COST OF LIVING.

Taranaki Daily News, 1 June 1920, Page 3

COST OF LIVING.

I'OOl) PIUCKS XIIIO BEST INDEX.

OFFICIAL EXPLAN AXIOM INCREASE NOW li2 PER CENT. The value of food prices as an index of the increase in the cost of living is discussed in an article by Mr. J. W. Butcher, acting-Government Statistician, in the April issue of the Abstract of Statistics. He. concludes that the cost of living is now 'iii per cent, higher than in, .July, ISH4, The article explains in detail the method of compiling statistics of prices, a description of which lias already been published. it states that household expenditure may be roughly classified into five groups, the relative importance of which, in the total expenditure of the average household, has been ascertained to be approximtaely as follows:

Percentage of _ , Total Expenditure. Pood , 34 Housing . Fuel and light *"*"*"'*** r. Clothing ZY.l* 14 Miscellaneous K ll Totfll ~, ioo CLOTHING DEARER BY 130 Pfeß CENT. -After reviewing the statistics of food prices, rent, fuel, and light, the article proceeds to explain the difficulty of making a. complete analysis of the cost of living. "Retail prices of clothing are not capable of accurate statistical measurement, Mr. _ Butcher writes, "on account of the insuperable difficulties of selecting for this group a reasonably constant regimen (or list of articles) owing to the frequent changes of quality and grade, brought about by the influences of fashlon or the exigiences of the times. Hence no comprehensive system or collection and tabulation has been attempted, but the Census and Statistics Office has collected sufficient reliable information on the subject to enable a reason-, ably close approximation as to the increase in tlie price of clothing and drapery since the commencement of the war. •It may be said here that a comparison of prices of clothing between July, 1914, and January, 1920, recently made, shows the approximate increase to be over 15(1 per cent-

"The 'miscellaneous' class may be referred to as the 'impossible' class, as it would be absolutely impossible to compile a reliable index number covering this group, with its multitude of items, including not only goods but services. Miscellaneous expenditure covers a whole host of items, ranging from maternity expenses »on entering the (vorld to funeral expenses on leaving it, and including such various matters as , train and tram fare,?, postage and telegraph charges, medical and "dental fens insurance rates, local body rates, in-' comfe tax-, amusements, subscriptions to football and cricket clubs, church offerings, toy*, confectionery, school books, fines, etc. FOOD AND HOUSEHOLD EXPENDITURE. In view of the impossibility of compiling reliable index numbers for the clothing and 'miscellaneous' groups it might be concluded that composite index numbers covering food, rent, and fuel and light, representing, three-fifths of the expenditure of the average household, would give the closest approximation attainable as to the increase in the cost of living. While this was probably the cose prior to the war, conditions have since changed, and for the last three years at leass the increase m food prices alone lias given the truest indication of the general increase in retail prices and the cost, of living. "While retail prices of the"' 'miscellaneous' class arc not capable of statistical measurement, the indications are that the average, several important i items (for instance, local body rates, medical and legal fees, insurance rates, telephone and telegraph charges, train and tram fares) having shown'comparatively small increases—in some case." indeed, none at all. If we assume for <the miscellaneous' class an arbitrary increase of 50 per cent, between Julv, 1.114, and the present date, with corresponding lower increase of 40, 30, and 20 per cent, as at July, 1918, and IHI7, and combine in the proper proportions these arbitrary increases and the approximate increases ascertained for clothing with the published increases for lood, rent, and fuel and light, we arrive at the following percentage increases in prices for the months shown as compared with prices prevailing in July, 1914:' , 6 Increase-per cent, over July, 1914. Pood Food, licr.t, All July. 1917 light, etc. groups 1918 ... i «9 no J«ly, 1919 44 «"«■». 1920 02 45 63

Were it possible to ascertain the actual increase for the elothin« an £ < mis . cellaneous' groups it might be found that the diflerences between the food column and the 'all groups' column are somewhat greater than those shown, but the figures are near enough to prove that in the absence of complete* statistics the increase in food prices gives at present a truer ideal of the general increase in prices than does the combined increase for food, rent, and fuel and light. Hence it is suggested that for comparisons the "three food groups" give the closest available approximation to the increase in the cost of'livin" between July, 1914, and recent periods.