Inflation understated in the CPI and RPI due to Size reduction?

spinbuster

Are there any statisticians out there who know whether the ONS is taking into account Manufacturers' reductions in size and weight when calculating the CPI and RPI?
See also “The Great 'Shrinking Food' Hunt” entry.:cool:

CLAPTON

CPI and RPI are about the cost of people buying things (products and services) and are not directly related to the size of UK manufactoring base

Reaper

CLAPTON wrote: »

CPI and RPI are about the cost of people buying things (products and services) and are not directly related to the size of UK manufactoring base

I think they mean the size of the products (eg how big is the Mars bar) rather than how big the manufacturing companies are.

You can find a list of what goes into the CPI index here:
http://www.ons.gov.uk/ons/rel/cpi/cpi-rpi-basket/2012/index.html

From a quick skim most things would not be affected by changes in the size of the packaging, and I guess (but haven't read through it all to make sure) they would specify the weight (eg 500g packet of corn flakes) and adjust the price if the weight changed.

Old_Slaphead

spinbuster wrote: »

Are there any statisticians out there who know whether the ONS is taking into account Manufacturers' reductions in size and weight when calculating the CPI and RPI?
See also “The Great 'Shrinking Food' Hunt” entry.:cool:

Yes they do.

Manufacturers report pricing movements on a like-for-like basis.

Radiantsoul

Yes, although quality improves are not necessarily factored in(so inflation is probably overstated).

Glen_Clark

How can you take Government Inflation Statistics seriously when they ignore housing costs?
I happen to know the civil service department producing these useless statistics is one of the few not being cut, because politicians spin doctors are so fond of them

Sceptic001

Glen_Clark wrote: »

How can you take Government Inflation Statistics seriously when they ignore housing costs?

CPI excludes housing costs. RPI includes housing costs.

You pays your money and you takes your choice...

grey_gym_sock

CPI includes some housing costs (such as: rent), but RPI includes more (such as: mortgage interest, council tax).

Milarky

Radiantsoul wrote: »

Yes, although quality improves are not necessarily factored in(so inflation is probably overstated).

(aka "hedonic" pricing)

Here is a US site which has been going for years (so the complaint that official statistics are manipulated isn't news at all)

http://www.shadowstats.com/

And here is a nice YouTube video which lays the case for the prosecution:

http://www.youtube.com/watch?v=zPkTItOXuN0