{"id":36877,"date":"2022-02-07T10:23:18","date_gmt":"2022-02-06T21:23:18","guid":{"rendered":"https:\/\/propertynoise.co.nz\/au\/?p=36877"},"modified":"2022-02-07T10:23:18","modified_gmt":"2022-02-06T21:23:18","slug":"why-are-soaring-property-prices-left-out-of-inflation-figures","status":"publish","type":"post","link":"https:\/\/propertynoise.co.nz\/au\/why-are-soaring-property-prices-left-out-of-inflation-figures\/","title":{"rendered":"Why are soaring property prices left out of inflation figures? |"},"content":{"rendered":"

PHOTO: Australian property prices surged more than 20 per cent in the last 12 months. FILE<\/strong><\/p>\n

We’ll be talking about inflation a lot this year.<\/p>\n

So let’s make sure we know what we’re talking about.<\/p>\n

What is inflation?<\/p>\n

What does it have to do with the cost of living?<\/p>\n

And how come soaring property prices\u00a0aren’t\u00a0<\/em>included in the official inflation figure?<\/p>\n

What is inflation?<\/h2>\n

At its most basic level, “inflation” refers to\u00a0a general increase in the level of prices in an economy over time.<\/p>\n

It’s also the phenomenon that explains why\u00a0a unit of currency loses its purchasing power\u00a0as the decades roll past.<\/p>\n

What does that mean?<\/p>\n

Watch the video below.<\/p>\n

Listen to Kurt Cobain and his Nirvana band mates talking\u00a0about ticket prices for\u00a0their concerts in the early 1990s.<\/p>\n

At the time, they charged about $US17 ($24) a ticket, and they were dumbfounded to hear\u00a0Madonna was charging $US50 or more.<\/p>\n

To their ears, $50 was\u00a0exorbitant<\/em>.<\/p>\n

But, to our ears, it sounds comically cheap.<\/p>\n

And\u00a0part\u00a0<\/em>of the reason why it sounds so cheap is because the nominal value of the currency we use\u00a0has deteriorated so much in the past 30 years, thanks to inflation.<\/p>\n

As the saying goes, a dollar ain’t what it used to be.<\/p>\n

And here’s how that process works.<\/p>\n

 <\/p>\n

Inflation is built into the system<\/h2>\n

Inflation\u00a0comes\u00a0from many sources.<\/p>\n

I’ve described some of them\u00a0in a previous article.<\/p>\n

But let’s consider an obvious one.<\/p>\n

Imagine a\u00a0town full of all kinds of people \u2014\u00a0shopkeepers, workers, consumers, manufacturers, farmers \u2014\u00a0you name it.<\/p>\n

Everyday, they’re jostling to try to make a bit more money.<\/p>\n

 <\/p>\n