Tuesday, 7 June 2011

J. Sainsbury's Guide To Inflation Rates

Just came back from my local Sainsbury's lugging two bags of shopping...

The bags are heavy, and whenever there's a strong pull on my arms I get thinking. Why this happens is a subject for another post (or maybe a case study for your local university hospital). Right now, the interesting thing is that I have realised that you don't need no fancy financial experts to tell you inflation rate as long as you are well off enough to be able to shop regularly at Sainsbury's and make sure you always fill your bags to capacity (both theirs and yours - no point, or at least no fun, knowing inflation rate when your arms are sore). But back to the point, that is how to use your local Sainsbury's to calculate inflation rate. So, just go shopping as you would normally, but keep half an eye on the amount you get when you divide your till total with the number of bags you carry out of the supermarket. Track this for a period of time, and lo! You get your inflation rate.

Let's see how it works in practice...

I happen to remember that, in summer 2001, an average bag of Sainsbury's shopping used to cost roughly £10. Today, on summer of 2011, it is close to £15 as makes no difference. Now, if you're doing this over more than a year, as I am, you do need some fancy tools to tell you yearly inflation rate. It's usually not much use knowing, as we now do, that over the last ten years the inflation in UK was close to 50%. Some mildly fancy maths calculations later (it's 1.50 to the power of 1/10th, for those of you who are curious - requests for a more general explanations on postcards, please), I can tell you that the average UK yearly inflation over the last ten years was a shade over 4%.

For my money (and it was my money spent at Sainsbury's in this past decade) that's the same as any economist with a fancy title (and an even fancier, or shall I say fatter, paycheck) can tell you. So, to sum things up: save yourself some money on financial publications and keep an eye on your shopping bag. If you want, you are more than welcome to repeat my experiment. You can even try a different supermarket (I wouldn't, but then that's me being weird again). Again, any supporting (or, shock! horror! opposing) results should be sent in on a postcard.

To really sum this up: well done Sainsbury's, well done me!