Mervyn and Financial Planning
The hullabaloo about Mervyn’s letter and we are talking about an inflation rate of 3.3%!
I heard an interesting comment from an economist on the radio the gist being the reason we feel inflation is a lot higher than Government figures is because the goods we buy regularly are going up in price dramatically. With my gas guzzling car I do seem to fill up every week and notice the price of petrol! Prices of irregular purchases such as clothes are supposedly dropping.
For a dose of reality, or if you’re like me and aren’t going to be buying any new clothes for a while (I have a closet full of things that I’m not planning on growing out of) you may want to look-up your personal inflation rate on the National Statistics website. Their neat calculator will give you a monthly estimate of your inflation rate based on the goods and services you buy. Turns out my inflation rate went up to over 20% annually in October 2007 but is now back to around 3%.
We have also been using this to analyse some of our clients spending before using the personal inflation figures in their financial plans. It makes for more accurate planning and can be quite revealing.
