/ Money

Do we need Google’s new index rate?

Stock market charts

You might only know about the government’s index rate, but Google’s just announced its own price index and there’s even one for the ridiculously well-off. So where do you fit into all this?

Prices are rising. September’s official consumer prices index (CPI) inflation rate is 3.1%. Until recently, the government used a different measure, called the retail prices index (RPI) which is currently 4.6%.

The difference between CPI and RPI might not seem much, but it matters because the government has decided to use September’s CPI as the yardstick for public sector pension increases in 2011. It’s even going to impact many benefit rates.

All in the nation’s shopping basket

So what do these figures actually mean? Well, CPI and RPI are both worked out by comparing prices for an imaginary basket of goods over a 12-month period. The difference between the two rates is that RPI takes account of housing costs, like mortgage interest payment and housing depreciation – CPI doesn’t.

The contents of the government’s ‘basket’ are updated each year to reflect our lifestyles and buying habits. So this year garlic bread replaced pitta bread, lip gloss replaced lipstick and Blu-ray players were added.

There’s an index for everything

But it’s not just government indexes that matter – there’s been some entertaining measures popping up of late.

Most recently, Google has come up with a measure if its own – the Google price index (GPI) – to compare online prices. Its inventor admits this index is more selective than government measures, but claims that the real-time nature of online data-gathering makes it more up to date.

Another American index is the Cost of Living Extremely Well (CLEWI), calculated by Forbes magazine since 1976. This tracks the prices of 40 luxury goods and services, from fur coats and caviar to Lear jets and New York lawyers. This year the price of a Steinway grand piano fell by 15% and the price of cigars remained unchanged. Hmm, not one to affect most of us.

There was even an amusing correlation made last week between the number of emotional posts on Twitter and the Dow Jones index. Apparently, the gauge of emotions, such as ‘anxious’ or ‘friendly’, bares an uncanny resemblance to movements on the stock market.

How do you compare to government indexes?

A lot of us feel that our own rate of inflation is higher than the government figure. The Office for National Statistics agrees and has an online calculator so you can work out your personal rate.

It works by taking into account how much you spend on a number of key items, from food and heating to transport and holidays. If an item that makes up a big share of your total spending has gone up sharply during the last 12 months, it drives up your ‘personal rate’. If one of these falls, it drags it down. Give it a go and see where you stand in comparison – my rate was about average last time I checked, but how about yours?

Do you think official rates give the whole picture, or should another measure, such as wages, be used to set pension and benefits? Will Google’s initiative help, or are there already too many measures?


I think this is a helpful move. The government official figures are constantly being “massaged” to an extent that they are no more than bare-faced lies. We all know that real inflation is much, much higher – what we need to know is exactly how much higher. Google is a popular and fairly trusted organisation, so it is a great idea for them to help out. However, it would be even better if Which decided to do one, since you are totally impartial and trustworthy, and can be relied upon to develop a sound basis for the figures.

The last thing we need is another American company sticking it’s nose into our affairs, how can you trust Google when they have been collecting wifi account password and emails under the guise of collecting pictures of our streets. Why is it that MP’s and large corporations can steal, invaded our privacy and lie to us, and the when they are found out all they do is say sorry, they never appear to be prosecuted as Joe Soap would be for more trivial things.

Canonach, the only reason that Google were able to collect any data from broadband users was that the users had made a very poor job of setting up their equipment. It was almost like putting their information all over the walls of their building. Setting up a Wifi set up is a little complicated and unfortunately it is too easy for users to just not bother, but they are leaving themselves open to possible prosecution if someone uses the unsecured facility for criminal activity. I do believe that Google did not want all the junk that they also obtained along with the one bit, the users broadcast identity (SSID), even that could perhaps should have been suppressed by the users in question.
As for the real point of the article, the creation of a new index rate is probably to be welcomed, Google do have a commercial interest in making it a solidly based index that people will pay for. Remember the present indexes are paid for by tax payers snd can and have been used against sections of the community.