Consumer Price Illusions

uneconomical

This chart from FT Money supply is neat:

… if you want an illustration of how useless the CPI is.

The graph is a little hard to read, but it says that the real price of “telephones” has flatlined since 2008.  (That means the price of telephones relative to the price of entire CPI basket.)  The full name of the CPI division which the FT used here is “Telephone and telefax equipment and services”.  We touched on this in the comment section recently.   The ONS think the actual (not relative) price of “telephone and telefax equipment and services” rose by 18.8% between January 2009 and March 2014.  Which seems like an absurd claim, given the improvements in e.g. smartphone quality over this period, never mind the rising popularity of free services like Skype.  OFCOM have more stats than you can poke a stick at for those interested.  I suspect the ONS simply can’t keep up with the high rate of substitution…

View original post 215 more words

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s