Ramblings

by Joseph Weisenthal




CD Player Dropped From Inflation Data, Phonograph Next?

from the neverending-treadmill dept

In the UK, the Office of National Statistics has decided to remove the personal CD player from the basket of goods which make up the RPI, the equivalent of our CPI, a measure of inflation. Nobody buys them anymore, the thinking goes, so the more popular and expensive mp3 player has replaced it. In the US, the Bureau of Labor Statistics, often make similar decisions. But does this make sense? Measures of inflation, when placed against wage measures, are supposed to indicate whether consumers are getting ahead. If prices go up, while wages stagnate, then that's a sign of trouble. Now, the reason that consumers buy mp3 players, and not CD players, is that they're better quality and a better deal. Or, put another way, consumers could still buy a high-quality CD player, and save a lot of cash for later. Either way they benefit. But, inflation data doesn't reflect this, it only notes that mp3 players are more expensive and thus the basket of consumer goods doesn't seem to go down in price. It seems that intellectual property isn't the only area in which the government has failed to adapt to new technology. Economic measurements need to show that consumers benefit from the rapid obsolescence and constant price deflation that marks the high-tech world.

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  1. identicon
    Anonymous of Course, 20 Mar 2006 @ 10:06am

    Re: Not all price changes are due to inflation

    The point is this, by dropping more mature technology
    from the list of products and adding leading edge stuff,
    the govenment takes advantage of the predictable price
    drop and claims lower inflation.

    This is why electronic devices, not housing and fuel
    are good items for the list.

    It's already been said, inflation due to printing money
    is a form of taxation. They make the money you hold
    worth less by printing more. Manipulation of the inflation
    statistics is no surprise, is it?

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