finance

[pritiks]

how often is inflation evaluated

[Oneeyedvic]

Monthly by way of the Consumer Price Index

[PrinceRainie]

Also Retail Price Index.........Government seem to change their chosen method of measurement to suit their own needs!!

[Reverandfunk]

Is it still based on a shopping basket of typical items???

[WoWo]

Yes it is, there are many measures that can be used. A few years ago the government switched from CPI to RPI.

RPI (retail price index) uses the basket of goods as does CPI (Cost price index) however RPI excludes housing costs, therefore RPI is generally lower than CPI.

However the it's all a bit of a fiddle because the government can remove items from the basket as they see fit, which allows them to manipulate things, for example we have recently seen the inclusion of things like Ipods and DVD players which have generally fallen in price and the removal of other good which have increased.

[Reverandfunk]

Ive often wondered about the old shopping basket, what if a couple of supermarkets are involved in a price war or certain specific items are expensive/cheap for other reasons.

Surely there must be a more robust way lol

And interest rates as the only way to tackle inflation? What about people on fixed rate mortgages? or people who rent ?

Dear me I'm getting far too deep for a Friday, i'll be mentioned kinked demand curves next.....