RPICPI User Group

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Measurement of energy price inflation

  • 1.  Measurement of energy price inflation

    Posted 05-06-2018 14:57
    Hi All

    A couple of developments today have put energy price inflation to the fore. Firstly there was the news that petrol & diesel prices at the pump rose by a record amount in May according to the BBC. But my point is at least they are transparent whereas this from Paul Lewis of Radio 4's Moneybox looks at something which is anything but.

    "SSE price rises. A standard tariff. Standing charges up 29.6%. Electricity tariffs up 7.6%, gas tariffs up 4.2%. A small user's bill I have seen will suffer an overall rise of 12.3% 'over the year' (unspecified). That's why 'typical' rises of 6.7% are misleading."

    This poses more than a few challenges for knowing what the actual price is which means that inflation measurement is even harder. This echoes my experience of switching recently where even if you know your usage that is only of a certain amount of help as a colder winter would change the gas usage ( if you use it for heating like me) a fair bit. So how do our statistcian's deal with this issue which seems to be getting worse as was there not an effort some years back to get rid of standing charges?

    One may also wonder how "typical" relates to mean and median...........?

    Regards

    Shaun Richards
    https://notayesmanseconomics.wordpress.com/