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Actually, I’m fibbing: I never buy any of these things. I am not even sure what a CD/radio autochanger is. Yet they have just been added to the imaginary shopping basket of goods and services that government statisticians use to calculate the retail price index (RPI), popularly known as the inflation rate. While these items have been added to the basket, several others have been dropped, including frozen fish in sauce, cat litter, non-mobile telephones, battery-powered clocks, shoe repairs and brown ale.
Obviously tastes change, and the RPI needs to reflect that. But I can’t help noticing that many of the new items are things coming down in price while many of the goods thrown out of the basket seem to be things going up in price. Were it not for this crafty manipulation, inflation, which last month shot up to 3 per cent, would almost certainly be higher.
Take the electronic keyboard, for example. When it was a novelty and falling rapidly in price, the Office of National Statistics (ONS) was happy to include it in the RPI. Now that the economies of mass production have run their course and prices have settled down, it has been dropped from the index. In its place comes the latest electronic gadget, the CD/radio autochanger, which you can bet will be included only as long as it, in turn, falls in price.
Strangely, when the old national carriers had a monopoly and it used to cost £200 to fly to Paris, air fares didn’t feature in the RPI at all. But now that competition from budget airlines is forcing down fares, suddenly air travel is included. Tinned spaghetti, on the other hand, was included in the RPI while the supermarkets were waging a fierce price war and were discounting tins to as little as 2p each. Yet now the price war appears to be over and spaghetti prices are recovering, the ONS has decided it no longer forms part of the cost of living.
The ONS will argue that British tastes have moved on from boring old spaghetti, even if my children still love it. But what about some other discarded items: have we really stopped buying belts, battery-powered alarm clocks and telephones in favour of dried potted snacks, membership of slimming clubs and tickets to horse races? Or is it that choosing these items has a favourable effect on the RPI? What can be the motivation for dropping frozen fish in sauce? I don’t suppose it could be that cod prices are set to rocket as North Sea fishing is curtailed.
Bizarrely, the biggest item on most people’s shopping list — their home — is excluded from the RPI altogether. Although the index does include mortgage repayments, they are weighted at a level which reflects house prices in 1994, when the housing element of the RPI was last revised and, it just so happens, house prices were at the bottom of a slump. It is only thanks to this dubious statistical method that the Government has been able to claim an inflation rate of less than 3 per cent when house prices have been rising at nearly 30 per cent.
The Government certainly doesn’t have a shortage of incentives to manipulate the RPI in its favour: many state benefits, including the old age pension, are linked to inflation, as pensioners found to their cost two years ago when their weekly income rose by just 75p. Inflation may be going up, but there is one thing that certainly isn’t rising in value: the integrity of government statistics. The retail price index is a fraud, a scam deliberately formulated to stop us asking for higher wages and pensions.
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