Cameron’s misleading stats

Average take-home pay went up by more than inflation last year to April 2013 for everyone but the top 10%. Proof, according to Cameron that everyone is getting better off; but the truth, as people feel, is that it’s still tough and getting tougher.
So is Cameron lying? No. His claim seems to be true, but it doesn’t do what he says it does.
The biggest problem is the inflation figure, in this case RPI.
This is always a political hot potato and the rival CPI – consumer prices index – was invented to take housing out of RPI, buffing the glow of a housing boom. Politicians now choose whichever most suits their arguments.
However, neither of them measures the problem felt by millions of ordinary people every day, which is that essentials have been going up faster than fripperies. Both CPI and RPI measure the prices of a basket of goods containing the sort of things that most of us spend our money on. The basket changes regularly to reflect changing habits, but it – necessarily – includes non-essential items like electronics, on which we spend more and more of our money. A lot of the non-essential, tech-based stuff we buy has been falling in price, which is a good thing – but it really distorts price indices, and explains how Cameron’s statement disguises the truth.
Essentials are things like food, rent, fuel, commuting and childcare. Not luxuries, feel-good items like a new phone, but the bills you have to pay every day, week and month whether you like it or not; and for most of this Parliament they’ve been going up a lot faster than RPI. It’s this faster-than-RPI rise in the costs of living that is causing the cost of living crisis and makes it hit the poorest hardest.
Cameron understands this, but he has no interest in doing anything about it.

The best riposte would be more statistics. I propose a new prices index, the essentials prices index, or the cost of living index, based only on a basket of essential items: rent, food, fuel, commuting and childcare. The purpose is to measure the effect of price changes on the poorest part of the population.

It’s also worth pointing out that the main reason Cameron’s claim is true (take-home pay rising faster than RPI) is the rise in the personal tax allowance, which is a LibDem policy. Cameron’s preference is to reduce tax rates, which is generally less progressive.


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