Note: [] Corresponding author: 35bis rue Brancas, 92310 Sèvres,
France. Tel.: +33 145348551; E-mail: [email protected]
Abstract: This paper argues that the official price indices currently
available for the United Kingdom are misleading the general public and are of
doubtful relevance for policy purposes. This is not an ethical issue in the
sense that government statisticians or politicians are deliberately misleading
the British public about inflation. What has happened is that the statisticians
have given more weight to questionable economic theory than to the public's
need for a clear and transparent measure of price inflation. The end result is
that politicians may make bad decisions because they are using bad statistics
and the general public loses faith in the statisticians because of the gap that
they see between their own daily shopping experience and the official measure
of inflation.
Keywords: Retail price index, cost of living index, hedonic quality adjustments, substitution effect