Measuring inflation and the standard of living

Australia has an odd way of measuring inflation compared to the rest of the world. The data is collected infrequently and only in the urban areas.

This makes the measure difficult to use when answering the question "Is the standard of living rising or falling for Australians?"

Of course the real cost of goods and services is only one way of measuring the standard of living, but it is an important one. And in the election campaign much has been made of 'skyrocketing prices" by the idiot Abbott and his cronies.

This article in the Guardian Australia shows that Australians are actually better off in real terms when considering their nominal incomes and the price level. This is very much in contrast to the rest of the developed world and you have to ask why Labor have not made much more of this. But that's another story.

What the article does show is how important it is to include the correct prices of goods in any calculation of inflation and how you have to compare it to incomes when considering real incomes. It also exposes the Liberals claims on the cost of living as a crude distortion of the facts. But we are used to that from Australian politicians aren't we?

The Guardian article is here

And another more scathing article is here