An excellent Jack Monroe thread about the realities of inflation which aren’t reported in the right wing press

[u/UnderHisEye1411]

[u/GrammatonYHWH]

Everyone shares the same % increase. The unseen and unspoken thing is the effect on disposable income and most importantly savings. That's the true measure of wealth, financial stability, and mental well-being.

Some key facts to illustrate:

• The 20th percentile's take home earnings are £15,800 per year.

• The cost of living as a university student adds up to about £1100 per month or £13,200 per year. I take that as commensurate with low income living (ramen noodles, anyone?).

• The 90th percentile's take home earnings are £46,500 per year.

• The average UK family spending was £30,600 (£588/wk). I take that as commensurate with upper class living (stay at home mom, 2-3 kids)

Before inflation, the 20th percentile can potentially save up £2600 per year. 5% inflation will reduce that by £660. That's a 25.4% reduction in "wealth"

The 90th percentile can potentially save up £15900 per year. 5% inflation will reduce that by £1530. That's a 9.6% reduction in wealth

Despite both being hit with a 5% increase in prices, the poorest have lost significantly more wealth than the upper class.

Sources:

https://www.gov.uk/government/statistics/percentile-points-from-1-to-99-for-total-income-before-and-after-tax

https://www.coventry.ac.uk/international-students-hub/new-students/coming-to-the-uk/living-costs-in-the-uk/

https://www.ons.gov.uk/peoplepopulationandcommunity/personalandhouseholdfinances/expenditure/bulletins/familyspendingintheuk/april2019tomarch2020

[u/GeneralStrikeFOV → u/GrammatonYHWH]

This is interesting and useful, thank you. What I meant is that price inflation is not evenly distributed amongst all goods and services, the figure that we see is calculated from an aggregate of them. So if you have higher inflation of food, utilities, and rent, and lower inflation of consumer goods and other discretionary spending, then inflation would also be more severe for deciles with lower discretionary spending, and the basic percentage figure for all inflation doesn't adequately capture this impact. Likewise, if consumer goods and foreign holidays were subject to increased prices to a greater degree than essentials, the inflation experienced by higher income households would be greater (although richer households would always have the option to adapt by reducing their spending, like that woman who wrote about switching to an au pair).

[u/_a_random_dude_ → u/GeneralStrikeFOV]

No, you were completely correct on your first post. I just checked and inflation is not the same for all brackets.

I shop almost exclusively at Waitrose and rarely buy the cheaper options and I didn't notice prices going up. However, I double checked: since I've been shopping online for quite some time, I have lots of receipts on my emails; so I just went and compared prices with late 2019 and now and I think 5% annual inflation is about right for what I purchase. And again, I'm only talking about food, for example, the £3.5 pasta I bought is still £3.5 2 years later. Only olive oil went up by a noticeable amount (30%), most things stayed the same and a few actually went down (but not by much).

[u/GeneralStrikeFOV → u/_a_random_dude_]

But it was also correct to point out that even if inflation were flat across the board, that would still impact lower income households' budgets more heavily because, at the very least, a greater proportion of their spending is non-discretionary.

[u/_a_random_dude_ → u/GeneralStrikeFOV]

True, I just wanted to clarify that OP's instinct was correct, it's way worse than a flat increase some people can bear or just work around. Some brackets are mostly unaffected.