What’s the REAL inflation rate?

Please note this sub-forum does not provide professional finance advice. You should seek advice from a licensed financial advisor.

To post in this sub-forum you must have made 100 posts or have Trust status or have completed our ID Verification.

If investing please consider our affiliate link for new accounts: Sharesies.

Forums › Finance and wealth management › What’s the REAL inflation rate?

Geektastic

18009 posts

Uber Geek
+1 received by user: 8465

Trusted

Lifetime subscriber

#286105 6-Jun-2021 10:47

It has become increasingly apparent that the inflation rate bandied about by government agencies bears little resemblance to prices in the real world.

For example, 500g of good minced beef in Countdown is currently $12 whereas better Angus mince was until recently about $6.80 for the same weight.

I am automating our gates. I received an email from the installer advising that the importer of the gate motors (from Italy) was putting prices up 5% at the end of June.

Numerous other examples can be found showing price increases are well above the 1.5% inflation rate officially quoted.

What do you think the actual rate is?

1 | 2 | 3

8810 posts

Uber Geek
+1 received by user: 5287

#2718907 6-Jun-2021 11:01

A range of international and domestic factors are currently resulting in rising costs for businesses and consumers. These factors include disruptions to global raw material supplies, higher oil prices, and pressure on shipping arrangements. These price pressures are likely to be temporary and are expected to abate over the course of the year.

https://www.rbnz.govt.nz/news/2021/05/monetary-support-continued

The above is from the Reserve Bank at the end of May , the uneven restart of the global economy is causing all sorts of shortages and supply constraints.. as for meat prices There are international constrictions at the moment as Argentina have banned beef exports for 30 days to help lower domestic prices in the run up to local elections....

sbiddle

30853 posts

Uber Geek
+1 received by user: 9996

Retired Mod

Trusted

Biddle Corp

Lifetime subscriber

#2718914 6-Jun-2021 11:10

Supermarket food is a very difficult thing to base figures off because prices change so often, but it is pretty clear there are pretty significant price increases across the board at present.

Statistics NZ blame this solely on the minimum wage increase

The minimum wage increased $1.10 from $18.90 to $20.00 per hour on 1 April. This was reflected in higher prices for restaurant meals and ready-to-eat food, which rose 1.2 percent for the month.

“This was the biggest monthly increase in more than 10 years. The last time prices for restaurant meals and ready-to-eat food rose by more than 1 percent was following the increase in GST to 15 percent in October 2010, when there was a 1.9 percent increase,” Mrs Dewbery said.

I know that over the past 6 weeks or so that the price of food at so many places in the Wgtn CBD that I have lunch or grab snacks from have gone up. There are two bakeries, 3 different sushi stores and 2 restaurants that are common places for me to have lunch, and all have increased prices by 10-15%

marpada

487 posts

Ultimate Geek
+1 received by user: 182

#2718934 6-Jun-2021 12:38

The biggest expense for mouse families is housing. Just think how much the price of buying or renting a property has gone up in the last years.

Batman

Mad Scientist
30014 posts

Uber Geek
+1 received by user: 6217

Trusted

Lifetime subscriber

#2718935 6-Jun-2021 12:46

Geektastic:

What do you think the actual rate is?

10-30% depending on the stuff you're buying

mattwnz

20515 posts

Uber Geek
+1 received by user: 4795

#2718949 6-Jun-2021 14:23

I think a lot of businesses are putting up prices to cover the lost business during the lockdowns. Many Building materials have risen from 5% - 30%. Peoples houses have gone up, so maybe they think people feel richer and can pay more.I think a lot of business also see now as an opportunity to put up prices as other businesses are doing it, so they are less likely to face a backlash from customers. The CPI omits a lot of stuff, but real world inflation has gone up a lot recently. NZ was already really expensive. You just need to compare our supermarket prices with the prices in the UK . This is a good video showing the difference in prices between the stores in the UK https://www.youtube.com/watch?v=nRUPQPB4OgQ

mattwnz

20515 posts

Uber Geek
+1 received by user: 4795

#2718950 6-Jun-2021 14:24

marpada:

The biggest expense for mouse families is housing. Just think how much the price of buying or renting a property has gone up in the last years.

Rising property prices means higher rent. I suspect the rent will be even higher as interest rates rise should house prices not drop back. Generally people will pay their rent before other bills as they need roof over their head, and they will cut back on other things.

AliExpress

Shop now on AliExpress (affiliate link).

Fred99

13684 posts

Uber Geek
+1 received by user: 10018

#2718951 6-Jun-2021 14:32

sbiddle:

Supermarket food is a very difficult thing to base figures off because prices change so often, but it is pretty clear there are pretty significant price increases across the board at present.

Statistics NZ blame this solely on the minimum wage increase

The minimum wage increased $1.10 from $18.90 to $20.00 per hour on 1 April. This was reflected in higher prices for restaurant meals and ready-to-eat food, which rose 1.2 percent for the month.

I know that over the past 6 weeks or so that the price of food at so many places in the Wgtn CBD that I have lunch or grab snacks from have gone up. There are two bakeries, 3 different sushi stores and 2 restaurants that are common places for me to have lunch, and all have increased prices by 10-15%

Well Stats NZ are talking about ready to eat and restaurant - not "supermarket food".

The impact of wage increase on FMCG is tiny - on restaurant food/takeaways, then sure, it's high as labour cost is a very high % of retail prices.

blackjack17

1713 posts

Uber Geek
+1 received by user: 865

#2718953 6-Jun-2021 14:50

marpada:

The biggest expense for mouse families is housing. Just think how much the price of buying or renting a property has gone up in the last years.

If they practiced proper birth control and had smaller families instead of the up to 50 odd babies a year then housing wouldn't be an issue.

Electric kiwi signup credit Sharesies credit

Fred99

13684 posts

Uber Geek
+1 received by user: 10018

#2718954 6-Jun-2021 14:59

blackjack17:

marpada:

The biggest expense for mouse families is housing. Just think how much the price of buying or renting a property has gone up in the last years.

If they practiced proper birth control and had smaller families instead of the up to 50 odd babies a year then housing wouldn't be an issue.

We should round them all up and send them off to prison colonies in Aus.

sbiddle

30853 posts

Uber Geek
+1 received by user: 9996

Retired Mod

Trusted

Biddle Corp

Lifetime subscriber

#2718956 6-Jun-2021 15:01

Fred99:

The impact of wage increase on FMCG is tiny - on restaurant food/takeaways, then sure, it's high as labour cost is a very high % of retail prices.

From speaking to a friend who still owns a supermarket the increased wage costs for a large format supermarket in NZ due to the new minimum wage increase represents is around $500,000 per year once everybody is moved up (you can't just move minimum wage up, you have to move lots of people up). It's still pretty significant increase and ultimately will be passed onto consumers in what is a very low margin industry.

Fred99

13684 posts

Uber Geek
+1 received by user: 10018

#2718958 6-Jun-2021 15:10

sbiddle:

Fred99:

The impact of wage increase on FMCG is tiny - on restaurant food/takeaways, then sure, it's high as labour cost is a very high % of retail prices.

From speaking to a friend who still owns a supermarket the increased wage costs for a large format supermarket in NZ due to the new minimum wage increase represents is around $500,000 per year. It's still pretty significant increase and ultimately will be passed onto consumers in what is a very low margin industry.

The increase was $1.10 per hour.

That equals 454,545 worker hours / 40 / 52 = 218 full time equivalent workers on minimum wage. That's one hell of a big supermarket. What was the turnover? (then you can calculate inflation effect from the wage rise). Note that one large supermarket chain pays above minimum wage by choice anyway.

HP

Shop now for HP laptops and other devices (affiliate link).

BlinkyBill

1443 posts

Uber Geek
+1 received by user: 1100
Inactive user

#2718960 6-Jun-2021 15:13

sbiddle:

From speaking to a friend who still owns a supermarket the increased wage costs for a large format supermarket in NZ due to the new minimum wage increase represents is around $500,000 per year once everybody is moved up (you can't just move minimum wage up, you have to move lots of people up). It's still pretty significant increase and ultimately will be passed onto consumers in what is a very low margin industry.

your friend is bull**itting you.

blackjack17

1713 posts

Uber Geek
+1 received by user: 865

#2718966 6-Jun-2021 15:37

BlinkyBill:

sbiddle:

From speaking to a friend who still owns a supermarket the increased wage costs for a large format supermarket in NZ due to the new minimum wage increase represents is around $500,000 per year once everybody is moved up (you can't just move minimum wage up, you have to move lots of people up). It's still pretty significant increase and ultimately will be passed onto consumers in what is a very low margin industry.

your friend is bull**itting you.

Not too sure (I agree with the wage increase but it has come at a cost)

$1.10 increase = $1.13 after kiwisaver

times 100 (number of staff) equals $111.3

times 40 (hours per week) $4,452

times 52 (weeks in a year) $235,040 in additional costs

Countdown doesn't pay minimum wage but still would have had to increase to maintain the difference. While it isn't $500,000 it is still a considerable amount.

Electric kiwi signup credit Sharesies credit

Fred99

13684 posts

Uber Geek
+1 received by user: 10018

#2718977 6-Jun-2021 16:47

Official inflation in the US is now 4.2%, but all I see is arguments between people (including economists) as to whether that's "true" inflation or "rebound" from C-19 deflation, the only thing close to consensus is agreement that it's going to take a while before we know what's going to happen.

NZ's CPI based on a basket of goods and services is a crude instrument.

All very good if you're enjoying lowered prices for venison and crayfish tails, not so good if your rent went up from $400 to $500 / week and you're trying to save a deposit for a house.

BlinkyBill

1443 posts

Uber Geek
+1 received by user: 1100
Inactive user

#2718983 6-Jun-2021 17:15

I have Woolworths shares. Woolworths owns Countdown NZ and hence staffing numbers are public information. There are 184 Countdown stores and distribution centres in NZ, and a hair over 18,000 total employee’s in the NZ business (i.e. not just store staff, that’s all staff).

So the average Countdown store/logistics branch is serviced by 98 employees including management and head office. That’s full-time and part-time. This from 2018 annual report.

Countdown has more larger stores on average than Pak-and-save, New World and Four Square, etc; so more employees.

I think it’s fair to say most supermarkets in NZ employ well under 90 total employees, full and part time.

1 | 2 | 3