Other Goods
A Clothing Index
Mr Hill's Budget
|
|
The Retail Price Index
Other Goods
Man does not live by bread alone. He needs many other things
apart from food. Your family will spend money on a variety of
items.
- Write down a dozen items that your family buys apart from
food.
- Try to classify these items into a smaller number of
categories, such as travel or clothing.
- Try to estimate how much, out of every £1000 spent,
your family spends on each category.
A Clothing Index
In earlier sections you have found how food prices have
changed, measured as an index number.
- Write down in a few sentences how you did this. (A flow
chart may help you.)
- Choose two categories, clothing and one other, from your
list. Write down in a few sentences how you would
estimate the change in prices of items in these
categories. Consider the weighting of individual items.
One family has no children, another has two young children,
while a third family has six children of different ages.
- How would a clothing index be different for these three
families?
Mr Hill's Budget
Mr Hill made a careful study of how his family spent its money
in 1977. For every £1000 spent, he recorded the
amounts spent on each major category in Table 6. He. is a typical
family.
| Catagory |
1977
cost (£) |
1978
price index |
1978
cost |
| Food |
233 |
107 |
|
| Alcoholic drink |
85 |
109 |
|
| Tobacco |
48 |
115 |
|
| Housing |
113 |
107 |
|
| Fuel and light |
60 |
111 |
|
| Durable household hoods |
64 |
112 |
|
| Clothing and footware |
80 |
110 |
|
| Transport and vehicles |
140 |
111 |
|
| Miscellaneous goods |
70 |
113 |
|
| Services |
56 |
112 |
|
| Meals boought and eaten out |
51 |
116 |
|
Table 6 - Mr Hill's spending.
- For each group of items in Table 6 (except food and
clothing), write down a few items it may contain. For
example, 'Housing' includes rent, mortgages, rates and
repairs in the home.
- Copy Table 6.
- Find the 1978 costs of each category. (Use the method in
Section B4.)
- Total separately the 1977 costs and the 1978 costs.
- Find the combined price index for 1978, with 1977 as the
base year.
The combined index of all major categories is called the
RETAIL PRICE INDEX.
The Department of Employment calculates the Retail Price Index
each month, using January 15, 1974, as the base time. They find
out the prices in many shops throughout the country. Altogether
there are about 350 items on their list. They calculate
individual item indices and combine them to find category price
indices. From the Family Expenditure Survey carried out
annually, the amount spent in each category is found, and hence
the Retail Price Index is calculated.
|
