Problems in Measuring Inflation
- Family Expenditure survey does not include everybody e.g pensioners are excluded, but pensioners have different spending habits e.g. heating is more important. Young people will benefit more from falling prices of mobile phones
- Changes in Quality: Computers have many more features than 10 years ago, so it is difficult to compare prices because they are different goods
- One off shocks. E.G changes in tax rates or interest rates
- People have different inflation rates.
Different Types of Inflation Measures
- RPI - old headline inflation rate
- RPIX - RPI less mortgage payments this is the underlying rate.
- This is used because interest rates are increased to reduce inflation but this higher interest rates increase the cost of mortgage repayments
- RPIY = RPIX less taxes ( This is sometimes known as the harmonized rate)
- CPI - Consumer Price Index
Essays and Revision Notes on Inflation
Hyperinflation - Causes and Costs
Inflation Essays
- Discuss the Difficulties of Controlling Inflation
- Does Devaluation Cause Inflation
- Should the Aim of the Government be to Attain Low Inflation?
- Explain What Can Cause a Sustained Increase in the Rate of Inflation
- Essay on Inflation - Is Inflation Harmful?


