I worry about a certain lack of elementary economic literacy evident in the media. The most recent irritant came with BBC TV reporting of the latest inflation figures. I heard the same thing several times, so have to conclude that whoever wrote this was deemed to have nailed it first time. I quote: "The Consumer Price Index for May is 2.8 per cent". No, it isn't. In fact, the CPI at the end of May stood at 122.8 (the base for the index is 2005). The annual rate of inflation as measured using the CPI was 2.8 per cent for May.Yes, I know that's what they meant, but it's not what they said.
Shouldn't someone writing economic copy for the national television station know the difference between an index, and the annual percentage change in an index? (Actually, I have a dreadful feeling that they don't even know what an index is, and that's the basic problem.)
By the way, something interesting, that I did not see commented upon in the media, was that the CPI actually declined from April 2012 to May 2012. Admittedly, only by 0.1, from 122.9 (April) to 122.8 (May). So, using the CPI measure, the UK experienced negative inflation in May. If you use the Retail Prices Index instead, prices were unchanged from April to May. Not a terribly big deal, perhaps. But an interesting curiosity, nevertheless: prices were static or possibly slightly falling in the UK in May 2012.
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