Quarter Life Crisis

The world according to Sven-S. Porst

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Inflation

462 words

In the past years petrol prices have gone up quite a bit. Because of taxes, because of a higher price per barrel of crude oil, and, recently, because of speculations after the tornado in the U.S. Every time price go up, some TV team will find people at petrol stations whining about that fact and how the government is supposed to do something to fix it. While that may logical in the case of tax increases, in all other cases I am tempted to note that it’s just the joy of capitalism that people are complaining about. The same people who’d otherwise tell the government not to interfere with the holy markets of course.

You’ll see graphs all over the newspapers documenting the increase in fuel prices. And keeping in mind that my dad kept saying that the increase in fuel prices has been going along with inflation when I was little, I always supposed that apparent ‘increase’ is just journalist stupidity because they don’t take into account inflation. In fact, I told my social scientist flatmate to go and find some numbers for us concerning the price of fuel and inflation, so we could do this comparison ourselves. But he never did it. I looked around for numbers myself but only found inflation numbers for the past five years or so and learned that the topic is quite complex and there are a number of different ways to find out what the inflation rate is.

What they do is put together a ‘shopping basket’ with everything from food to clothes, from energy to holidays and so on, weight the contents of that ‘basket’ and then see how it changes over years. This should give a reasonable average value. And in fact the German statistical office have an interactive way to find out a more personal inflation rate for your lifestyle. E.g. if you’re using a lot of public transport and don’t have a car, the values will be slightly different. While the differences aren’t huge, it’s quite interesting.

I guess this indicates that any inflation based computations we make won’t be spot-on correct but should be reasonably close to what’s happening. And what’s even better is that Leif found the relevant numbers quite quickly and came up with a few graphs. When going back to 1970 it suggests that fuel prices (in Germany) are in fact higher today than they’d be if they just went along with inflation and that in recent years fuel did get expensive:

Fuel prices vs Inflation

While it’d be nice to have numbers for the 1960s as well, this suggests that fuel prices have indeed risen higher than other living costs. And particularly because of fuel prices going down in the late 1980s, the prices we see today seem expensive.

September 7, 2005, 0:08

Comments

Comment by Peter Edworthy: User icon

Happy Birthday to Sven, Happy Birthday to you, Happy Birthday dear Sven, Happy Birthday to you.

I’m glad to see you are living it up; posting about fuel pricing to celebrate ;-}>

September 7, 2005, 11:12

Comment by ssp: User icon

Thanks Pete!

Yeah, celebrating in style ;)

September 7, 2005, 16:54

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