Inflation figures

[sp1214]

You often hear that Britain has one of the lowest inflation figures in Europe. I believe the latest UK inflation was about 2.1% or nearabouts. Europe has just published the inflation figures but bear no resemblence to ours. Are they calculated differently?

http://news.bbc.co.uk/1/hi/business/7350101.st m

[kempie]

UK inflation (using the Consumer Price Index - CPI) for March 2008 was 2.5% as per the ONS - Office for National Statistics...

http://www.statistics.gov.uk/cci/nugget.asp?ID =19

This is the same figure used by Eurostat - the Statistical Office of the European Communities...

http://epp.eurostat.ec.europa.eu/pls/portal/do cs/PAGE/PGP_PRD_CAT_PREREL/PGE_CAT_PREREL_YEAR _2008/PGE_CAT_PREREL_YEAR_2008_MONTH_04/2-1604 2008-EN-AP.PDF

[sp1214]

Yes thanks for that. But do the items that give the inflation figures match identically to those of the Euro zone?

[kempie]

There is no uniform "basket of goods" applying to all countries within the EU (although a certain level of similarity does exist in the range of goods and services selected for the "basket"), however individual CPIs are used to compute HICPs - Harmonized Indices of Consumer Prices - to produce comparable figures...

http://epp.eurostat.ec.europa.eu/cache/ITY_OFF PUB/KS-BE-04-001/EN/KS-BE-04-001-EN.PDF

[sp1214]

Evidently not:

The basket of goods and services and weighting
In reality the distribution of purchases of goods and services, and the precise nature of some of the goods and services themselves, varies from country to country � there is no uniform basket applying to all countries. The HICPs reflect this reality by being based on the prices and expenditures which are representative in each country and not on an average �euro-basket�.
The weights used for computing HICPs within a country may relate to a period up to seven years prior to the current year. However, to minimise any incomparability this might cause, adjustments must be made each year for any especially large changes in expenditure patterns. It is required that the HICPs should cover all newly significant goods and services. Special rules cover situations where prices are newly introduced for goods or services that were previously free, and other rules concern the situation when markets are opened to new suppliers � which may in practice deliver price benefits for consume

[R1Geezer]

the true figure is more like 7%, trouble is over the last 10 years or so anything that raises it has been taken out of the basket. The figure for inflation is of no use in reality, all it does is serve as a measure so the government can claim it's keeing inflation down.

[sp1214]

Quite right Geezer