“If the apples were full of disease, making them smaller and smaller, and less nutritious, then it would be a fair comparison” – MLA Mark Pollard
Stanley inflation has “dipped into deflation territory” according to the latest sitting of the Standing Finance Committee.
In a report on the Stanley Retail Price Index, Economist, Andy Wu said inflation fell in the first three quarters, resulting in a dip “into deflation territory”, tempering this by saying the annual inflation rate for 2024 was calculated against a “very high base value”.
As such “the annual inflation results should be interpreted with caution”
In his report, the findings show the Stanley RPI declined by 0.1% between Q3 2023 and Q3 2024, down significantly from an annual increase of 2.5% in the 12 months to Q2 2024, noting this is the lowest rate of inflation since Q1 2021.
Internet package changes, their negative contribution to quarterly inflation, and how packages are measured in the Stanley RPI was brought up by those present.
In Quarter 3, Communication had an impact of -0.07%
MLA Leona Roberts took issue with internet packages being measured by cost per 1 gigabyte, saying “1gb doesn’t go as far as it used to – everything is very data heavy”, later adding “websites aren’t just simple text pages anymore”.
In the report, tracking the price of one broadband package is compared to be “exactly like tracking the price of one apple.”
Giving a visual example of two apples, one smaller than the other, showing the smaller apple to weigh 100g in Q2 of 2024 and cost £1, and the bigger apple weighing 200g in Q3 of 2024, and costing £2.
The example shows if the price of the apple is tracked this would lead to an incorrect conclusion that the price of apples doubled between Q2 and Q3, and instead, the price of 1g of an apple should be measured, which would show no change in the price.
MLA Mark Pollard disagreed with the comparison of apples to internet packages, saying “if the apples were full of disease, making them smaller and smaller, and less nutritious, then it would be a fair comparison”
MLA Gavin Short agreed with his colleagues, saying “it doesn’t matter if you double the amount of data I have, it still costs fifty quid… even if you quadruple it, it still costs fifty quid”
MLA Roberts said the way this is measured creates “an artificial decrease in inflation”
The “Basket of Goods” was also discussed, with Mr Wu saying when he was out gathering prices, he “couldn’t find prices for a lot of items” saying “it’s difficult to make comparisons” when items are not consistently available in the shops.
MLA Short also raised the example of the cost of imported tomatoes throughout the colder months, compared to lower priced, locally grown tomatoes, which were then available when the Economist was gathering prices for the latest RPI, having an influence on inflation.