Inflation - Difference by Country

[Oliver Hardy]

Note inflation hit 11% today in the UK, but I am curious how is inflation so much greater in some countries than others?

Why is inflation so much smaller in Switzerland than Germany for example, why s Polish inflation suddenly gone far higher then the UK.

I am sure it is very complicated but anyone care to do a for dummies version?

[shambolic]

They don’t have a self serving Tory government full of Eton educated nincompoops.

[SS9]

My immediate guess would be something to do with import/export economy and how much control they have on supply/demand and thus pricing. I’m sure someone far more intelligent on economics will be along shortly with the correct answer.

[craigjm]

It depends on how the economy structured and what is in demand in that economy and the level of supply to meet that demand. Different countries get their energy from different sources for instance so some countries will see more energy inflation than others. Same with food, some counties have bigger demand for certain items that may or may not be in scarce supply. The make up of the employment sector has an impact too whether services, manufacturing or agriculture etc and level of demand. Complicated recipe per country. In the same way I’m reality that everyone’s personal inflation rate is different depending on what they consume

[wisbech]

Also, the Swiss franc has got much stronger, so imports (in Swiss terms) are not going up in price as fast as they are in Germany.

As an example, oil is priced in dollars. If one currency drops 10% vs dollar, and another gains 10%, that will mean very different price changes (in local currency) for fuel.

[markiii]

since our government decides what products they put in the basket from which they calculate inflation, I suspect other governments do to.

Chances of all picking the same basket I suspect are slight,

so are we really comparing apples with apples?

[Oliver Hardy]

markiii said:

since our government decides what products they put in the basket from which they calculate inflation, I suspect other governments do to.

Chances of all picking the same basket I suspect are slight,

so are we really comparing apples with apples?

TRue, but you can still track trends of inflation?

[Caddyshack]

Oliver Hardy said:

markiii said:

since our government decides what products they put in the basket from which they calculate inflation, I suspect other governments do to.

Chances of all picking the same basket I suspect are slight,

so are we really comparing apples with apples?

TRue, but you can still track trends of inflation?

You can but if the items in their basket are dropping in cost whilst ours go up then it skews the numbers. They may be benefitting from profit from rising value imports that we are buying at rising cost.

[Simpo Two]

shambolic said:

They don’t have a self serving Tory government full of Eton educated nincompoops.

Top class-warring, very insightful. What's your answer for the rest of Europe then?

https://www.statista.com/statistics/225698/monthly...

[craigjm]

Caddyshack said:

Oliver Hardy said:

markiii said:

since our government decides what products they put in the basket from which they calculate inflation, I suspect other governments do to.

Chances of all picking the same basket I suspect are slight,

so are we really comparing apples with apples?

TRue, but you can still track trends of inflation?

You can but if the items in their basket are dropping in cost whilst ours go up then it skews the numbers. They may be benefitting from profit from rising value imports that we are buying at rising cost.

Inflation is just a theoretical average anyway. Everyone’s personal rate of inflation is different depending on their lifestyle, circumstances and preferences.

[rich40]

Inflation is the symptom of the money supply increasing faster than productivity.

Differences between countries caused by different rates of increase of money supply vs productivity.

[wisbech]

rich40 said:

Inflation is the symptom of the money supply increasing faster than productivity.

Differences between countries caused by different rates of increase of money supply vs productivity.

In a perfect world. However, increases in money supply can also end up in asset inflation, which can be hard to distinguish sometimes from supply/ demand price changes.

e.g. beachfront property.

[OutInTheShed]

Exchange rate means UK GBP prices have to rise faster than worldwide USD prices.

Many things going on.

[Jordie Barretts sock]

rich40 said:

Inflation is the symptom of the money supply increasing faster than productivity.

Differences between countries caused by different rates of increase of money supply vs productivity.

When you say money supply, you don't mean physical notes do you? You mean access to credit, etc? Because actual note supply is regulated by demand isn't it? To simplify, if I go to the cashpoint, I can only take out what is in my account.

[rich40]

I mean any money that can buy things. Digital or physical.

[Jon39]

In the UK you have a choice of inflation figures.

Widely used for a long time. .... Retail Price Index - October 2022 ............... 14.2%
In use more recently. ................ Consumer Price Index - October 2022 ....... 11.1%

I think it might have been under Gordon Brown, when the CPI measurement started to be favoured.
They gave a very detailed explanation about why it is much better.
However, CPI always tends to be a lower figure than RPI.

The government now use CPI for outgoing payments (benefits, pensions etc.), but funnily enough, still use RPI for a few payments that we make to government departments. That is possibly a pure coincidence. -

Edited by Jon39 on Saturday 19th November 21:53

[rich40]

Not sure how they do it in the UK but in the US they have something called substitution. For example, if the price of a prime steak goes up by too much they will substitute that steak with one of lesser quality so its more "representative" (aka pushing the inflation number down). Also treating Twix bars (for example) as the same even though they are half the size that they used to be etc etc etc. Long story short I'm not sure the "official" numbers can be trusted.

"substitution, the change in purchases by consumers in response to price changes, changes the relative weighting of the goods in the basket" https://www.investopedia.com/articles/07/consumerp...

[fido]

The biggest increases are in food and energy. If you can make your own, or use less of it (e.g. working from home instead of commuting if service sector) the better. Even in Norway with oodles of cheap energy - inflation is nearly 6% - so we're not doing too badly in the circumstances.

[NRS]

fido said:

The biggest increases are in food and energy. If you can make your own, or use less of it (e.g. working from home instead of commuting if service sector) the better. Even in Norway with oodles of cheap energy - inflation is nearly 6% - so we're not doing too badly in the circumstances.

Norway was hit with European power prices in the south of Norway, since the electricity systems are linked up to the UK and mainland Europe. In the north (not many people live there) it was very cheap. They were also running low on water so are now importing electricity from Europe to avoid running out in winter (no rainfall to top up dams as it's all snow/frozen).

[fido]

NRS said:

Norway was hit with European power prices in the south of Norway, since the electricity systems are linked up to the UK and mainland Europe. In the north (not many people live there) it was very cheap. They were also running low on water so are now importing electricity from Europe to avoid running out in winter (no rainfall to top up dams as it's all snow/frozen).

Don't we also import hydroelectric power from Norway? I guess it's to do with peak load and they use us like a battery.