From: "Andy Pandy" 
Newsgroups: uk.finance
Subject: Re: Inflation
Date: Mon, 27 Nov 2006 19:35:36 -0000


"Tamale-Loco"  wrote in message
news:zo-dnUuxH7qIU_fYRVnyhw@eclipse.net.uk...
> How is the Retail Price Index (and, therefore inflation?) REALLY worked out?
> Is it done on weight/capacity/number of items per unit......or just "what was
offered last
> week and went up this week"?
> For instance, here are a few examples:
> Say some items i buy on a regular basis are (say) a litre bottle of Cola, a packet
of 10
> doughnuts and a double pack of kitchen towels
> Take the Cola as 1st example.....say this costs One Pound.They reduce the volume to
(say
> 90 millilitres, and reduce the price by, say 5p to 95 pence
> Now, take the packet of 10 doughnuts. They either reduce the ammount to 9 per
packet, or
> keep the same ammount per packet, but reduce the size of each doughnut, and sell
the
> packet at the same price
> The kitchen towels were 60 sheets per roll, but they are subject to a "50% more"
offer for
> a short time, then, when the offer ends the actual rolls now contain only 44 sheets
per
> roll.
> I guess i am not explaining this too well, but what i *think i mean is does it get
based
> on "pence per 100 mls" or pence per 10 sheets, etc?

Yes, basically. For a full explanation see:

http://www.statistics.gov.uk/articles/nojournal/CPI&RPI_basket_2006.pdf

http://www.statistics.gov.uk/articles/nojournal/CPI&RPI_2006_weights_article.pdf

There seem to be a load of loony conspiracy theorists around who think all inflation
measures are a con, but they don't seem to able to produce any credible evidence.

--
Andy