According to the CPI, the cost of everything has risen 12.6% in a decade. Most of the problems stem from the CPI’s laudable attempt to calculate an all-encompassing household inflation rate — for a population that is anything but homogeneous. The surging replacement cost resulting from natural disasters, such as the Christchurch earthquakes, is cited as evidence the real rate of inflation is significantly higher than reported. In 2015, the bank estimated the total cost would be about $40 billion; more than twice its 2011 estimate. Asked whether the CPI methodology tempts the Government to fudge the real cost of living, Minister of Statistics James Shaw said the CPI is a macro-economic indicator and not a direct measure of living costs.

Source: Otago Daily Times February 23, 2020 14:37 UTC