New measures for inflation...

In Article 16 (page 111) I set out to show how inflation is measured in the UK. When you read the analysis of this article you will see that there are three different measures of inflation published by the office for national statistics (ONS). The main measure of inflation is the consumer price index (CPI) which the Bank of England is supposed to keep at annual rate of 2%. This measure is regarded by many commentators as being a far from perfect figure as it excludes the housing costs which have been such a very important economic variable in recent times. On the 15th March the ONS updated the basket of goods and services that are included in the calculation of the CPI. In came hair straighteners, lip gloss and still mineral water and out went toilet soap, baby food and pitta bread. Based on this information I am even more convinced that the ONS bases the annual re-weighting exercise solely on my own household spending. With a wife and two University-age daughters I can count three hair straighteners currently around the place while it is a long time ago that baby food featured in our shopping baskets! If you want to find out more information about the re-weighting go the following website www.statistics.co.uk. Have fun!