It is about time the Government informed the public about the true rate of inflation and increased payments to those who are entitled to it. Okay, unemployment is low but those living in rural areas depend on it to survive. They can continue to to rely on the unemployment benefit, or they can move to the city. That is the last thing we want - more people living in the major coastal cities.
The problem is that non-essentials are included in the CPI. This offsets the real inflationary increase in the necessities of life. Many do not know that essential goods have increased by a massive 8 per cent over the past year. The high dollar is "hiding" this by making imported non-essentials cheaper. Prices of such goods have actually fallen. Those on low incomes spend a higher proportion of their income on essentials like food, electricity, water, fuel and rent.
Oddly, interest rates are not in the CPI package. Curiously, it was taken out in 1998. In other words both political parties have been covering up the cost of living. Furthermore, Price rises in property are out as well.
Another important thing that the public is not informed of is the practice of discounting a price that hasn't changed (quality adjustment). If the price of something has not increased over a year you would think that this would have zero effect on the the CPI. This is not the case. The price of an electronic product will reduce the CPI even if it has not gone up. How does this happen? It is because the Government discounts the price of this non-essential by saying it is a better product due to technological improvement. It says you are getting more for your money and the price has fallen when it has not. This is purely a value judgement. Measures of inflation should contain factual data only. This is no more nor less than doctoring of figures which benefits the Government. Both political sides alter the CPI to make things seem better. Note how the Coalition passed over the CPI when the GST was introduced? A fully independent body should regularly revue the way the CPI figure is evaluated and this nonsense should stop.
The problem is that non-essentials are included in the CPI. This offsets the real inflationary increase in the necessities of life. Many do not know that essential goods have increased by a massive 8 per cent over the past year. The high dollar is "hiding" this by making imported non-essentials cheaper. Prices of such goods have actually fallen. Those on low incomes spend a higher proportion of their income on essentials like food, electricity, water, fuel and rent.
Oddly, interest rates are not in the CPI package. Curiously, it was taken out in 1998. In other words both political parties have been covering up the cost of living. Furthermore, Price rises in property are out as well.
Another important thing that the public is not informed of is the practice of discounting a price that hasn't changed (quality adjustment). If the price of something has not increased over a year you would think that this would have zero effect on the the CPI. This is not the case. The price of an electronic product will reduce the CPI even if it has not gone up. How does this happen? It is because the Government discounts the price of this non-essential by saying it is a better product due to technological improvement. It says you are getting more for your money and the price has fallen when it has not. This is purely a value judgement. Measures of inflation should contain factual data only. This is no more nor less than doctoring of figures which benefits the Government. Both political sides alter the CPI to make things seem better. Note how the Coalition passed over the CPI when the GST was introduced? A fully independent body should regularly revue the way the CPI figure is evaluated and this nonsense should stop.
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Economics
