. In certain cases it is hard to accurately estimate the price fluctuation of a specific set of products, particularly technological items, such as TVs and laptops, as the price seems to remain relatively constant over time, while the specification sheet improves exponentially.

The makeup of the basket of goods is carefully monitored and updated regularly to reflect what consumers spend on and certain goods and services are removed, such as tape recorders, no longer bought .

The Polish statistics office has been responsive to feedback on its methodology and a couple of months ago changed its way of calculating port movements and is looking into figures for the consumption of eggs, which producers say were misstated.


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