The Real Cost of Living ? and Why the Inflation Rate Tells a Different Story

It may well be above the Government?s target of 2%, but to most UK households, a 3% rise in average costs would be affordable, if a little inconvenient. To those of us keeping a close eye on our finances, the official 3% inflation rate might seem a little short of the mark.

In reality, the UK has recently experienced some much sharper rises in costs of living that are putting many people under serious financial strain.

It?s clear that the official inflation rate does not tell the full story. For that reason, The Telegraph recently reported on the Real Cost of Living Index (RCLI): an unofficial inflation measure designed to map out how much more each year the average British citizen is paying out for their essential costs of living ? those that are unavoidable without making significant lifestyle changes.

RCLI: how is it different to official measures?

The Real Cost of Living Index aims to give a realistic weighting to the essential costs of living, which The Telegraph says ?provides a more realistic picture of costs faced by hard-working families?. In particular, this includes housing (i.e. mortgage/rent), groceries, utilities, transport and taxes.

The current RCLI rate of inflation has been measured at 9.5% - over three times the official inflation rate of 3%.

To date, the Government have relied on the CPI (Consumer Price Index) and RPI (Retail Price Index) measures of inflation. Both measure the change in prices of a vast range of goods and services (known as the ?basket of goods and services?), intended to represent the average buying habits of the British public.

There?s a problem with this method: for your own rise in costs to mirror inflation, you would have to buy everything in the Government?s ?basket?, in the right quantities. In reality, each individual is only likely to buy some of these.

Considering that a reasonable proportion of household spending is taken up by groceries ? of which The Telegraph reported a 23% yearly rise in average prices ? it could be argued that the 3% inflation rate proves that CPI doesn?t give a clear enough picture of how or where prices are rising.

Why would official inflation figures conflict with real-life experience?

It?s a matter for great debate as to exactly why the official inflation rate of 3% falls short of so many real-life experiences. One explanation is that CPI does not include council tax and mortgage costs ? two major expenses to any homeowner. But RPI does include these, and even RPI inflation is only 4.2%.

Government inflation measures give different weightings to items according to the perceived importance to the average person?s budget. But the much higher RCLI inflation figures suggest that essential costs of living are not being weighted highly enough in the official statistics.

What?s more, the Government has increasingly included items in their figures that are known to be steadily falling in price ? most notably consumer electronics. This, along with items that experience little or no change in price, may go some way to neutralising the effect of such large rises in costs of living. And this could make the inflation rate look unrealistically low.

Are inflation figures transparent?

Some critics have suggested that items in the ?basket? may be chosen for political reasons, rather than for an accurate representation of costs of living. There are a number of reasons why this could be the case.

Steady inflation

In many ways, a low-inflation Government is seen as a successful Government. The last time the economy really struggled was under the Conservatives in the early 90s ? and this was cited as a major factor in their loss of power. 3% inflation is by no means a low rate of inflation, but it?s a lot better than 9.5%.

Risk of a downturn

On the other hand, announcing an official inflation rate of 9.5% could be devastating to the economy. In times of uncertainty, a large part of recovery is down to consumer and lender confidence.

High inflation means money is technically worth less ? so people are poorer, and spend less. If companies give pay rises in line with high inflation, the prices which cause inflation are sustained, and may continue to rise. If they reach a certain point too quickly, demand will suddenly fall ? meaning business are stuck with high costs that are not being met by demand, and may be forced to make cutbacks. If this results in above-average unemployment, companies are hit by a further reduction on demand, which could lead to further cutbacks ? potentially sparking economic recession.

The rise in costs of living may well be higher than inflation would suggest ? but the inflation rate affects consumer confidence. In this sense, an unrealistically low inflation figure could in fact save the economy from further damage.

Is it accurate?

Thirdly, a 9.5% inflation rate wouldn?t give the full picture. Yes, some of the most significant costs of living are rising at this rate ? but the costs of many other goods and services aren?t. For example, the average consumer does not need to spend 9.5% more of their disposable income on things like CDs, DVDs, books, trips to the cinema, and pints of beer than they did this time last year.

only then would it be clear just how much are costs are rising, where they are rising, and how much of a problem it is. With increases in essential costs of living varying so wildly from that of other goods and services, it might be more accurate to release different figures for different areas of the economy ? together and measuring the average rise in costs isn?t accurate enough?

With that in mind, could it be that grouping a ?basket of goods and services?

Regardless of whether they publicly acknowledge it, the Government may well take a 9.5% rise in these costs very seriously. It measures costs which have a huge impact on how much we have left as disposable income. However inflation is measured, the Real Cost of Living Index is an important figure.

Seven Tips to Get the Money You Want

That was 3,000 years before Christ. According to Brian Tracy 's book "The 100 Absolutely unbreakable laws of business success", this law was discovered since the old Egyptian era. I was deadly wrong. May be it was found a few decades ago.

I thought that the law of attraction was discovered a few years back.

Instead, evil mind came from the infatuation of money. The evil mind does not come from money. Although many people do not want to emphasize on money since many relate money with evil mind. In this article, we will talk directly toward money.

Here are the seven steps to make money including:

1. Know how much money you want and at the certain point of time. Although most people want money, not many people gladly accept that they do things for money.They do not want to accept that their biggest aspirations is becoming a rich person.

If you do not accept that, you will not have a chance to earn the money you want. Make decision to accept that you want money and specify how much money you want. Once the number is up, you will now have the target to achieve.

2. Evaluate your current status. You need to appraise on yourself before you decide to go for a plan for attracting money. You should do the appraisal on not only how much money you have at the moment but also on your ability to make the money. Do you need to acquire any additional skills? At the current status, what you need to learn more so that you can qualify earning such amount of money. How long do you need to prepare yourself to this? Write down your status quo so that you know your starting point.

3. Know how you would acquire that amount of money. You certainly have certain skill to earn money. However, we need know in what will be the most possible way to work for until you get that amount you want. Most of the people do not see in what way they are going to make it. You may not know it now but it is your job to find it out. Once you find out, you will stick to it until you achieve your goal.

4. Create your future plan. Draw up a plan. The result comes from actions. All you need is the activity plan so that you can do something. Write down your plan and pursue it. Make plan to earn, to save, and to invest properly during the assigned period.

5. Fill in the blanks. Along the way of your money making plan, we may not have full information on what the circumstance will be. You may need to add that by yourself when time comes. Fill in the blanks in your plan. Adjust the method according to the situation. Once you get more information, come back to your plan and make sure that you have the right puzzle for your game plan.

Regular visualization will help you achieve results faster according to the law of attraction. See the pictures as if it is real. What you can contribute to others.

What you are going to give out? What you are going to buy? Visualize what you will be like if you have achieved the amount of money you want. See yourself as already a successful person.

Visualize yourself in Success. 6.

Being flexible on your approaches will help enable you to finally get the money you want to make. You must know your progress so that you can decide if you should continue or you should change your approach. There must be some area that you are not excel in and you may fail in some steps. Revision is a very important step to follow since you will not be successful on everything you do.

Review your plan every month. 7.