AUSSIES: What exactly is "inflation", if skyrocketing house and food prices don't aff

The cost of housing in Melbourne has gone up at least 1,000 % since the early 1980s. This is no exaggeration. You could buy a house in Fitzroy for $45,000 in 1984. These days you%26#039;d be lucky to get a tin shed in Fitzroy for less than $450,000.

The cost of food has gone up at least 40% in the last year.

And so on and so on.

Yet the so-called %26quot;inflation rate%26quot; has stayed at a few per cent.

How come? Surely it%26#039;s meaningless, if it doesn%26#039;t reflect real increases in the cost of living?

AUSSIES: What exactly is %26quot;inflation%26quot;, if skyrocketing house and food prices don%26#039;t affect it?

I think you will find that the Coalition has changed the parameters for working out a number of things including inflation and employment figures, so that the answer they get is closer to what they want. Otherwise how the devil could inflation stay at around 3% when, as you say some things have gone through the roof? I think inflation for the wealthy might be about that but for the working person it would have to be more like 10% or more.

AUSSIES: What exactly is %26quot;inflation%26quot;, if skyrocketing house and food prices don%26#039;t affect it?

Newspeak notwithdstanding,

Inflation has been redefined to mean %26quot;how prices, excluding all those politically inconvenient to consider, have risen%26quot;

That clears that up then.

Thank you Mr Howard.

Thank you George Orwell.

AUSSIES: What exactly is %26quot;inflation%26quot;, if skyrocketing house and food prices don%26#039;t affect it?

There are 2 main rates of inflation that are measured, the first is %26quot;headline inflation%26quot;, and the second is %26quot;underlying inflation%26quot;

Headline Inflation is a measure of the price increases of everything, including volatiles like fuel and housing which move at uncontrolable rates in various directions, current headline inflation is well above the 3% ceiling that the RBA like to maintain.

Underlying inflation is a measure of the everyday items rise in price over a particular period of time, it is calculated quarterly and the RBA try to keep it between 2 and 3% anually. currently the underlying inflation rate is sitting arouund the 3% which is why they are putting interest rates up to reduce spending, which in turn will slow the rate of inflation.

Try this tool on the RBA website, its for calculating the price of stuff at varoius times compared with now. http://www.rba.gov.au/calculator/calc.go

AUSSIES: What exactly is %26quot;inflation%26quot;, if skyrocketing house and food prices don%26#039;t affect it?

Costello says that the CPI is the fairest way of determining inflation I say rubbish when the CPI lists every thing sold in Australia who goes out and buys a plasma screen TV every week or buys a windscreen for a commodore when you have a falcon even with food its a falsehood why by 3 liters of milk when you only want 1 then there is housing some people own their house some people pay a mortgage some rent everybody%26#039;s inflation rate is different

AUSSIES: What exactly is %26quot;inflation%26quot;, if skyrocketing house and food prices don%26#039;t affect it?

That%26#039;s because Howard, in his wisdom, has changed the way we assess inflation. The cost of many ordinary household items are no longer included in the calculation - perhaps because their inclusion would show a very different state of affairs?