Monday, December 04, 2006
Official: Inflation Doesn't Measure Cost Of Living
A few weeks ago we were discussing whether the government's Consumer Price Index (CPI) was grossly understating the actual inflation rate faced by eg pensioners. I made a note to wrap another towel round my head and delve into the numbers.
Now I don't need to bother. The Telegraph has commissioned Capital Economics (owner Mr R Bootle, author of The Death of Inflation) to do some crunching.
And the results are striking. Few may worry that rich (£100,000 pa) families are facing inflation of 6%, but those pensioners turn out to be facing inflation of around 9%, driven by sharp increases in fuel prices.
And 9% stands in shameful contrast to the 3.6% which is all the government reckons is needed as an increase in single pensioners' basic state pension this year.
But the most eye-catching item is the quote from the Office for National Statistics:
"The CPI and RPI are specifically not intended to measure what people often refer to as 'the cost of living'."
So remember that next time some politico tells you the opposite. And wonder why we can't be given some indicies that do measure the cost of living- ie the thing that most of us out here are actually concerned about.
Posted by Mike D at 8:10 am