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Inflation is Always and Everywhere.........................

The latest ONS inflation figures for the UK show a rise from 2.4% to 2.7% (annualised). This rise doesn't surprise most consumers. One thing which my wife (who is not an economist) has pointed out to me is that the marked price of many products is not going up, but the quantity of product being sold has been reduced. For example, Twix bars are getting smaller, there are 8 slices of cheese instead of 10 in many cheese-slice packets, and Shloer bottles have gone from being 1 litre to 750ml. These changes may fool some consumers into thinking that there is no inflation, but in reality there is. What about the price of services or other more complex products? Could firms be reducing quality rather than increasing price? It is hard for CPI measures to pick up a deterioration in quality, which means that inflation can be underestimated.

      

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