Playing with Official Inflation Statistics: An Example from Germany By Karl-Friedrich Israel The Harmonized Index of Consumer Prices (HICP) consists of 12 subindices, which are weighted according to their shares in total household expenditures. If, for example, food and non-alcoholic beverages (subindex 1) account for 15% of expenditures, they should also be given a weight of 15% in the overall index. In this way, each expenditure category would be given the importance it has for an average household. This is the claim of official statistics. But here, too, as so often, aspiration and reality diverge. In Germany, the traditionally largest subindex covers housing, water, electricity, … [Read more...]
May Inflation Surges to 3.2% in OECD Countries
The Organization for Economic Co-operation and Development (OECD) has finished aggregating the May inflation data provided by its member countries and has released the results. Energy prices were up a whopping 14.2% for the 12 months ending in May while food prices were up by 3.9%. The overall average for all products in all the OECD countries was 3.2% in May. This was up from the 2.9% reported in April. The major components of this increase were mainly a sharp acceleration of inflation in Canada (to 3.7% in May, up from 3.3% in April) and the United States (to 3.6%, up from 3.2%) with high food and energy prices being the main drivers. The following chart breaks the components down by … [Read more...]