CPI is 2%.

antrobus

safestored4 wrote: »

...Or Hedonics (if you don't know what this is see Wiki) where if the specification of a high tech item is improved but the price remains the same this is counted as a price reduction. The fact that you don't necessarily want the so called improvement is ignored. ....

I think you mean 'Hedonic Regression' as in a "method used to determine the value of a good or service by breaking it down into its component parts".

The ONS began to use hedonic regression for some components of the CPI a few years ago. The RPI uses (or used) the option cost method. But all consumer price indexes adjust for quality changes.

P.S. Whether anyone 'wants' the improvement is irrelevant from the point of view of measuring inflation.

N1AK

grizzly1911 wrote: »

I take your point about noise nut in the extreme example you put forward simply taking it out of the index makes a mockery of the index.

No index is correct for all uses. Ignore substitutions or including substitutions may be better depending on what you want. Is it really getting harder for the average chap if everything stays the same price except peanut butter which entered a gold like bubble? Many people, even myself begrudgingly, would put something else on our toast.

Include rent and the index is misleading for council tenants with housing benefit. Include mortgage payments and it's misleading for OAPs who own their homes. Include car costs and it's misleading for people who don't own cars.

In my opinion CPI does a reasonable job of estimating the average increase in cost of living for the population excluding housing. I find it odd that we exclude housing given repeated governments complete lack of effort to provide enough to keep the cost under control.

N1AK

Tancred wrote: »

CPI is complete rubbish. It is being kept artifically low because of a few things like council tax

Council tax isn't included in CPI. I still have no idea how you can consistently show yourself to be so poorly informed and yet still find your opinion so worthy of sharing in such a forthright manner.

Tancred wrote: »

and petrol not going up over the past year; unfortunately the things which are going up are the ones that matter most to ordinary people, e.g. food and public transport. CPI should be scrapped as a measure of inflation and replaced by RPIX.

I don't know in which version of the world you live in. But in the one most of us inhabit cars use fuel and most people use cars. CPI uses a weighting of transport based on observing what people do, not making it up to suit their bias as you are.

This stupid view that a measure of inflation is wrong because it dares to include things that haven't increased in price isn't going to cut it as the basis of an argument. The protests over fuel prices every time they increase, and the fact government keeps cancelling duty increases, is enough to tell you that fuel prices are extremely important.

N1AK

CLAPTON wrote: »

I'm not sure what you want to say

They want to say CPI bad, RPIX good but lack understanding of either so just grasped at a couple of things and hoped they'd stick. Unfortunately, as you point out the things they picked were absolutely terrible examples to use.