Inflation in Europe: Could your morning coffee become a ‘luxury’?

Globally, inflation is exerting pressure on household budgets. But how can you determine what the headline inflation rate means for you?

CNBC reported that the headline inflation rate for the 19 countries using the euro reached 10.7% in October 2022, the highest rate since the introduction of the single European currency. The most significant factor was the 41.9% annual increase in energy prices in October.

In October 2022, the annual price increase for food, alcohol, and tobacco was 13.1%, up from 11.1% a month earlier. In October, headline inflation reached 12.8%. CNBC reported unemployment rates of 11.6% in Germany and 7.1% in France.

How is the rate of inflation measured?
The majority of national inflation figures are derived from changes in the prices of a basket of goods and services that statisticians believe to be representative of what a typical household would purchase on a regular basis.

Although this produces a national inflation rate, your personal inflation rate is determined by what you actually purchase on a daily basis. Similar to many other official sources, the UK Office of National Statistics provides a calculator to help you calculate your personal rate.

In an effort to make headline inflation rates more relatable, experts have devised some substitutes. In 1981, the late Financial Times journalist Nico Colchester proposed the Mars Bar Standard, a measure of inflation based on the amount of money required to purchase a chocolate bar.

Price-based indices for the chocolate Freddo bar and the Big Mac burger have been developed. Now, the statisticians of the European Union have devised an even more universal measure: the price of a cup of coffee.

Read more • weforum.org

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