Mugged by inflation — again

It was Ronald Reagan who warned that ‘inflation is as violent as a mugger, as frightening as an armed robber and as deadly as a hit man’. Having just worked out that my personal rate of inflation is running at a scary 6.6 per cent, I know exactly what he meant.

A few months ago Britain’s official statisticians began to panic. They had realised that nobody believed their figures any more. With school fees, gas bills and the cost of car insurance soaring, many people — especially pensioners and middle-class consumers — laughed through gritted teeth when told that inflation remained at rock-bottom. In desperation, the number-crunchers decided to launch a personalised inflation calculator by which anybody can work out what is happening to their cost of living; but instead of making the official numbers more credible, it is having the reverse effect.

The calculator is available on the Office for National Statistics’s website and I recommend it to all Spectator readers. They will discover a very different picture from that painted by the national figures, even though these are finally beginning to show the soaring prices that the rest of us spotted long ago.

According to the main consumer price index (CPI) targeted by the Bank of England — which excludes house prices, various housing costs and council tax — inflation is at 3 per cent. Although this grossly underestimates the extent of the problem, it is the index’s highest reading since it was introduced a decade ago. The alternative retail price index excluding mortgage payments (RPIX), which the Bank used to target and which includes many of the costs omitted by the CPI, tells us that price increases have reached 3.8 per cent, the highest rate since 1992.