July, 2004

June, 2004

Comment

How accurate is the Consumer Price Index and how useful is it as a cost of living measure? The (all groups) CPI is generally recognised as the principal measure of inflation. It is not however the only inflation measure as there are other price indices such as the capital goods index. Also the GDP deflator is more of an economy-wide measure of inflation. There are also many analytical series which accompany the CPI and include or exclude various items. But there is no doubt that the CPI is the standard measure and is used as a point of reference in wage negotiations as well as being applied to various benefit increases. A CPI Revision Advisory Committee (including the CTU) met recently to "investigate, review and form recommendations concerning the general nature of the CPI, while taking account of the actual, potential and appropriate uses of the index".