Unfortunately the last government didn't like the results and the ONS was to to go away and try again.
Another problem if the basket of goods used has formerly expensive items like DVD players and Computers that over time experience massive price deflation - it skews the figures
Any luxuries in the inflation basket immediately means that it is only relevant for the top 50% of the population.
If you are rich then inflation is just annoying. If you are poor then it is catastrophic. So it makes sense to focus on the latter.
But when they where added to the index they where a lot more expensive than now - which is one sneaky way you can fiddle the inflation figure.
So you deliberately add to the basket of goods a device (that you know will deflate) at say £200 10 years later its now £25.
Makes inflation seem less than it really is.
I think that is fundamentally wrong aside from the few digital nomads that wander internet cafes with their laptops.
DVDs and cell phones and bicycles and such are very cool. No doubt about it. But they are toys. Productivity boosting toys perhaps; but housing is essential... housing isn't just productivity boosting. Without it you cannot own anything you cannot carry on your back.
I would choose a country home with a few books and a log fire over a city flat with a supercomputer. Wouldn't you?
(Hell, if we believe in the market, the fact they are more expensive is a statement that they are indeed more valuable!)
No, the argument is that the inflation rate is not the same as the cost of living index.
If the majority of people are at income / wealth levels that mean their personal inflation rate is the cost of living index, then the general rate of inflation should be equal to that. It is literally an expression of what money is worth to the people for whom money is anything more than a metagame token.
(Compare with median vs mean income. Mean income really doesn't mean much, especially if you exclude the unemployed.)
Either that or we really need to reconsider what inflation is used for. The idea of it being used as a sort of way to determine 'real returns' is broken if most of the things people care about are left out of the index or demoted in weighting.
Even a wealthy person does not have 0% inflation in the UK. They are probably buying flats in London or similar, which are going up in price all the time. How is that not inflation? Your money buys less... inflation is (should be) a measure of that.
Toys really do not make up vast proportions of the expenditure of, well, anyone.
Sure, and that's why the basket of goods is weighted according to much of them are purchased
If inflation is 0% then it is not weighting correctly when the vast majority of expenses are rocketing.
That's basically the point. Anyone 'on the ground' that actually tracks their costs knows this very well.