What colour is a rainbow? On average, white. And what is the current level of UK inflation? On average, 5.4 per cent. Both answers are true. Both are missing something important.
The consumer price index, or CPI, aims to measure the average price paid by UK consumers. But when the latest CPI numbers came out, the food writer and poverty campaigner Jack Monroe took to Twitter with some examples from her local supermarket: 500g of cheap pasta up from 29p to 70p year on year; 1kg rice up from 45p to £2; baked beans up from 22p to 32p. As the examples piled up, Monroe concluded that the inflation rate faced by poor households was much higher than the CPI’s 5.4 per cent.
“The system by which we measure the impact of inflation is fundamentally flawed,” she added — in a thread that has since been read by millions of people. I agree, for different reasons. Monroe is worried that prices are soaring for the poorest households. I’m worried that our current inflation-measuring process simply can’t tell us if she is right or wrong.