COST OF LIVING.

Hawera & Normanby Star, Volume LXXIV, Issue LXXIV, 4 March 1919, Page 4

COST OF LIVING.

THE BASIS OF CALCULATION

(By Telegrapn—Special to Star.) WELLINGTON, March 3. An exceptional increase in the index numbers of retail prices of groceries for December, reported by the Government Statistician last week, was explained ]by him as being largely due to abnbrmaur/prices of potatoes during the month. jpThis has aroused criticism of the whore basis of calculating the cost of living, and its reduction to index numbers" for purposes of easy comparison.: The suggestion is that the figures do not truly represent the real cost of living to the working people who make an expenditure on the various necessaries covered by the index: numbers, as they-""would adjust their buying "arrangements in accordance with prices, and leave potatoes alone if they were unduly high in price. But an examination of the process of making up these index numbers' shows that the criticism will not stand the test of practice. So much attention is now being paid to the official cost of living figures that your correspondent asked the Government Statistician to explain the basis of compilation. Four groups of necessary food commodities are taken into consideration. The grocery group contains 32 articles, all necessaries; dairy products cover 7 articles; meat, 21 headings, so as to include the prices of all important joints; the fuel and light heading has 7 items. Here are 67 items, the cost of which is ascertained month by month. They form the greater part of the daily diet, and are necessary to maintain the worker m health and capable of exerting the normal amount of energy. If, as suggested by critics of the figures, the worker turns to something else as a substitute for high-priced potatoes,.- it would be difficult to secure a moneysaving substitute of equal food value. Unless he actually - reduced the food value of his diet, he would not reduce the cost of living. He usually has to adopt the expedient of meeting the higher expenditure on -these 67 necessaries by cutting down expenditure on luxuries and miscellaneous items, which the Government Statistician does not take into account in making up his index numbers. The items consideredin making up the cost of living statistics are so essential, that if any attempt was made to leave any of them out, the working man would be carrying on an experiment in economy as ridiculous as that of the man in the table, who in the interests of economy cut his horse's food down to one straw per day, and succeeded perfectly in saving—only the horse died. Monthly comparisons are admittedly unreliable, says the Government Statistician, but they are published because or the interest taken in the subject and the information they give regarding temporary fluctuations But when comparisons are made they should be i made over a period of a year, when it ! will be found that as the basis in the price of a number of absolutely essential commodities the statistical result is sound.