HC Deb 21 May 1993 vol 225 cc335-6W
Mr. Austin Mitchell

To ask the Chancellor of the Exchequer what was the aggregate increase in prices in non-food items since 13 January 1987 for(a) the groups in table 18.2 of the April edition of the "Monthly Digest of Statistics" and (b) table 18.1 for March; what is the reason for the difference between the two figures; what account was taken of foreign holidays in (i) the weights in both tables 18.1 and 18.2 and (ii) the averaging in table 18.2; and if he will make a statement.

Mr. Nelson

The aggregate increase in prices in non-food items within the retail prices index since 13 January 1987 was 39.7 per cent. by 12 January 1993 and 40.8 per cent. by 16 March 1993.The difference between the two figures simply reflects changes in prices between January and March.

Foreign holidays were introduced into the RPI with effect from February 1993, following a recommendation of the RPI Advisory Committee, Cm 2142.Thus, while March 1993 edition of the "Monthly Digest of Statistics" contains indices up to and including January 1993, with no foreign holidays component, the April 1993 edition contains indices up to March 1993, including the new foreign holidays component showing the movement compared to January 1993.

The foreign holidays component in the all-items RPI for 1993 has a weight of 30 parts per 1,000.

Changes in prices for the RPI are measured by comparing them to their levels in the previous January and then weighting them together using the latest weights for the current year to produce an overall average price change for each month. These average price changes are then linked with the figures for earlier years.

By "chain-linking" the calculations in this way, the index can both take account of changes in the make-up of household spending from year to year and provide comparisons between different years. This procedure ensures that if something is dropped from the index or introduced, the index is not distorted. Thus, the introduction of foreign holidays has not resulted in a discontinuity in the level of the index.

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