Inflation- what is actually going down (or up) in price?
Inflation is down! This should be good news after months of worry that wages have not been keeping pace with inflation making us all feel even poorer than we are. However, the bank of England’s latest announcement of a record low inflation rate last month of just 0.5% has led to worries that inflation is now too low and that we might end up in deflationary times. It seems inflation is bad whichever way it goes. But what does inflation actually mean to you?
Much of this month’s drop in inflation can be attributed to the surprising, yet very welcome drop in fuel prices (down 18.7% on last year), which is likely to have a continued effect into next month, but what else is getting cheaper, and what is actually going up in price. Here is a practical guide:
Going down in price…
1. Iceberg lettuce – down 28%
Unexcitingly, this year’s biggest bargain is a fairly uninteresting vegetable. Vegetables as a whole were down by 7.1% on average over the past year, according to the Office for National Statistics. But it’s Iceberg lettuce that is down by the most, selling for an average 68p in December 2014, down 28% from 94p in December 2013. You’d have to go back to 1992 to find these prices on lettuce. Rabbits have never had it so good.
2. Cucumbers – down 24%
Cucumbers are a very versatile vegetable. And now cheap, too. The ONS said the average price in December 2014 was 58p compared with 77p last year, making cucumber as cheap as they were in 1989. The compared prices were both taken in December, so there is no element of seasonality to the price drop, cucumbers are just cheaper than than used to be. Cool.
3. Bread – down 15.7%
It doesn’t matter if you’re brown or white, the price of a loaf costs less bread than it used to. The ONS’ average large sliced wholemeal loaf (800g) is now £1.13, down from £1.34 in December 2013. The price of an 800g sliced white loaf has also fallen, down from £1.27 to £1.11 over the same period, with some supermarkets selling brand named loaves at just 79p.
4. Eggs – down 13.1%
You can get a break on eggs, but only if you’re happy with caged birds. Free-range eggs are down a little (2p) from the previous year, but it’s non-free-range eggs where the biggest savings are found. A dozen medium eggs is now 38p cheaper at £2.51, making the price differential between caged hen eggs and free-range (£3.06) even greater.
5. Televisions – down 10.5%
Finally, TVs- the ONS says that the cost of television equipment fell by 10.5% last year, although TVs tend to change spec rather more frequently than salad vegetables so it is perhaps harder to compare prices across years. Still, good job you punched your neighbour to get that Polaroid telly on Black Friday huh?
Things costing you a pretty penny more…
1. Olive oil – up 12.5%
The price of olive oil is soaring after the worst harvest in a decade. Spain’s annual harvest dropped by almost 40%, and as Spain is the world’s biggest producer of oil, this pushed up wholesale prices 12.5%. You could always try using sunflower oil instead?
2. Landlines – up 6.25%
Despite reports that consumers don’t even actually know the price of a landline, phone line rental has outstripped inflation for years. On December 1, BT raised its prices by 6.25%, Sky by 6% and TalkTalk by 4.7%. BT also began charging for its previously-free 1571 service, which now costs £22 a year. It’s not so good to talk.
3. Booze – up 3.5% (and fags – up 8.2%)
The ONS estimates that the average price of wine went up by 3.5% on average over the past year, with a 175ml glass of wine now costing £3.44 compared with £3.22 a year ago. Although always adversely affected by duty increases, 20 king-size cigarettes have jumped from £8.04 to £8.70. If the fags don’t kill you, the cost of them might.
4. Rents – up 3%
The average rent paid for a privately-rented flat rose by 3% in 2014, according to figures from letting agents Your Move and Reeds Rain this week. It said the average rent in December 2014 was £767, compared with £745 in December 2013.
5. Train fares – up 2.5%
Finally, and in a popular move, regulated train fares went up by 2.5% on average this month, although some fares are up 5.6%. That’s more than 11 times inflation for a train that might always be late…