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Wednesday, July 16, 2014

women power ... summer cloth sale pushes up Inflation in UK

Come the Festival season ~ crowds in Textile bazaar of T Nagar – Nalli, Kumaran, Pothys, Chennai Silks, Saravana … and more – would swell ….in every magazine you will find jokes on ‘shopping women and poor husbands waiting (im)patiently’…… one can find allocated places for waiting – some jokes would say that waiting hubbies would get coffee, tiffin and more as their waiting would get extended to many hours !  By some yardstick – purchasing power of people is increasing and people tend to buy more no. of garments (read sarees / chudidars) than the past generation used to …. –there is a common description - "too much money chasing too few goods".

Elsewhere in UK there is news that food price rises and delayed summer clothes sales by high street retailers lifted Britain's inflation rate to a five-month high in June, well above forecasts. The bigger-than-expected rise in the consumer price index (CPI) measure of inflation to 1.9% in June from 1.5% in May will further cloud the picture for Bank of England policymakers as they weigh up price pressures in the economy and decide when to raise interest rates from their record low.

There tends to price rise – people ends up spending more than what they used to – the money value going down – the purchasing power kneels … that is ‘Inflation” - defined as a sustained increase in the general level of prices for goods and services. It is measured as an annual percentage increase. As inflation rises, every Rupee you have buys a smaller percentage of a good or service.  The value of Rupee does not stay constant when there is inflation.  In India, we have the Consumer Price Index (CPI) -– more specifically - All India Consumer Price Index (General) for Industrial Workers (Base 1982=100).  Back home, inflation has risen  to 5-month high of 6.01 per cent in May. The Wholesale Price Index (WPI)-based inflation was 5.20 per cent in April and 4.58 per cent a year ago in May.

In our Nation, the Consumer Price Index (CPI) is calculated using :
a) Market prices for 252 items as collated  by the Officials of Department of Statics and Department of Posts. 
b) The   all   India   weights given  the  each  category   of  items  such  as  food 49.71%,  housing 9.77 % , fuel  9.49% , footwear 0.68% transportation 7.5 %, Medical 5.31 % Personnel care 2.92 % & Miscellaneous 26.31 % total 100% . CPI points are determined using this all India weights and prices of the 252 items.  ~ and here is something (from Daily Mail) on what has pushed up inflation in UK …. Perhaps the same is the reason here too ……

The newsitems states that inflation rose sharply last month – driven in part by a surprise hike in the price of women’s clothes. A combination of retailers delaying summer sales thanks to the economic upturn, and the cost of women’s clothing rising 0.6 per cent in June helped push up inflation from 1.5 per cent to 1.9 per cent. Over there every month, 180,000 prices for 700 different items are logged by the Office For National Statistics to work out Britain’s level of inflation. It said women’s clothing has a bigger impact on that basket of goods than men’s clothing, meaning the price rises had a stronger influence on the inflation figures.

Richard Campbell, of the ONS, said it might be linked to the timing of summer sales. He added: ‘There may be less of an incentive to discount. Why put things on sale when people are coming through the door anyway?’  The ONS said there were ‘upward contributions from nearly all items, the largest from trousers and skirts’. Its figures show the amount of clothes being bought and the amount of money being spent on them has been increasing in recent months. The  economists warned against the rise in inflation triggering an immediate increase in interest rates. The Bank of England has kept the base rate frozen at 0.5 per cent since March 2009.  David Kern, of the British Chambers of Commerce, said: ‘The increase in inflation in June should not spark a knee jerk reaction on interest rates by the Bank of England’s monetary policy committee.

So women influence more (the price rise) and determine the inflationary trends for other goods ! 

With regards – S. Sampathkumar

16th July 2014.

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