More sophisticated analysis than standard approach says underlying rate dropped to 6.8% in July
, which simply excludes food, energy and alcoholic drinks from the overall measure, the new ONS methodology works out what it called the “common trend component” that shows the rate of price rises across all goods and services.
This seeks to minimise the remaining volatile element for every measured item in the basket of goods and services. Some prices, such as petrol, diesel, gas and electricity tend to move independently from other goods and services, so have a high volatile component and low common component. Electrical goods, which have decreased in price over many decades, are equally seen to be poor predictors of underlying inflationary pressures.
The ONS said the research suggested that restaurant prices were by far the best indicator of overall underlying inflation because they changed at the same time as the prices of most other goods and services either rose or fell. This means that the prices in McDonald's, PizzaExpress or Nando’s have been “a good measure of the underlying trend in consumer prices inflation in the UK economy”, it added.
Statisticians speculated that this trend resulted from restaurants reflecting rent, energy, food and labour costs, “so price movements often reflect the same broad shocks that impact the majority of items in the index”.
Belgique Dernières Nouvelles, Belgique Actualités
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