scotview wrote:
So inflation = 10% is it not as simple as that ?
No.
You are only looking at a single item of expenditure and not considering what the reminder is spent on. How is demand, and price, adjusting to the change in price of energy? Inflation is, and always will be, a macroeconomic measure.
If this is hard to imagine consider what your model would be if average income was only £1,100 per month, with £1,000 spent on energy. Energy is quite "inelastic" - which is to say price changes don't change demand by much. People are either unable, or reluctant, to use less as the price rises. So there is originally £100 left over each month to buy "other stuff". After the energy price rise there is nothing left to spend on "other stuff". What happens to the price of "other stuff"? What is its inflation rate?
To properly measure inflation you need to measure a number of things, and adjust the basket, and take into account substitution effects.
For most people they won't describe inflation as a "simple model".