Property prices with regards to inflation (1 Viewer)

[bell531]

I've been given conflicting information from my two textbooks as to whether property is included in the calculation of the Consumer Price Index, and headline inflation. Tim Dixon's book, "Australia in the Global Economy", said this:


"...the CPI does not include property prices, so that the large increase in residential property prices since the late 1990s has not been reflected directly in the CPI"



and Tim Riley's book, "Economics 2009", said this:

"The method of calculation of the CPI by the ABS changed in 1998. The ABS now uses an 'acquisition' based approach in measuring prices...this means...the purchase price of new houses (excluding land) is included"


So, whats the consensus? Is property included, or not? Is this a simple misunderstanding by me, that will make me feel stupid as soon as it is explained? I have a feeling it is...

Thanks in advance.

 

[Mu5hi]

hmm, it seems both are complete oposites, if they are both 2009, then ask your teacher.

 

[munchiecrunchie]

This is what ABS says:

1 The Consumer Price Index (CPI) measures quarterly changes in the price of a 'basket' of goods and services which account for a high proportion of expenditure by the CPI population group (i.e. metropolitan households). This 'basket' covers a wide range of goods and services, arranged in the following eleven groups:

* Food
* Alcohol and tobacco
* Clothing and footwear
* Housing
* Household contents and services
* Health
* Transportation
* Communication
* Recreation
* Education
* Financial and insurance services.

I think what the confusion may be related to is the removal of credit + mortgage repayments in the calculation of the CPI in 1998 (leading edge)

so yes, housing is included.