There’s been a fair bit of discussion of inflation in the comments threads. Bruce Bradbury of the Social Policy Research Centre has sent in a guest post (in a PDF over the fold), making the point that the cost of regular purchase, notably food, has gone up by more than the Consumer Price Index. This implies that irregular purchases (consumer durables like TV sets and cars) must have gone up by less than the CPI and in fact the inflation rate for these items over the past three years has been only 0.5 per cent. Bruce’s conclusion
This gap perhaps explains some of the divergence between the expressed concerns of consumers and the complacency of economists. Though consumers know that their next TV will be much better than their last one for much the same price, they are still struggling to meet their weekly supermarket and petrol station bills.