Thursday, February 13, 2020

Economic forecast

Trust an economist? Not me. Inflation was under control by 1987.

Using the Reserve Bank inflation calculator a loaf of bread cost 18 pence in 1960 which is $1.94 in 2011. I expect you could buy a loaf of bread for that price in 2011, maybe even now at one of the cheap Asian bakeries.

I've used this clipping from the newspaper before but it is interesting to revisit more than thirty years later. Of course these are Australian dollar figures but to make it a bit more interesting, I will add the world wide currency (so the BBC told me when I complained about it not using £ when talking about England).


In the year 2020, two adult movie tickets cost around $40. US$27

Scotch? Good is very subjective but perhaps $35, single malt, $50. US$24 to US$34

Just an educated guess, but two weeks in Fiji including flights and very nice accommodation might cost for two about $7,000. US$4,700

We eat good quality bread and it costs less than $4. US$2.70

Car insurance? Ours is not bad because we have been with the same company for a long time and we are rated well, $725. US$488

Tweed sports jacket? Perhaps not great quality but perhaps $150. US$100

29 comments:

  1. Wow! Powerful observations. Thanks.

    Greetings from London.

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    1. Cuban, don't be a stranger 😉

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  2. I am very glad that they were wrong. Mind you, we eat very little bread and tend towards artisanal sour dough for which I pay $7 or so. Bakeries often are more expensive than the supermarket fare.

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    1. EC, interesting about bakeries being more expensive than supermarkets. Some are here, but the Asian owned and operated ones are usually cheap. Sometimes I find sourdough too sour, like vinegar tasting. Why did I spell sour sourgh? Odd.

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  3. I try and use bakeries too, expensive but when you want non-plastic worth the price. I see things going up 20% in my local grocery story just this past month and am alarmed. No way has my fixed income being indexed to this.I remember the old inflation standard back in luddite days when I studied was that everything doubled in price in 12 years. We are a long way from that.

    XO
    WWW

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    1. WWW, so have prices doubled every 12 deals or not? I guess not.

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  4. Anonymous9:27 am

    $40 for a movie? You must be going to the wrong cinemas. There must be plenty of cheaper movie houses around. Cineplex Australia in Brisbane charged $8 a ticket when last I visited my brother two years ago. It's a decent cinema in the suburbs with multiple screens. Visit me in Thailand and I'll get you in to see 1917 for $3. Or $5 at the weekends. - Ian

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    1. Ian, it was so cheap because you are old. I think as seniors, we pay $12 or $13 at the same cinema. Cinema tickets really did rise for a while but then dropped right back as technology and the person to show you to your seat disappeared. Having so many screens in large old cinemas has saved so many of them. I have no doubt that 1917 is a brilliantly made movie, but I saw Gallipoli. That is enough and no doubt I would again become angry at the senseless loss of life.

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  5. The movies are $7.00 ea. Senior tickets. A good loaf of bread is like $3.00. Plain sandwich bread is $1.00. We pay less than $800.00 per year for two vehicles. Famous Grouse Scotch is $30.00 for 2 liters. But Single Malt is about $60.00+.
    I never buy any clothing full price. I bought a designer sweater today originally priced $80.00 and I paid 12.00 on sale. Thailand? No desire to go.

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    1. Maribeth, even in the more expensive NYC, we noticed how cheap most things were compared to here. But I think the wages are higher here, so we can afford the prices. As I've mentioned before, Macy's almost gave me a shirt, such were the discounts applied.

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  6. I suppose inflation wouldn't cripple families IF salaries and pensions kept up with the inflation. My salary didn't increase for five years :(

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    1. Hels, that is not good. I saw my grandparents money eaten away by inflation, admittedly poorly and too conservatively invested.

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  7. Being a pensioner I can get a movie ticket for just over $11, unless that has gone up since the last time I went about two years ago. I tried the store brand $2 bread a few times, but don't like the texture much, so I stick with the $3 bread that I like the taste of and it has small slices, so I don't end up with a sandwich the size of my table.

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    1. River, yes, sometimes you don't want a monster slice of bread, or a bucket of coffee for that matter. The thicker the slices, the quicker the loaf disappears.

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  8. I would guess it depends on what area of Australia cost of items. On the bread under $3 I would put great deal, might be healthiest. $3 to $5 is usual you find some pretty good healthy bread. But the $5 or more is the fancy package and usual super healthy. Lot of time that bread is in health food section.
    As I under stand milk in America is pretty reasonable priced around here it between $3 and $4 range.
    Husband retirement hasn't change all that much since he retired. We have to buy into his medicare because I work if I didn't work the state would cover it. But we would be living on lot less income...The poverty section here I could go on and on.

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    1. Dora, your information is interesting. Would that be $3 to $4 for a gallon, which makes it cheap by our standards or a pint which makes it quite expensive?

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  9. Back in the UK they used to have 'Mars Bar Economy'. Not only would they tell you how much one cost in 1800, but also predict what it would cost in 2100. I have no idea if they were ever right!

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    1. Cro, the Scottish deep fried version no doubt dearer.

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    2. Yuk. I have yet to sample one.

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  10. It does depend where you live as to the cost of living especially food. Since Aldi came to our nearby town my weekly grocery bill has gone down markedly. 1987 was the year that legislation was passed that guaranteed wage increases linked to productivity. Now we have stagnant wages growth,it would be very difficult for many people to make ends meet.

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    1. Cheryl, that is interesting. Since we began, forced to really, began shopping at Aldi, we dropped the weekly shopping kitty from $140 to $100. We don't buy everything at Aldi as some things they don't have and some things we don't like, but we have certainly saved money. There couldn't possibly be a connection between stagnant wages and people not spending money and closures of small businesses could there be?

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  11. Interesting.
    Prices vary greatly as we travel. Fresh bread is called frozen and is frozen and not cheap at all for normal bread. But that is in the outback towns where bread deliveries are not often.
    Some prices of some things are much the same. I did a spreadsheet years ago for the cost of common foods and was surprised that some items hadn't changed much at all.

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    1. Margaret, our late friend would not freeze bread as that was all he could get in the NT and he grew to hate it. I think a lot of food is relatively cheaper now. But are we paying a fair price for the food we consume?

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  12. 1987, interest rates (mortgage rates) were about 12%, down from 17 or 18% a couple of years earlier, and inflation was regularly 10% or more. Those were reasonable predictions based on those numbers.

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    1. Travel, how dare you spoil my post with truths and statistics.

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  13. Well I'm glad those predictions were a load of bollocks Andrew, what inflation rate did they use I wonder!

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    1. Goodness knows Grace. We would be living in poverty.

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  14. They left out the all-important "if present trends continue" which they didn't and never do. When inflation becomes unmanageable, the government will find ways to combat it (here in the US, it's usually by raising interest rates, which sometimes brings on recessions.)

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    1. Kirk, yes. Inflation is managed the same way here. While we now have lowish inflation, wages are stagnant and people are just not spending. In the 1990s we had 'the recession we had to had have if we weren't to become a banana republic'.

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