Tuesday 12 March 2013

Changing the basket for CPI

The ONS have looked at spending patterns in the economy and decided to change the basket of goods which the CPI is measures by.

Remember that the CPI is based on the change in the prices of the representative basket of goods. The goods in the basket are based on the share of total expenditure of the average household.

Each good is given a weight according to its share of the total basket. If the average household spends 10% on a good then its weight (share) of the CPI basket is 10%.

Well almost. Not every good is included, only those which are significant enough and only about 700 goods make it.

The ONS have changed the basket to take account of changing spending over the last year. The BBC explains what is in and what is out in the article below.

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2 comments:

  1. Anonymous6 February 2014 at 17:32

    Is Mark no more? RIP CH economics....

    ReplyDelete
    Replies
    1. CHEconomics13 March 2016 at 18:04

      http://vceeconomicshelp.blogspot.com.au/
      Now in Melbourne

      Delete

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