Quote:
Originally Posted by Nick 0208 Ldn
If the government want to continue usign the CPI as their measure for the rate of inflation in this country, then they need to either expand or update the basket of goods that they judge it by. Sounding like bloody idiots otherwise, whether it be politicians or economists trotting out the line that it is only at 2.whatever percent.
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Can't - most of the rules about what goes in are decided at European level.
Nothing really stupid about saying that CPI is at 2.something percent though - CPI is CPI. People should understand what CPI is, which is inflation on a basket of consumer goods. Inflation on what you buy is measurable by CPI. It's an average, so you might experience more, or less. If you experience more you squeal more loudly, if you experience less you don't squeal, so people who judge its effectiveness by how loud people squeal are missing out.
The major item that doesn't go into CPI is housing costs. There's a separate index to measure for that - it's RPI. And anyone can find it using Google. Politicians shouldn't have to tell people what it is.
In summary, if you complain about CPI not being realistic, you're the spastic, not the economist or politician who's quoting CPI. Just learn what they mean - takes 5 minutes.