Thursday, August 4, 2011

CPI - Consumer Pricing Insult!

You don't have to be watching Today Tonight to realise that we're all getting a raw deal on product package sizing. Ya good old packet of Samboy BBQ used to be a shareable 250gms "when I was a boy".  Now instead you'll see your favourite salty chicken crisps actually (and not you) doing the Richard Simmons  weight loss down to packet sizes more like 170gms. Take a trip down to Subway, Nandos or your favourite take away food shop and you'll quickly see "I'll have $5 worth of chips, thanks mate" will no longer satisfy you and four of your mates.   Its the same story not only in food but also our other everyday house hold items like fire starters... I mean washing powder.

Now while this shits me no end, what shits me even more is the bullshit we all have to endure from the Reserve Bank via the ever more annoying scare mongering media networks about "Inflation" and "Interest Rates". 
**** warning ranting unfounded economics content to follow ***  

We are constantly bashed around the head with economic soothsayer expert warnings of interest rate increases based on "rising inflation".  Which, the tell us is out of control when we're talking about an increase of say 3.00% pa (CPI) to 3.50% pa. Let me tell you Mr KossyGobleesien its far higher than that and has been for a while. Lets take a look at my humble dry potato chip dilemma.  It seems the pointy heads down at the Australian Bureau of Statistics from what I can gather in my hard hitting 2 minute investigation, don't factor in product sizing changes in the Consumer Price Index (CPI) calculations.

Okay, lets look at my favourite Cheese and Onion crisps in the year 2000 compared to 2010.  I've looked up the international chipping pricing market records and .. okay I didn't. Anyway say my packet of chips in 2000 costs $2.50.  At an average inflation rate of 3%, which has been what they are telling us is about what the CPI has been; the price of my lovely crisps becomes $3.50 in 2010. Check this table homies:


Price
($)
Size (grams)
$ per Gram

Cheese & Onion Crisps 2000
2.50
250
0.010

Xtra Cheesey Onion Crisps 2010
3.50
170
0.021
51%

Lets have a look at the chip price per cheesey gram increase over the same time period and you'll see this figure has actually risen by 51%. Importantly the flavour enhancement technology has also increased by approximately the same amount.  I haven't factored this into my analysis.

So, the message is Mr Reserve Bank Governor .. put down your lobster and piss off!!  CPI "Inflationary pressures" are hardly the basis to adjust interest rates.


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