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Inflation rate

27th June 1991, Page 45
27th June 1991
Page 45
Page 45, 27th June 1991 — Inflation rate
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Which of the following most accurately describes the problem?

Keywords : Inflation, Interest

• I note with interest your roadtest inclusion of a contract maintenance rate. However, it is somewhat superfluous, if not misleading, to quote a total cost for the contract duration based upon a non-inflationary calculation, as this assumes the unrealistic situation of there never being any future rise in the cost of parts, labour and so on.

Take the AWD TL, for example, (CM 25 April-1 May). You quote 5.4p/km, or £16,200 over a five-year life at 60,000Ian per annum. Allowing for a compounded parts and labour rise of 7.5% per annum, the true contract maintenance cost would be £18,820—an average of 6.27p per km or just over 10p per mile.

It is debatable that a vehicle would cover less than 37,000 miles per year, but by recognising the effects of inflation, a possible cost of £18,820 for a total of 183,000 miles maintenance over five years (excluding tyres) puts the contract maintenance charge into a truer perspective.

S Thomas

7'ranspsort consultant, Penkridge, Stafford.

0 This is a valid point. While there are obvious problems with predicting inflation figures, we will certainly see what can be done for future roadtests — Ed.

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