Do UK price indexes overstate inflation? From: National Institute Economic Review | Date: May 1, 1995| Author: | COPYRIGHT 1995 National Institute of Economic and Social Research. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan.  All inquiries regarding rights should be directed to the Gale Group.Copyright information

Some economists have posited that official price indices overstate inflation, and thus understate real growth, due to the unmeasured quality change in such indices. Estimates put the overstatement of inflation in countries other than the UK at 0.5% to 2% per annum. In the UK, factors behind overstated inflation in official price indices include failure to allow properly for quality change and failure to allow for new goods. However, the rate of overstatement is not presently quantifiable.

Official price indexes may overstate (or understate) inflation for a number of reasons. These include ...

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