# Increase in Inflation recently?



## Silvius (29 Apr 2021)

(Apologies to the moderator if this is in the wrong place). Have you noticed an increase in inflation recently and what do you think about it? Does it impact your financial strategy? In the past few weeks I've bought a few services that I hadn't availed of for many months (doctor, dentist, physio), booked a few more and got take-away meals from some favourite restaurants that have recently re-opened. I've been struck by the price increases across the board from 5% to 15%. I don't begrudge the higher charges in light of the pressure businesses have been under during lockdown but wonder what's going on. Is this part of a general inflationary trend?


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## jpd (29 Apr 2021)

Only if the customers pay the higher price - if enough customers refuse to pay and go elsewhere then the sellers will have to forego the increase


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## Brendan Burgess (29 Apr 2021)

Hi Silvius

The CSO is excellent for answering questions from the public.

Give them a shout and ask them if your experience is correct.

Brendan


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## PMU (29 Apr 2021)

Silvius said:


> I've been struck by the price increases across the board from 5% to 15%


Maybe, but not according to the CSO to the end of March  https://www.cso.ie/en/statistics/prices/consumerpriceindex/


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## Purple (30 Apr 2021)

jpd said:


> Only if the customers pay the higher price - if enough customers refuse to pay and go elsewhere then the sellers will have to forego the increase


Inflation is a good thing for average working people as it increases the value of labour (wage inflation) and reduces the value of money (capital). For the last few decades the value of labour has reduced significantly relative to the value of **Capital*. That's not a good thing.

_*edit: typo fixed_


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## odyssey06 (30 Apr 2021)

Silvius said:


> (Apologies to the moderator if this is in the wrong place). Have you noticed an increase in inflation recently and what do you think about it? Does it impact your financial strategy? In the past few weeks I've bought a few services that I hadn't availed of for many months (doctor, dentist, physio), booked a few more and got take-away meals from some favourite restaurants that have recently re-opened. I've been struck by the price increases across the board from 5% to 15%. I don't begrudge the higher charges in light of the pressure businesses have been under during lockdown but wonder what's going on. Is this part of a general inflationary trend?


A lot of those businesses have specific additional covid costs in terms of PPE, cleaning, staff capacity or reduced volume.
Supermarket prices seem stable.


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## elcato (30 Apr 2021)

Purple said:


> For the last few decades the value of labour has reduced significantly relative to the value of labour.


Huh, the party ?


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## Purple (30 Apr 2021)

elcato said:


> Huh, the party ?


Typo fixed


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## joe sod (30 Apr 2021)

PMU said:


> Maybe, but not according to the CSO to the end of March  https://www.cso.ie/en/statistics/prices/consumerpriceindex/


There is a bit if jiggery pokery going on with inflation statistics, very hard to find out the granular details of exactly what products are included in the index now. It's not just an Irish phenomenon as our money and interest rates are set in Europe. The ecb want to keep interest rates negative and keep highly indebted countries access to cheap money. Therefore the pretence that there is no inflation will continue because they can't raise interest rates .

It's like Fr Ted , kick bishop Brennan up the ass but pretend you haven't done it and then convince bishop Brennan that you haven't done it because that would be preposterous.


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## PMU (30 Apr 2021)

Purple said:


> Inflation is a good thing for average working people as it increases the value of labour (wage inflation) and reduces the value of money (capital).


 
This is debateable  It applies only for those workers that are price setters rather than price takers in the market.  Only if your post-tax income increases greater than the rate of inflation are you a 'wnner' and it's doubtful if many workers are in a position to do that.  Otherwise your wages are just eaten up by increased prices for goods and services, assuming you can still keep your job.  When there was high inflation in the 70s and 80s it wasn't exactly a workers' paradise.  


Purple said:


> For the last few decades the value of labour has reduced significantly relative to the value of **Capital*. That's not a good thing.


 This is also debateable.  If you look at PAYE receipts as a proxy for value of labour, Revenue's income tax receipts report 2020 states that “PAYE income tax net receipts grew steadily over the period 2016 to 2019 and declined slightly in 2020, by about €202 million (1.2 per cent), but the share of receipts arising from PAYE continues to grow.”.   So if the tax take from labour and its share of taxation is increasing, it's doubtful if the value of labour is decreasing, but interest rates, that determine the value of money, have been falling since 2008, from 4.75% to 0%.


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## RedOnion (30 Apr 2021)

joe sod said:


> There is a bit if jiggery pokery going on with inflation statistics, very hard to find out the granular details of exactly what products are included in the index now.


Have you actually looked or just making wild statements with no basis again? It's readily available information.


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## NoRegretsCoyote (30 Apr 2021)

RedOnion said:


> Have you actually looked or just making wild statements with no basis again? It's readily available information.



I know this well and have my own very technical issues with how the CSO does its inflation estimates, but:

The source data is not rigged. CSO is a national statistical institute in a developed country, not Venezuela. The CSO has very strong legal protections from political interference and its staff are in my long experience really good by public sector, or indeed any, standards.
If there is a bias in the methodology, it is to slightly _over_-estimate inflation.


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## Purple (30 Apr 2021)

PMU said:


> This is debateable  It applies only for those workers that are price setters rather than price takers in the market.  Only if your post-tax income increases greater than the rate of inflation are you a 'wnner' and it's doubtful if many workers are in a position to do that.  Otherwise your wages are just eaten up by increased prices for goods and services, assuming you can still keep your job.  When there was high inflation in the 70s and 80s it wasn't exactly a workers' paradise.


Eventually price takes get to be price setters when they go on strike or labour shortages increase prices. 
Periods of high inflation are, in the medium term, great for working people as they erode the real value of debt. They also increase the value of labour.


PMU said:


> This is also debateable.  If you look at PAYE receipts as a proxy for value of labour, Revenue's income tax receipts report 2020 states that “PAYE income tax net receipts grew steadily over the period 2016 to 2019 and declined slightly in 2020, by about €202 million (1.2 per cent), but the share of receipts arising from PAYE continues to grow.”.   So if the tax take from labour and its share of taxation is increasing, it's doubtful if the value of labour is decreasing, but interest rates, that determine the value of money, have been falling since 2008, from 4.75% to 0%.


Labour inflation is way behind capital inflation (stock markets, houses etc) so in real terms the value of labour is reducing. This is a good paper on the subject. Looking at tax takes or labour price inflation in isolation is meaningless. We are creating a Capital Owning class in this country which will be just as embedded as the old Anglo-Irish landlords. That infamous leftie Michael McDowell was writing about it in the IT the other day. Apparently even the wee man in the Park was breathlessly pontificating about it on the Late Late recently.


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## joe sod (30 Apr 2021)

NoRegretsCoyote said:


> I know this well and have my own very technical issues with how the CSO does its inflation estimates, but:
> 
> The source data is not rigged. CSO is a national statistical institute in a developed country, not Venezuela. The CSO has very strong legal protections from political interference and its staff are in my long experience really good by public sector, or indeed any, standards.
> If there is a bias in the methodology, it is to slightly _over_-estimate inflation.


Alright, well then can you point me to where this information is , I mean the granular data of the thousands of products that have been included in the statistic and also what proportion of products were replaced since the last statistic was completed. I searched high and low and could not find it before, I must be stupid


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## NoRegretsCoyote (30 Apr 2021)

joe sod said:


> Alright, well then can you point me to where this information is


Have a read of this Eurostat report here. 

They do not publicise exactly which products or services they sample. No national statistical institute does this.


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## odyssey06 (30 Apr 2021)

NoRegretsCoyote said:


> I know this well and have my own very technical issues with how the CSO does its inflation estimates, but:
> 
> The source data is not rigged. CSO is a national statistical institute in a developed country, not Venezuela. The CSO has very strong legal protections from political interference and its staff are in my long experience really good by public sector, or indeed any, standards.
> If there is a bias in the methodology, it is to slightly _over_-estimate inflation.


Are there particular expenditures that are not covered by the statistics that might cause people's wallets to feel lighter but not picked up by the stats? Would doctor's fees for example be listed?


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## NoRegretsCoyote (30 Apr 2021)

odyssey06 said:


> Are there particular expenditures that are not covered by the statistics that might cause people's wallets to feel lighter but not picked up by the stats?


Well they don't survey illegal drugs and s€x work for example  

But otherwise it is aimed at being a representative basket of all sorts of legitimate expenditure on goods and services.


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## Purple (30 Apr 2021)

joe sod said:


> Alright, well then can you point me to where this information is , I mean the granular data of the thousands of products that have been included in the statistic and also what proportion of products were replaced since the last statistic was completed. I searched high and low and could not find it before, I must be stupid


Is this what you are looking for?


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## odyssey06 (30 Apr 2021)

NoRegretsCoyote said:


> Well they don't survey illegal drugs and s€x work for example
> 
> But otherwise it is aimed at being a representative basket of all sorts of legitimate expenditure on goods and services.


So it should be picking up for example, increases in the costs of medical services, medical insurance OR say electricity bills, broadband bills, transport costs such as the price of petrol or bus fares, car servicing or car insurance?
I scanned the PDF you linked but it didn't give information one way or another.


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## Purple (30 Apr 2021)

odyssey06 said:


> So it should be picking up for example, increases in the costs of medical services, medical insurance OR say electricity bills, broadband bills, transport costs such as the price of petrol or bus fares, car servicing or car insurance?
> I scanned the PDF you linked but it didn't give information one way or another.


The charts here have that detail.


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## odyssey06 (30 Apr 2021)

Purple said:


> The charts here have that detail.


Perfect that's what I'm looking for... interesting to note that as per the OP:
_Health increased primarily due to a rise in the cost of dental and medical services.  This increase was partially offset by lower prices for pharmaceutical products.
Restaurants & Hotels rose mainly due to higher prices for alcoholic drinks and food consumed in licensed premises, restaurants, cafes etc.  This increase was partially offset by lower prices for hotel accommodation._


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## Purple (30 Apr 2021)

odyssey06 said:


> Perfect that's what I'm looking for... interesting to note that as per the OP:
> _Health increased primarily due to a rise in the cost of dental and medical services.  This increase was partially offset by lower prices for pharmaceutical products.
> Restaurants & Hotels rose mainly due to higher prices for alcoholic drinks and food consumed in licensed premises, restaurants, cafes etc.  This increase was partially offset by lower prices for hotel accommodation._


Medical inflation is a problem everywhere. Of course doctors would never engage in price fixing, certainly not Hospital Consultants but GP's do have meetings to discuss, eeh, clinical issues within their areas. By sheer coincidence prices for all the GP's in that area may go up shortly afterwards.


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## WolfeTone (30 Apr 2021)

Purple said:


> Is this what you are looking for?



I would classify this as the jiggery-pokery that @joe sod was talking about. 

Items are removed because of 'declining popularity'? 
Maybe they have become just too expensive? Maybe not. Hard to tell if they are not being counted. 

The best way to gauge inflation is to measure the cost of living for yourself. There are too many variables in the national statistics for them to be reflective of your own circumstances. They are a good guide, and helpful for overall trends. 
For my own part, the last year has seen a significant drop in the cost of living across mortgage repayments, insurance, groceries. Energy costs also down due to lack of use of the car. Home energy is up near 20%.


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## cremeegg (30 Apr 2021)

Purple said:


> Eventually price takes get to be price setters when they go on strike or labour shortages increase prices.
> Periods of high inflation are, in the medium term, great for working people as they erode the real value of debt. They also increase the value of labour.
> 
> Labour inflation is way behind capital inflation (stock markets, houses etc) so in real terms the value of labour is reducing. This is a good paper on the subject. Looking at tax takes or labour price inflation in isolation is meaningless. We are creating a Capital Owning class in this country which will be just as embedded as the old Anglo-Irish landlords. That infamous leftie Michael McDowell was writing about it in the IT the other day. Apparently even the wee man in the Park was breathlessly pontificating about it on the Late Late recently.


It is through using debt that capital is accumulated nowadays. 

'Working people' as you call them do not usually have any significant debt. 

Investors who have borrowed heavily benefit from inflation.


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## cremeegg (30 Apr 2021)

PMU said:


> interest rates, that determine the value of money, have been falling since 2008, from 4.75% to 0%.


Do falling interest rates make money more or less valuable.

€1m in capital obviously generates more income if interest rates are higher.

A future income stream of say €1,000 per month is more valuable if discounted at 1% rather than 5%


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## joe sod (1 May 2021)

cremeegg said:


> Do falling interest rates make money more or less valuable.
> 
> €1m in capital obviously generates more income if interest rates are higher.


falling interest rates make existing bonds more valuable so they go up in value relative to newly issued ones because older ones now pay a higher interest rate. Thats the real reason why interest rates have been driven negative to keep the biggest financial asset of all the bond markets on side. The bond markets dwarf the size of the equity and the real estate markets and are the means by which the worlds governments are paying for the pandemic. We saw what happened in 2008 when the bond markets turned up their noses at italian, greek and irish bonds.
Therefore no matter what "real inflation" is running at official inflation will remain low because they *cannot* raise interest rates.

thats why the bishop brennan analogy is a good description, you kick bishop brennan up the ass and then pretend you havn't done it, but only the ECB and the Fed can kick bishop brennan not the irish government


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## RedOnion (1 May 2021)

joe sod said:


> Therefore no matter what "real inflation" is running at official inflation will remain low because they *cannot* raise interest rates.


My major issue is the price of tinfoil hats is not included in the statistics. There's obviously a demand for those...

There are trillions of euro worth of CPI linked bonds held privately. If there was any fooling around with the numbers going on, there's be court cases about it. The amount of nonsense that gets passed off as factual on this site and is left unchallenged is getting ridiculous.

Apologies for the 'spurious' links to the official CSO website.

Heres background to the CSI CPI methodology





						Consumer Price Index - CSO - Central Statistics Office
					






					www.cso.ie
				




All of the methodological documents,  including a list of the items, and their weights since the index was rebased are detailed here:




__





						Methodology Documents - CSO - Central Statistics Office
					






					www.cso.ie
				




What exactly are you not able to find there which would better inform you about how CPI is calculated?


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## Sarenco (1 May 2021)

joe sod said:


> The bond markets dwarf the size of the equity and the real estate markets and are the means by which the worlds governments are paying for the pandemic.


Not true.

The market cap of global, publicly traded, investment-grade fixed-income securities is lower than the market cap of global, publicly traded, equity securities.

I look forward to reading your explanation as to how the CSO is artificially misrepresenting the “real” inflation rate.


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## WolfeTone (1 May 2021)

@RedOnion I don't think anyone is disputing the data that you are posting. Rather it's relevance to the everyday perceptions of ordinary people. 

"_Approximately 51,000 prices are collected for a representative basket consisting of 615 item"_ 

This is all fine and good, but realistically how relevant is it to anyone? Who has 615 items in their basket? 

If you are an investor with property ownership your perspective of the 'real' inflation rate is going to be different to someone trying to save a deposit at negative interest rates while house prices increase. 

Here are some recent comments from ECB chief LaGarde on the matter 

_"our economies are changing increasingly quickly. We need to keep track of broad concepts of inflation that capture the costs people face in their everyday lives and reflect their perceptions, including measures of owner-occupied housing. This is not about moving the goalposts for monetary policy. It is about future-proofing how we measure inflation."_

We can interpret this comment to mean whatever we want. My interpretation is that it is a tacit admission that the methods used by central authorities to measure inflation are inadequate at best and, need some jiggery-pokery, to bridge the gap of the inflation rate that increasing numbers of people are perceivably experiencing against the official rate that they are being informed of. 
The gap between the official rate versus the 'real' (or perceived) rate is widening for increasing numbers of the population and that is why you perceive there to be increasing demand for tinfoil hats.


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## RedOnion (1 May 2021)

@WolfeTone 
I completely agree. I don't smoke, so the price of tobacco has no influence on my cost of living. But its included in the statistics. 

There was a claim there's there's fooling around with the numbers to suit the desired outcome. And that the data on what's included isn't readily accessible.  That was what I was specifically responding to, not whether of not the basket is representative of every individual in the country. The basket is what it is, there's a methodology in the selection of items, their weighting in the basket, and how price data is collected.

If you think the removal of camcorders and getting photo film developed in 2016 was purposefully done because those items were getting too expensive,  then fire ahead with that narrative.


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## WolfeTone (1 May 2021)

RedOnion said:


> There was a claim there's there's fooling around with the numbers to suit the desired outcome. And that the data on what's included isn't readily accessible. That was what I was specifically responding to



Ok, I don't subscribe to such claims.



RedOnion said:


> If you think the removal of camcorders and getting photo film developed in 2016 was purposefully done because those items were getting too expensive, t



No of course not, and I understand the sentiment of removing them but I consider it somewhat part of the inadequate approach being applied.
Whether it's camcorders or some other out of fashion, outdated, good or service, there is a cost to be borne with those that continue to stock and or invest such items which feeds into the overall inflation (deflation) rate, albeit at micro levels.


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## joe sod (1 May 2021)

RedOnion said:


> All of the methodological documents, including a list of the items, and their weights since the index was rebased are detailed here:
> 
> 
> 
> ...


thanks for that yes, there is some detail there now but it takes a bit of searching however I did notice one thing that is a big factor the weighting of sectors that were closed down has been reduced in 2021. Therefore the big expenditure items like fuel , motor cars, licensed premises entertainment were reduced down in 2021 considerably. Of course that is legitimate however that means that inflation is low because spending is low but any discretionary spending that people are "allowed" to do is increasing in price.
Therefore there will be a big spike in inflation next year as these anecdotal price rises get fully reflected (or not so in the official inflation statistics) , a change in a decimal point number of a big expenditure item is not immediately obvious in an excel spreadsheet but it has a big effect on the overall figures.
Therefore next year you don't fully restore the weightings of those closed down sectors, where the price rises are likely to be greatest, there are alot of ways that the figures can be massaged a little here and there and it all looks perfectly ok. There are alot of highly paid statiticians in the CSO alot better paid than moi.


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## PMU (1 May 2021)

Purple said:


> Eventually price takes get to be price setters when they go on strike or labour shortages increase prices.
> Periods of high inflation are, in the medium term, great for working people as they erode the real value of debt. They also increase the value of labour.


 
But not in the real world.  There is a trade off between employment and inflation.  The public policy objective is to maintain the highest possible level of employment consistent with price stability.   If workers could force through higher wages, i.e. become price setters, in periods of high inflation, all you can get is either higher inflation (bad for the average worker and the unemployed) or higher unemployment (also bad for the average worker and the  unemployed).


Purple said:


> Periods of high inflation are, in the medium term, great for working people as they erode the real value of debt. They also increase the value of labour.


 
Only if your post tax income rises faster than inflation.  Otherwise, you are worse off as you pay increased prices for goods and services due to inflation, leaving you with less money to service your debt.  In fact, you may have to get additional debt (i.e. short term loans, credit card bills, etc.) to pay bills that suddenly increase due to inflation or to maintain your life style in the short-term.

Furthermore, central banks stamp out inflation by rising interest rates, the interest you pay on outstanding debt wil increase also leaving you worse off.

And if you have inflation, working people, and everybody else, just sees the value of their savings evaporate, also leaving you worse off.


Purple said:


> This is a good paper on the subject.


 
From the ESRI?  The house think-tank of left-wing losers?  That crowd haven't got over the fall of the Berlin Wall.


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## Purple (4 May 2021)

PMU said:


> Only if your post tax income rises faster than inflation. Otherwise, you are worse off as you pay increased prices for goods and services due to inflation, leaving you with less money to service your debt. In fact, you may have to get additional debt (i.e. short term loans, credit card bills, etc.) to pay bills that suddenly increase due to inflation or to maintain your life style in the short-term.


If I'm paying back a €400k mortgage and inflation is running at 5% then the real cost of my mortgage drops by 5% each year. 
Those who have paid off their mortgages have savings. Those who have not paid off their mortgage have no savings, at least their savings are less than their debts. When your debts are bigger than your savings then inflation leaves you net better off over the medium term.


PMU said:


> Furthermore, central banks stamp out inflation by rising interest rates, the interest you pay on outstanding debt wil increase also leaving you worse off.


Yes, there is short term pain as repayment rates increase and if you can't keep up with them then your net debt increases faster but inflation is the friend of the indebted.


PMU said:


> And if you have inflation, working people, and everybody else, just sees the value of their savings evaporate, also leaving you worse off.


That only matters if your savings are greater than your debts but yes, inflation erodes the real value of savings, just as it erodes the real value of capital. That's a good thing as it allows more wealth to be retained in labour.


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## Leo (4 May 2021)

WolfeTone said:


> "_Approximately 51,000 prices are collected for a representative basket consisting of 615 item"_
> 
> This is all fine and good, but realistically how relevant is it to anyone? Who has 615 items in their basket?



The prupose of the chosen items is obviously not to be representative of any individual's shopping basket! It's a collection of stuff that the general public buy in large quantities, and therefore are a good measure of where the public are spending their money.



WolfeTone said:


> Whether it's camcorders or some other out of fashion, outdated, good or service, there is a cost to be borne with those that continue to stock and or invest such items which feeds into the overall inflation (deflation) rate, albeit at micro levels.



Yes, at micro levels. Niche products often have large swings in pricing and should have no affect on overall macro inflation numbers.


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## WolfeTone (4 May 2021)

Leo said:


> The prupose of the chosen items is obviously not to be representative of any individual's shopping basket! It's a collection of stuff that the general public buy in large quantities, and therefore are a good measure of where the public are spending their money.



I know. And it is useful for that purpose. 
But that purpose is not very efficient way for an individual to measure the level of inflation on their own individual incomes. There is a much more precise way of measuring inflation - monitor your own bills and spending habits.


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## Leo (4 May 2021)

WolfeTone said:


> There is a much more precise way of measuring inflation - monitor your own bills and spending habits.



But habitual spending and inflation are two very different things. The fact that you use the car less and so buy less petrol does not mean the price of petrol has fallen.


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## WolfeTone (4 May 2021)

Leo said:


> The fact that you use the car less and so buy less petrol does not mean the price of petrol has fallen.



Of course not, but if you are using less petrol and your income is the same then your cost of living has reduced.
Inflation being a measure of the increases in the cost of living.


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## Purple (4 May 2021)

WolfeTone said:


> Of course not, but if you are using less petrol and your income is the same then your cost of living has reduced.
> Inflation being a measure of the increases in the cost of living.


There has to be an element of "all else being equal" about it though. "What if everyone becomes a monk?" shouldn't be one of the variables.


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## WolfeTone (4 May 2021)

Purple said:


> There has to be an element of "all else being equal" about it though. "What if everyone becomes a monk?" shouldn't be one of the variables.



I don't really get that Purple? I'm not disputing the CSO or the national stats. I'm merely suggesting that there are more precise and reliable ways to gauge the inflation rate on one's standard of living that using those figures. Those figures are a useful as a comparable guide that is all.


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## Purple (4 May 2021)

WolfeTone said:


> I don't really get that Purple? I'm not disputing the CSO or the national stats. I'm merely suggesting that there are more precise and reliable ways to gauge the inflation rate on one's standard of living that using those figures. Those figures are a useful as a comparable guide that is all.


Yes, the CSO measures national rates. You're talking about spending reductions at an individual level. If coffee gets more expensive and everyone stops buying coffee the price has still gone up. If everything gets more expensive and everyone buys less of everything everything is still more expensive.


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## newirishman (4 May 2021)

WolfeTone said:


> I don't really get that Purple? I'm not disputing the CSO or the national stats. I'm merely suggesting that there are more precise and reliable ways to gauge the inflation rate on one's standard of living that using those figures. Those figures are a useful as a comparable guide that is all.


What do you have in mind here?


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## WolfeTone (4 May 2021)

Purple said:


> You're talking about spending reductions at an individual level.



Not necessarily, that may be a consequence for sure of increasing prices. 
If I'm a drinker and a smoker and continue to consume same levels as before a price increase then I experience the effects of inflation. 
If I'm not a drinker or smoker, a national stat that includes the increase price of alcohol and tobacco is not really reflective of my experience. 
I'm merely suggesting that the best way to measure inflation/deflation is to measure price increases on your own specific basket of goods and services that you consume rather than a national basket of goods and services, while useful as a comparable guide, is alot less precise.


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## WolfeTone (4 May 2021)

newirishman said:


> What do you have in mind here?



Measuring price increases/decreases on goods and services that are specific to your own basket of goods and services that you consume.


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## joe sod (4 May 2021)

PMU said:


> Furthermore, central banks stamp out inflation by rising interest rates, the interest you pay on outstanding debt wil increase also leaving you worse off.


but when was the last time the central banks did that ? late 70s , early 80s over 40 years ago to fight the energy shock inflation of the 70s, also long before the euro and ECB. Remember the 1977 fianna fail election manifesto , cut in taxes, massive increase in borrowing . It was OK until the government had to re finance the borrowing at the much higher interest rates of the early 80s. Is history about to repeat itself ? huge increase in borrowing  (doesn't matter because interest rates will stay low narrative) . Inflation has already begun again , huge increase in money supply running into constrained natural resource and factory production (caused by supply shock lockdown disruptions) equals inflation.


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## FinCork (5 May 2021)

joe sod said:


> but when was the last time the central banks did that ? late 70s , early 80s over 40 years ago to fight the energy shock inflation of the 70s, also long before the euro and ECB. Remember the 1977 fianna fail election manifesto , cut in taxes, massive increase in borrowing . It was OK until the government had to re finance the borrowing at the much higher interest rates of the early 80s. Is history about to repeat itself ? huge increase in borrowing  (doesn't matter because interest rates will stay low narrative) . Inflation has already begun again , huge increase in money supply running into constrained natural resource and factory production (caused by supply shock lockdown disruptions) equals inflation.


I've been thinking about this a lot recently, the central banks want more inflation to melt away some of the debt this crisis has caused, ideally 3-4%. however the genie can quickly get out of the bottle and it can go far higher but raising interest rates will likely mean a huge amount of business and government defaults, its a fine line.


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## Cervelo (5 May 2021)

WolfeTone said:


> I'm not disputing the CSO or the national stats. I'm merely suggesting that there are more precise and reliable ways to gauge the inflation rate on one's standard of living that using those figures. Those figures are a useful as a comparable guide that is all.


I'm with Wolfe Tone here, The OP if I understood his their post wasn't really asking about inflation on a national level
but rather had anybody else noticed an increase in the cost of services that they just availed of


Silvius said:


> In the past few weeks I've bought a few services that I hadn't availed of for many months (doctor, dentist, physio), booked a few more and got take-away meals from some favourite restaurants that have recently re-opened. I've been struck by the price increases across the board from 5% to 15%.


On a personal level I would agree somewhat with the OP that prices are going up in nearly all areas of my spending
but giving that there are so many service providers or other alternative products or services to buy, I'm able to keep these costs down
and the only way to keep on top of it is to track your own personal spending rather than the national average spending


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## Leo (5 May 2021)

WolfeTone said:


> Of course not, but if you are using less petrol and your income is the same then your cost of living has reduced.
> Inflation being a measure of the increases in the cost of living.



Inflation isn't intended as a measure of personal spending patterns changing based on discretionary spending. Using the term inflation to reflect personal choices is an incorrect use.


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## Leo (5 May 2021)

Cervelo said:


> On a personal level I would agree somewhat with the OP that prices are going up in nearly all areas of my spending
> but giving that there are so many service providers or other alternative products or services to buy, I'm able to keep these costs down
> and the only way to keep on top of it is to track your own personal spending rather than the national average spending



Inflation measures the price of common goods and services across multiple suppliers to take that into account.


----------



## WolfeTone (5 May 2021)

Cervelo said:


> The OP if I understood his their post wasn't really asking about inflation on a national level



That is how I understood it too. The response being to contact the central authorities to compare.


Leo said:


> Inflation isn't intended as a measure of personal spending patterns changing based on discretionary spending. Using the term inflation to reflect personal choices is an incorrect use.



True, it isn't intended for that purpose. But I suppose what I am trying to point out and if I'm correct, what others here are trying to point, is there is a growing perception of a not less than significant divergence from the official national inflation rate and what people are experiencing in their everyday lives. The consequence being, to question the value or relevance of these national inflation statistics. I revert to the comments of ECB chief LaGarde, speaking last month she said;

_"our economies are changing increasingly quickly. We need to keep track of broad concepts of inflation that capture the costs people face in their everyday lives and reflect their perceptions, including measures of owner-occupied housing. This is not about moving the goalposts for monetary policy. It is about future-proofing how we measure inflation."_

My interpretation is that it is a tacit admission that the methods used by central authorities to measure inflation are inadequate at best and, need some jiggery-pokery, to bridge the gap of the inflation rate that increasing numbers of people are perceivably experiencing against the official rate that they are being informed of.


----------



## Leo (5 May 2021)

WolfeTone said:


> But I suppose what I am trying to point out and if I'm correct, what others here are trying to point, is there is a growing perception of a not less than significant divergence from the official national inflation rate and what people are experiencing in their everyday lives. The consequence being, to question the value or relevance of these national inflation statistics.


But if price increases are widespread, they should influence inflation. Your circumstances meaning you drive less than you used to shouldn't. 

In reference to adapting to changing markets, adoption rates of technology in particular are now much greater than ever, so they do need to adjust when new products gain broad traction quickly.


----------



## WolfeTone (5 May 2021)

Leo said:


> In reference to adapting to changing markets, adoption rates of technology in particular are now much greater than ever, so they do need to adjust when new products gain broad traction quickly.



Or if older products lose traction quickly? For example, if I only use my car 50% of what I used it before covid. This can either be a widespread occurrence, reflected in national inflation stats, or it could be just me, reflected in my perception of the inflationary (deflationary) environment.

I'm not disputing the CSO stats, or any other official stats. I am querying their relevance when, in my opinion, their is a growing perception that those same stats do not reflect a reality in a lot of peoples lives. I think LaGarde is acknowledging this.


----------



## joe sod (5 May 2021)

WolfeTone said:


> "our economies are changing increasingly quickly. We need to keep track of broad concepts of inflation that capture the costs people face in their everyday lives and reflect their perceptions, including measures of owner-occupied housing. This is not about moving the goalposts for monetary policy. It is about future-proofing how we measure inflation."


Interesting that she actually said "this is not about moving the goalposts for monetary policy" that means she is talking to a lot of people in the ECB where they must be discussing that. It's like when a child accidentally blurps out the truth " My Daddy says he is not here"


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## Purple (5 May 2021)

WolfeTone said:


> Or if older products lose traction quickly? For example, if I only use my car 50% of what I used it before covid. This can either be a widespread occurrence, reflected in national inflation stats, or it could be just me, reflected in my perception of the inflationary (deflationary) environment.
> 
> I'm not disputing the CSO stats, or any other official stats. I am querying their relevance when, in my opinion, their is a growing perception that those same stats do not reflect a reality in a lot of peoples lives. I think LaGarde is acknowledging this.


Yes, the cost of living is probably lower in Damascus now than it was a few years back but there are other negative factors which have caused that.


----------



## PMU (5 May 2021)

joe sod said:


> but when was the last time the central banks did that ? late 70s , early 80s over 40 years ago to fight the energy shock inflation of the 70s, also long before the euro and ECB.


 
2008 for the ECB; 2007 for the Bank of England; 2019 for the FED.


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## PMU (5 May 2021)

Purple said:


> If I'm paying back a €400k mortgage and inflation is running at 5% then the real cost of my mortgage drops by 5% each year.


 
Only (a) if you have a fixed-rate mortgage, as, in that situation, you are paying the fixed mortgage payment in money that is worth less.
But with a variable rate mortgage, banks  just pump up their rates to maintain the value of mortgage repayments.  Bankers don't get rich by handing out free lunches.  Your mortgage is worth less to the bank (i.e. it is an asset that is being reduced in value by inflation), so they try to maintain the value by increasing mortgage rates, i.e by increasing your mortgage payments.  And (b) only if your post-tax wages keep place with or exceed inflation.   Otherwise you are paying more of your post-tax income to service your mortgage.  And with a variable rate mortage interest rates will increase in excess of the rate of inflation, also reducing your post-tax income.

          If your thesis were correct, all the advice given by numerous contributors on AAM that you should overpay or pay your mortgage early is incorrect.  If you are correct the recommendation should be that, as a matter of policy, you do not pay off the mortgage early, i.e to allow inflation to reduce it in real terms and you should invest any surplus funds in the stock market, or just spend the money on enjoyment, rather than reduce the capital sum owed.   It also implies that as you can't foresee future inflation with precision, but you believe inflation will reduce the value of your mortgage, you should take out the longest duration fixed-rate mortgage possible, to increase your chances of encountering a possible bout of high inflation in the future and thereby reducing your mortgage in real terms.   But nobody giving  this advice.....


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## Cervelo (5 May 2021)

Leo said:


> Inflation measures the price of common goods and services across multiple suppliers to take that into account.


That may be true but do they measure the RRP or the actual price that people pay??


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## Purple (5 May 2021)

PMU said:


> Only (a) if you have a fixed-rate mortgage, as, in that situation, you are paying the fixed mortgage payment in money that is worth less.
> But with a variable rate mortgage, banks  just pump up their rates to maintain the value of mortgage repayments.  Bankers don't get rich by handing out free lunches.  Your mortgage is worth less to the bank (i.e. it is an asset that is being reduced in value by inflation), so they try to maintain the value by increasing mortgage rates, i.e by increasing your mortgage payments.  And (b) only if your post-tax wages keep place with or exceed inflation.   Otherwise you are paying more of your post-tax income to service your mortgage.  And with a variable rate mortage interest rates will increase in excess of the rate of inflation, also reducing your post-tax income.
> 
> If your thesis were correct, all the advice given by numerous contributors on AAM that you should overpay or pay your mortgage early is incorrect.  If you are correct the recommendation should be that, as a matter of policy, you do not pay off the mortgage early, i.e to allow inflation to reduce it in real terms and you should invest any surplus funds in the stock market, or just spend the money on enjoyment, rather than reduce the capital sum owed.   It also implies that as you can't foresee future inflation with precision, but you believe inflation will reduce the value of your mortgage, you should take out the longest duration fixed-rate mortgage possible, to increase your chances of encountering a possible bout of high inflation in the future and thereby reducing your mortgage in real terms.   But nobody giving  this advice.....


Inflation reduced the value of a fixed sum of money. Therefore it reduced the value of a fixed amount of debt. I don't know what you don't get about that. The interest rate on the repayment is not relevant to that point.

If your income in increasing by 5% due to inflation then the real value of your debt is decreasing. The interest rate may increase or decrease with inflation but inflation itself has a compounding effect on the fixed debt. 
I'm not making any point beyond that.

The more general problem is inflation had the same impact on debt as it has on savings, as it has on fixed incomes etc but for working people in normal economic circumstances inflation is a result of increased wages. That hasn't happened in the developed world since the automation of the services sector and the move of so much manufacturing to Southeast Asia. That's meant that more wealth is going to capital than is going to labour. That's not good for society.

On the issue of repaying mortgages early, if interest rates were higher than the rate of return on the capital markets then it would make sense to repay your mortgage sooner. They aren't so it isn't.


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## Leo (5 May 2021)

WolfeTone said:


> Or if older products lose traction quickly? For example, if I only use my car 50% of what I used it before covid. This can either be a widespread occurrence, reflected in national inflation stats, or it could be just me, reflected in my perception of the inflationary (deflationary) environment.


As products become less relevant or tastes change, they are removed and replaced with something else.

If there is evidence that people are driving a lot less (which current traffic volumes don't support), then that would likely be factored into the overall calculations. Without insight into the exact formula I can't say what the impact would be, but the goal is to track such trends and be representative of overall costs of living.


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## Leo (5 May 2021)

Cervelo said:


> That may be true but do they measure the RRP or the actual price that people pay??


The price, they visit stores.


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## WolfeTone (5 May 2021)

Leo said:


> As products become less relevant or tastes change, they are removed and replaced with something else.
> 
> If there is evidence that people are driving a lot less (which current traffic volumes don't support), then that would likely be factored into the overall calculations. Without insight into the exact formula I can't say what the impact would be, but the goal is to track such trends and be representative of overall costs of living.



I agree, I am not disputing this.


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## Delboy (5 May 2021)

Purple said:


> Eventually price takes get to be price setters when they go on strike or labour shortages increase prices.
> Periods of high inflation are, in the medium term, great for working people as they erode the real value of debt. They also increase the value of labour.
> 
> Labour inflation is way behind capital inflation (stock markets, houses etc) so in real terms the value of labour is reducing. This is a good paper on the subject. Looking at tax takes or labour price inflation in isolation is meaningless. We are creating a Capital Owning class in this country which will be just as embedded as the old Anglo-Irish landlords. That infamous leftie Michael McDowell was writing about it in the IT the other day. Apparently even the wee man in the Park was breathlessly pontificating about it on the Late Late recently.


Globalisation and open borders mean labour shortages are a thing of the past.
Higher inflation will not be matched by increased labour rates for the foreseeable


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## Purple (6 May 2021)

Delboy said:


> Globalisation and open borders mean labour shortages are a thing of the past.
> Higher inflation will not be matched by increased labour rates for the foreseeable


I agree. That's why flooding the developed world with money hasn't led to labour price increases as the labour which produced the goods is in a different place. It has led to capital price inflation since, simplistically put, the capital is not in a different place.


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## joe sod (6 May 2021)

PMU said:


> 2008 for the ECB; 2007 for the Bank of England; 2019 for the FED.


Yes there was a bit of inflation in Ireland around 2007, but did the ECB come in with their fire hoses to quell Irish inflation rates then,? there was no inflation in Germany remember, the German banks were lending to Irish banks then. They came in way too late to stop the run away lending that was going on, but they also crystallized the collapse of the banking sector by raising those rates and preventing the banks from rolling over their bonds. If anything they were 5 years too late. Can't see them doing that again especially as this time the debt is mostly sovereign bonds.


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## PMU (6 May 2021)

joe sod said:


> Yes there was a bit of inflation in Ireland around 2007, but did the ECB come in with their fire hoses to quell Irish inflation rates then,? there was no inflation in Germany remember, the German banks were lending to Irish banks then. They came in way too late to stop the run away lending that was going on, but they also crystallized the collapse of the banking sector by raising those rates and preventing the banks from rolling over their bonds. If anything they were 5 years too late. Can't see them doing that again especially as this time the debt is mostly sovereign bonds.


The ECB responds to inflation in the eurozone.  Inflation was at the 1%  level in the 1990s; in the early 2000s it rose above the ECBs target rate of  2%.  In 2008 it hit 3.28% so the ECB increased interest rates.   Inflation fell to 0.29% in 2009.  https://www.rateinflation.com/inflation-rate/euro-area-historical-inflation-rate/.  So monetary policy (as per Paul Volker) works.  What's not to like?


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## Purple (6 May 2021)

PMU said:


> What's not to like?


The old Monetary union without Fiscal Union problem.


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## WolfeTone (6 May 2021)

Inflation rose to 4.06% in July 2008,


PMU said:


> so the ECB increased interest rates



 by Dec 2008 inflation dropped to 1.59%!



PMU said:


> What's not to like?



The calamitous Irish property crash and sovereign debt crisis that ripped through the eurozone bankrupting nation states. Other than that, all good!


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## joe sod (6 May 2021)

PMU said:


> In 2008 it hit 3.28% so the ECB increased interest rates. Inflation fell to 0.29% in 2009. https://www.rateinflation.com/inflation-rate/euro-area-historical-inflation-rate/. So monetary policy (as per Paul Volker) works. What's not to like?


It worked for Paul Volker alright but caused a recession in the US and a depression in Ireland throughout the 1980s. Jean Claude Trichet almost collapsed the euro a decade ago when he tried to stay rigidly to the inflation targets. I doubt they will risk that again, they will talk the talk alright , pretend inflation is not there by not putting their measuring probes into hot places. The main issue is not prices per se but production capacity they need to ensure that all hands are on deck in the factories and farms to keep stuff produced. The issue is no longer demand shock (solved by money printing) but supply shock ( unfortunately houses cannot be printed).


----------



## PMU (7 May 2021)

WolfeTone said:


> The calamitous Irish property crash and sovereign debt crisis that ripped through the eurozone bankrupting nation states. Other than that, all good!


 
This had nothing to do with the ECB.  Irish banks operated essentially a scam by using their investors' capital as collateral to borrow euro on the cheap and then lend them on to naive investors to buy overpriced property.  It was just one big bet on inflation or 'bigger fools' coming along to  pump up property prices to allow the initial investors to sell on at a profit.


joe sod said:


> It worked for Paul Volker alright but caused a recession in the US and a depression in Ireland throughout the 1980s. Jean Claude Trichet almost collapsed the euro a decade ago when he tried to stay rigidly to the inflation targets. I doubt they will risk that again, they will talk the talk alright , pretend inflation is not there by not putting their measuring probes into hot places. The main issue is not prices per se but production capacity they need to ensure that all hands are on deck in the factories and farms to keep stuff produced. The issue is no longer demand shock (solved by money printing) but supply shock ( unfortunately houses cannot be printed).


 
It definitely showed that central banks will now use interest rate increases as the preferred policy instrument to reduce inflation; and  not wage and price controls that were previosly used. 

Trichet didn't nearly collapse the euro, but it exposed poor policy making in certain countries, e.g. Greece, Ireland, etc..  The euro really isn't a currency; it's more like a souped-up Bretton Woods agreement.  If you want to be in the euro you have to run your ecconomy in a certain way, e.g. according to the Growth and Stability Pact etc..  If you don't do this, you run into problems.  The ECB's mandate is price stablity in the eurozone - not to bail out negligent economies.  Trichet increased interest rates; inflation subsided. Result!


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## WolfeTone (7 May 2021)

PMU said:


> to borrow euro on the cheap



From who? 
Please, the ECB are charged with managing the money supply of the eurozone. The bloated Irish property market did not happen overnight. They signs were evident for years. I could see the property bubble sitting on the topdeck of the 39 bus from Blanchardstown.


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## PMU (7 May 2021)

WolfeTone said:


> From who?


Other banks and by issuing bank bonds, for example.


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## WolfeTone (7 May 2021)

PMU said:


> Other banks and by issuing bank bonds, for example.



Yes, but all of it is under the aegis of the eurozone monetary system in which the ECB tasks itself with maintaining price stability.
This is from their website

"_The ECB monitors developments in the banking sectors of the euro area and the EU as a whole, as well as other financial sectors, to identify any vulnerabilities and check the resilience of the financial system.

It carries out these tasks together with the other central banks of the Eurosystem and the European System of Central Banks.

The emergence of possible systemic risks in the financial system is addressed through macroprudential policies. The overarching goal of macroprudential policy is to preserve financial stability."_


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## Purple (10 May 2021)

WolfeTone said:


> Yes, but all of it is under the aegis of the eurozone monetary system in which the ECB tasks itself with maintaining price stability.
> This is from their website
> 
> "_The ECB monitors developments in the banking sectors of the euro area and the EU as a whole, as well as other financial sectors, to identify any vulnerabilities and check the resilience of the financial system.
> ...


Just because someone does a job badly that doesn't mean the job shouldn't be done. If the argument is that the Euro/ECB/EU should be unwound because they blundered their way into the 2008 crash then by the same logic we should get rid of our public health system. Personally I'd like to see both remain but run properly.


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## WolfeTone (10 May 2021)

Purple said:


> If the argument is



That's not the argument at all. 
I am in favour of a single currency, further integration with Europe. 
However, it has to be on the basis of a system that is workable and accountable.


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## Purple (10 May 2021)

WolfeTone said:


> That's not the argument at all.
> I am in favour of a single currency, further integration with Europe.
> However, it has to be on the basis of a system that is workable and accountable.


Yes, so improve it. I'm all in favour of that.


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## WolfeTone (10 May 2021)

Purple said:


> Yes, so improve it. I'm all in favour of that.



Exactly. The question being, how to improve it. 
You have suggested Fiscal Union earlier. I'm not against it, but how it is structured would be key. 
I would not like the Irish government to become as fiscally redundant or peripheral as the Irish Central Bank has become peripheral on the monetary side.


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## Cervelo (13 May 2021)

Brendan Burgess said:


> Hi Silvius
> 
> The CSO is excellent for answering questions from the public.
> 
> ...







__





						Consumer Price Index April 2021 - CSO - Central Statistics Office
					






					www.cso.ie


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## joe sod (15 May 2021)

Inflation has surprised to the upside in US , they were expecting 3.5% but actually hit over 4%. Wages at the low end are rising because employers in the service industry now have to pay more to entice workers back to work in restaurants and bars after getting used to the government cheques, It will be the same here given the level of our PUP payments here probably more so, therefore starting wages will need to be at least 100euros above this. Anecdotal evidence that employers are getting it very difficult to coax workers back to work, 30,000 construction workers were still on PUP last week even though construction industry supposed to be fully open with a massive backlog in construction.
The markets did not like it one bit , they are worried that the central banks will be forced to raise interest rates sooner to try and stop run away inflation even though that will be bad for government borrowing


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## joe sod (3 Jun 2021)

the oil price is continuing to rise, looks like there is no stopping it this time as the oil majors are now being restricted and are not bothering to drill for more oil due to the onerous regulations. Meanwhile Russia and Opec are unencumbered by these regulations and will take advantage of the restrictions on Western oil companies, they will be back  in control of the oil price. Obviously they do not control demand but if oil gets more expensive the Chinese will just increase their coal consumption, the price of australian coal has shot up recently as the Chinese are back buying with a vengeance. 
If anything points to inflation it is energy, looks like we are repeating the mistakes of the 1970s except this time we are embargoing the oil rather than the arabs .


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## kinnjohn (11 Jun 2021)

There is not much inflation in my day to day grocery food-shopping,   Inflation is all around us at present once you take grocery food shopping out,

It may take a little while longer for inflation to be passed on through price increases but inputs have gone up in lots of areas,


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## joe sod (12 Jun 2021)

The whole reason inflation is being played down is because overindebted government's need to keep borrowing at ultra low interest rates. The Irish government had to pay slightly more interest rates last week in their last bond auction.That's the real issue how does the ecb retract from quantitative easing and allow the normal bond markets to function normally?


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## kinnjohn (12 Jun 2021)

I don't really have a view  on whether it is played down or not
When things open up more after Covid  and retailers start to replace existing stock and start passing on the large increases  we will see problems with Inflation,
many  retailers will have cash flow problems who give credit terms, such as hardware stores and building suppliers, I expect to see price Increase  more than inflation to cover losses on Items sold on credit ,


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## noproblem (12 Jun 2021)

Different countries as far as I know have varying methods by which they measure inflation. Ireland may have high inflation while someone in a country beside us have a lower rate. You'd wonder at times about the reality of it all.


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## Gordon Gekko (13 Jun 2021)

joe sod said:


> The whole reason inflation is being played down is because overindebted government's need to keep borrowing at ultra low interest rates. The Irish government had to pay slightly more interest rates last week in their last bond auction.That's the real issue how does the ecb retract from quantitative easing and allow the normal bond markets to function normally?


No, that’s the whole point of monetary policy these days.

Get inflation ahead of interest rates.

e.g. borrow €30bn in 2011 to backstop Anglo Irish Bank, and repay it in 2040.

€30bn then is less than €30bn now.


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## joe sod (13 Jun 2021)

Gordon Gekko said:


> No, that’s the whole point of monetary policy these days.
> 
> Get inflation ahead of interest rates.
> 
> ...


But inflation never went negative like interest rates did, there was always positive inflation ? Is monetary policy  really about inflation at all , until it really is about inflation. Joe Biden  has let the genie out of the bottle and he has unleashed inflation, it's back  to 1970s , the oil price is on a tear and nothing sparks inflation like the oil price, it never went away you know. Oil consumption will be back above 100 million barrels per day next year resuming its long-term upward trajectory. Biden will bookend his political career with another 1970s style inflationary spiral


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## kinnjohn (13 Jun 2021)

noproblem said:


> Different countries as far as I know have varying methods by which they measure inflation. Ireland may have high inflation while someone in a country beside us have a lower rate. You'd wonder at times about the reality of it all.


Yes,
Take a look at The way the USA measure  inflation,
I don't know about Ireland Some Countries measure
 Gross Domestic Purchase price Index featured/ measure  of Inflation in their economy
The Index measures the price of goods and services purchased by their residents regardless of where the goods and services were produced

It Shows Quarterly Percent Change from Preceding Quarter
There is a  built-in released every Month showing a  % of Inflation  Deflation each month until the next Quarter in published,

Seeing Ireland is in the EU it may not be as easy to Measure, but Ireland should be publishing a monthly guide to Inflation/deflation in there Economy,


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## PMU (14 Jun 2021)

Gordon Gekko said:


> No, that’s the whole point of monetary policy these days.
> 
> Get inflation ahead of interest rates.
> 
> ...


It just doesn't work that way when you dont have control of your own currency, i.e are in the eurozone.    The ECB's monetary policy objective is price stability; not bailing out overborrowed member states.


joe sod said:


> But inflation never went negative like interest rates did, there was always positive inflation ? Is monetary policy  really about inflation at all , until it really is about inflation. Joe Biden  has let the genie out of the bottle and he has unleashed inflation, it's back  to 1970s , the oil price is on a tear and nothing sparks inflation like the oil price, it never went away you know. Oil consumption will be back above 100 million barrels per day next year resuming its long-term upward trajectory. Biden will bookend his political career with another 1970s style inflationary spiral


 
Ireland had negative inflation (i.e negative annual CPI) in 2009 (-4/5%), 2010 (-1.0%), 2015 (-0.3%) and 2002 (-0.3%) and zero inflation in 2016. The last time our inflation exceeded the ECB's 2% target rate was in 2011 (2.6%, but this was after two years of negative inflation).  (http://www.cso.ie).
The eurozone HICP is currently 1.6% so it is doubtful if there is any pressure on the ECB to increase interest rates in the short term.


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## kinnjohn (14 Jun 2021)

But there is no real breakdown of which  sectors in the Irish Economy led to deflation in 2009/2010 that I can see and who gained lost as a result,


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## joe sod (14 Jun 2021)

PMU said:


> It just doesn't work that way when you dont have control of your own currency, i.e are in the eurozone. The ECB's monetary policy objective is price stability; not bailing out overborrowed member states.


But is that not what the ecb's policy is on the surface, initially that was the strategy followed by trichet he followed the euro rule book to the letter and almost collapsed the euro during the financial crisis . Since draghi took over they changed tact then they eased monetary policy in order to keep the over indebted countries on board . As you rightly pointed out Irish inflation does not count but German inflation has spiked up now, are the ecb going to rush in to quench the flames of German inflation ? That is the test but I doubt it because I believe the over borrowed member States are now wagging the tail of the ecb. Lagarde is a liberal anyway she is not a technocrat but a quasi politician so that's where she will sway.


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## skrooge (14 Jun 2021)

kinnjohn said:


> Seeing Ireland is in the EU it may not be as easy to Measure, but Ireland should be publishing a monthly guide to Inflation/deflation in there Economy,



Might I suggest you look at the CSO website. They are the authority responsible for collecting price statistics. These figures are reported regularly - monthly no less



kinnjohn said:


> But there is no real breakdown of which  sectors in the Irish Economy led to deflation in 2009/2010 that I can see and who gained lost as a result,



Again the CSO publish detailed info on the components of the CPI/HICP. 

Would the 234 difference series do you? 



			https://data.cso.ie/table/CPM16
		


As for winners and losers in 2010- very subjective

Biggest decreases related to mortgage payments - this likely reflects collapse in house prices. 

Biggest increase in prices - health insurance and third level education. 

I don't remember either homeowners or students being classed as winners back then.


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## kinnjohn (14 Jun 2021)

Thanks, skrooge
I think people pick up inflation away faster than the above reports for some reason,
For the last few months I know there is a big increase in building and material supplies I don't see it reported on any website so far,

It is news to me that your Mortgages goes down when your house price collapse how did you come up with that,Must be in the 234 difference series you found it in

Most students and their parents were winners back then rents fell, buy to let owner/landlord lost the most  landlords with no mortgage may not have lost as much, is their detail/reports showing the different type of landlords,

One I was wondering about is if they reform taxing company profits to where most of their sales are made will it drive up inflation, in other words, will the consumer finish up paying the extra tax on the items bought,


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## skrooge (15 Jun 2021)

kinnjohn said:


> For the last few months I know there is a big increase in building and material supplies I don't see it reported on any website so far,



In addition to the CSO website might I recommend you broaden your horizons to include  RTE



			Concern at impact of increased building materials costs
		




kinnjohn said:


> It is news to me that your Mortgages goes down when your house price collapse how did you come up with that,Must be in the 234 difference series you found it in



You need to stop and think what the CSO are trying to measure. What you have in your mind is not inflation in the the strictest definition.  

The CPI measures the price of transactions for a given month. The cost of buying a house moves in line with prices. Existing homeowner's/mortgage holders are not included as they are not new transactions. You could argue remortgaging should be in there (and maybe they are) but they are dwarfed by the scale of new purchases in any month. 




kinnjohn said:


> Most students and their parents were winners back then rents fell, buy to let owner/landlord lost the most  landlords with no mortgage may not have lost as much, is their detail/reports showing the different type of landlords,



A very property-related/blinkered view on things - the rate of youth unemployment  was between 25%-33% in 2010 - you could hardly class that as winning.


			https://www.google.com/url?sa=t&source=web&rct=j&url=https://enterprise.gov.ie/en/Publications/Publication-files/Forf%25C3%25A1s/Profile-of-Employment-and-Unemployment.pdf&ved=2ahUKEwi888arj5nxAhXhmFwKHUyxDxcQFjADegQIHBAC&usg=AOvVaw2vsPN6VySSktQiAyElpho6


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## Protocol (15 Jun 2021)

kinnjohn said:


> For the last few months I know there is a big increase in building and material supplies I don't see it reported on any website so far,



There has been widespread reporting of rises in building materials costs.


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## Protocol (15 Jun 2021)

kinnjohn said:


> One I was wondering about is if they reform taxing company profits to where most of their sales are made will it drive up inflation, in other words, will the consumer finish up paying the extra tax on the items bought,



Your query is really about the *incidence *of taxation, as in who actually pays a tax.

Who pays the higher excise on tobacco?

The tobacco company send the payment to Revenue, but the customer actually pays the tax.


Who pays CT? That is a good question.

It is one or more of:

(1) staff
(2) customers
(3) shareholders


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## kinnjohn (15 Jun 2021)

Protocol
 Reform of Corporation tax that leads to an increase in taxation will hit all companies and Countrys at the same time, for each country to get its fair share of CT tax will have to be linked to the location item is sold in, the question is will this lead to inflation,
There is a good chance CT tax increases will finish up being built into the costing from now on as part of the tax reform,


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## Protocol (15 Jun 2021)

You are presuming that retail prices are affected by CT rates.

When Trump cut CT from 35% to 21% in 2018 in the USA, did that lead to falls in consumer prices?

I don't think so.

The UK has cut CT several times over the last few years, from 30% to about 20%.

I never read anything to suggest that might cause less inflation.


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## joe sod (15 Jun 2021)

I had a look at the cso inflation statistics for 2020 and 2021 @Protocol it shows that it actually went slightly negative in 2020 -0.46% and only 1.6% so far this year. It seems curiously low in comparison to other countries, big spike in inflation in UK , US and Germany now over 4 % in some cases. Also the curious negative inflation here in 2020 did not happen in either of these countries , they still had positive inflation rates. Can you explain why is this ? What is different about Ireland that we are avoiding inflation even though employers in many cases cannot get employees for lower paid jobs and the oil price has spiked?


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## kinnjohn (15 Jun 2021)

Protocol
I don't want to take tread off course
would the result be the same if they insisted CT went up another 5% extra and this 5% has to be forwarded on to another country where their product finally sold they would have to put systems in place to catch the extra CT the easiest way is to build CT into the price,
The question is would they have take a hit on the 5% tax or passed the extra tax on to the final customer,


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## skrooge (15 Jun 2021)

joe sod said:


> I had a look at the cso inflation statistics for 2020 and 2021 @Protocol it shows that it actually went slightly negative in 2020 -0.46% and only 1.6% so far this year. It seems curiously low in comparison to other countries, big spike in inflation in UK , US and Germany now over 4 % in some cases. Also the curious negative inflation here in 2020 did not happen in either of these countries , they still had positive inflation rates. Can you explain why is this ? What is different about Ireland that we are avoiding inflation even though employers in many cases cannot get employees for lower paid jobs and the oil price has spiked?



I'd be careful looking too closely at the cross-country comparisons over the last 18 months. Lockdowns at various different times in different countries might explain some of the difference.


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## kinnjohn (15 Jun 2021)

Lots of lower-paid jobs In Ireland are about to get pay increases Child care just to name one will have a knock-on effect on other areas,
 More Regulations means what once was a low-paid job is now a specialist  job commanding higher pay, and getting higher by the day,


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## joe sod (15 Jun 2021)

skrooge said:


> I'd be careful looking too closely at the cross-country comparisons over the last 18 months. Lockdowns at various different times in different countries might explain some of the difference.


But surely the reasons why inflation is low or high need to scrutinized, if it is indeed the case that Irish inflation was lower than internationally because of lockdowns we should be able to find this out. Should the esri not be tasked with going into these statistics to find out any anomalies . The impression from this thread seems to be the cso is the authority on this you don't need to worry your little mind anymore?


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## skrooge (15 Jun 2021)

joe sod said:


> But surely the reasons why inflation is low or high need to scrutinized, if it is indeed the case that Irish inflation was lower than internationally because of lockdowns we should be able to find this out. Should the esri not be tasked with going into these statistics to find out any anomalies . The impression from this thread seems to be the cso is the authority on this you don't need to worry your little mind anymore?



Not at all. My point was any cross-country comparison needs to be mindful of the environment. These are not normal times. Locking people in their homes for 4 months, subsiding their income and then letting them out is going to lead to an increase in inflation. The timing when those corks go pop will skew comparisons. No one in their right mind would set policy on such volatile events. 





__





						Information Note on Implications of COVID-19 on the Consumer Price Index - May 2021 - CSO - Central Statistics Office
					






					www.cso.ie
				




The CSO do an excellent job of giving people a break down of what's contributing to an increase in the price indices.





__





						Consumer Price Index May 2021 - CSO - Central Statistics Office
					






					www.cso.ie
				




As for authorities looking at inflation you make it sound like no one is looking at this.  The central bank, esri all do. For example



			https://www.google.com/url?sa=t&source=web&rct=j&url=https://centralbank.ie/docs/default-source/publications/economic-letters/vol-2020-no-1-evaluating-the-determinants-of-irish-inflation-(byrne-and-zakipour-saber).pdf&ved=2ahUKEwingbna-JnxAhWzoFwKHdYfBuIQFjACegQIGRAC&usg=AOvVaw1fVfv3i7iknSk7OhDCuIf5&cshid=1623771218759


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## kinnjohn (15 Jun 2021)

Today in the Dail Fianna Fail's Daragh  Calleary speaking about the Mica redress scheme, The rising cost of construction means proposals made just a few months ago  are (are already out of date, is this inflation showing up on the monthly CSO monthly reports and the Inflation % shown,


skrooge said:


> Might I suggest you look at the CSO website. They are the authority responsible for collecting price statistics. These figures are reported regularly - monthly no less


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## skrooge (15 Jun 2021)

kinnjohn said:


> Today in the Dail Fianna Fail's Daragh  Calleary speaking about the Mica redress scheme, The rising cost of construction means proposals made just a few months ago  are (are already out of date, is this inflation showing up on the monthly CSO monthly reports and the Inflation % shown,



Property again? 

I don't know about you but I think the typical household in Ireland does not (re)build a house month-to-month. 

Remember the CPI (or consumer price index) measures the typical households typical expenditure in a month. You can't shoehorn everything in there.


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## Protocol (16 Jun 2021)

The CPI tracks the prices of consumer goods and services.

Building contractor rates to build a new house are not a consumer good or service.


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## kinnjohn (16 Jun 2021)

skrooge said:


> Property again?
> 
> I don't know about you but I think the typical household in Ireland does not (re)build a house month-to-month.
> 
> Remember the CPI (or consumer price index) measures the typical households typical expenditure in a month. You can't shoehorn everything in there.


I don't build a house every month,
My first post clearly stated my weekly grocery bill has not gone up, but household items have increased quite a bit,
You don't have to be building a house to go to the hardware store and buy items also used in new houses,

When I posted the title of this thread was Increase in Inflation Recently and I responded ,


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## skrooge (16 Jun 2021)

Mica redress - which you referenced in your earlier post - is hardly small maintenance.

I'll reiterate my earlier advice - look at the CSO link I posted and you'll see what goes in, how much it has risen by and the weight it gets in the overall index (table 7 in particular)


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## kinnjohn (16 Jun 2021)

Hi, scrooge
 again thanks for the link,
 Retired now, When I was working,  I spent some time in the USA with the company I was working with I was there at the start of the last crash,

, I remember they had for the want of a better word an index which showed % of inflation/deflation in each sector which was very helpful,
I don't think Ireland  has anything like it that I know of when I get a chance I will see can I find it,

The only reason I mentioned Mica redress was that a TD had acknowledged that Inflation In Ireland is so high costings a few months old are already well out of date which is a cause for concern and we have no system in place to flag it,

We seem to be more interested in defending existing reporting systems, TDs seem to be aware of high inflation but we do not seem to be want to know unless it affects us directly not realizing our cost base long term affecting us all in the long run,

In other words, we need to know and be on top of  Irish inflation and have systems in place to flag Irish Inflation and what is driving it, and know the reason if it is out of kilter with other Countries Inflation,

I think we already know/ agree the CSO is very helpful but we need to flag Irish Inflation which makes us uncompetitive against our trading partners,
Even more so now seeing our Corporation tax status may change,


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## ATC110 (16 Jun 2021)

My dentist increased the personal contribution for a PRSI-funded check-up, scale and polish by 66% without prior notice from €15 to €25


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## joe sod (8 Jul 2021)

An article in the independent today about the "return of nasty inflation" under a picture of Christine lagarde. Surely the cso statistics must be picking this up by now. Everything is going up, fuel, energy, drink and food , services etc. The ecb are saying that it is a temporary phenomenon but of course they would say that now. What happens if it isn't ? Looks like they will play down inflation and under measure it , governments hooked on negative rates could not deal with an increase in interest rates.


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## Sarenco (8 Jul 2021)

joe sod said:


> Surely the cso statistics must be picking this up by now.


They are -

*June 2021*


*CPI and HICP*​CPI​​HICP​% monthly change​% annual change​​% monthly change​% annual change​Feb 20210.4​​-0.4​​0.3​​-0.4​Mar 20210.8​​0.0​​0.9​​0.1​Apr 20210.7​​1.1​​0.6​​1.1​May 20210.1​​1.7​​0.2​​1.9​Jun 20210.2​​1.6​​0.1​​1.6​
*Prices rise by 1.6% in the year to June 2021 *


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## Sarenco (8 Jul 2021)

joe sod said:


> Looks like they will play down inflation and under measure it


Have you any evidence that the CSO is deliberately understating inflation or is this just another conspiracy theory?


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## Purple (8 Jul 2021)

ATC110 said:


> My dentist increased the personal contribution for a PRSI-funded check-up, scale and polish by 66% without prior notice from €15 to €25


Find a different dentist.


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## kinnjohn (8 Jul 2021)

Purple said:


> Find a different dentist.


I think you posted not that long ago Doctors Dentist and such like sing from the same hymn sheet and I agree,

I made an appointment to go to the dentist I normally use they were pushing the appointment over a month,

I checked around to see could I get a dental appointment sooner tried several dentists
 the all to be fair pointed out that cost had gone up and provided new prices before agreeing to take bookings,


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## joe sod (9 Jul 2021)

Sarenco said:


> Have you any evidence that the CSO is deliberately understating inflation or is this just another conspiracy theory?


No of course not, I don't work in the cso , I don't earn 100k plus , I actually have a regular job that takes most of my time. I'm giving an opinion that the cso and other European agencies are not actually measuring inflation fully, it's like their measuring probes are being kept away from the fire and and are not detecting fully the heat.

I just think it is convenient not to fully measure inflation because then they don't need to react to it. I'm not singling out the cso because they are using the European metrics since we are in the euro and it is the ecb job to respond or not to inflation. My strong opinion is that inflation is much higher than what is being stated in the statistics.


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## Leo (9 Jul 2021)

We don't do conspiracy theories...


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