The hidden cost of inflation

I was talking to @geowgeow about why things cost random prices in shops, on seeing a surprisingly reassuring price-list in a sandwich shop in Victoria station. Everything there cost rounded whole numbers instead of apparently arbitrary digits – 12.64 is a pin code, not a price tag dammit!

Carrying the thought through (as you do) however led us to the fallacy of this – inflation is running at over 4%, so a 1 pound sausage roll would have to cost 1.04 next year and so on. So the silly prices return.

@geowgeow speculated that rounding for tidiness is probably worsening inflation – store managers that don’t like price tags that say 1.04 round up to 1.05 and BANG – up goes inflation by another percentage point.

Alan Sugar might be happy with the entrepreneurial instincts shown here, but Mervyn King? He’s probably unimpressed by the entire situation.