Wednesday, April 29, 2009

My pay/pension's inflation-protected, so I'll be all right... won't I?


Click to enlarge - I hope!
No.

Take the illustrated cases above, where take-home income is 1,000 zlotys (or whatever), and you are exceptionally fortunate, in that your benevolent employer/government gives you annual rises that exactly match the rise in inflation in the preceding 12 months.

The trick is, although the pay hike brings you up to the new level of monthly expenditure (at least, up to the point where inflation was re-calculated), it doesn't compensate for the cumulative losses over the year.
This is is one way they can exploit inflation to steal from you, and balance the public finances.

4 comments:

  1. dearieme29 April 2009 at 19:25

    Good point, Sacks.

    ReplyDelete
  2. James Higham30 April 2009 at 16:12

    Well that's not much use if I can't scrutinize the bloody thing. :)

    ReplyDelete
  3. Adam7 May 2009 at 15:43

    It'd be great to see those tables. Would you mind I repost on on my blog full-size, as a guest post? With full attribution of course. email is editor (at sign) bearishnews.com.

    ReplyDelete
  4. Sackerson8 May 2009 at 18:24

    Hi, Adam - have redone the figs and the image does now enlarge when you click on it, at least on my computer.

    ReplyDelete

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