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The Index of Retail Prices, January 1956 to January 1962

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The Index of Retail Prices, January 1956 to January 1962 IE Extracted from Economic Trends^ No. 104, June 1962. The index of retail prices, January 1956 to January 1962 Introduction items and of important chanGes in import prices. The This article is an expansion of an article in the May GroupinG, which is the same as in the previous article, I960 issue of this publication and reviews the move­ is of necessity arbitary and is based on actual move­ ments in the index of retail prices durinG the period ments in retail prices. January 1956 to January 1962. DurinG this time the The ‘seasonal’ items are fresh milk, eggs, potatoes index rose by 17^ points. The rise did not occur uni­ and other fresh vegetables, apples and pears, fish and formly; takinG 12 months’ periods, mid-January to home-killed mutton and lamb, which together had a mid-January, the index rose by nearly 4-i points in 1956, weight of 93(1). over points in 1957, nearly 2 \ points in 1958, fell by The second cateGory—items for which retail prices half a point in 1959, rose by nearly points in 1960 chanGed markedly followinG chanGes in import prices— and then by over 5 points in 1961. comprises bacon, cooked ham, butter, cheese and The rise was the result of many component move­ chilled and frozen beef, with a total weiGht of 47. It will ments which were not all similar. Thus the housinG be seen from Chart A that over the whole of the six Group showed an increase of about 40 per cent, over years 1956-61, apart from a few months in 1959, the the six years and fuel and liGht, services, and miscel­ index for items affected by chanGes in import prices laneous Goods rises of about 30 per cent. On the other was lower, usually appreciably lower, than the index hand, durable household Goods rose by only 2 per cent, for the food Group as a whole. and clothinG and footwear by 6 | per cent. It is note­ The remaininG food items are home-produced foods worthy that the index for food rose by almost exactly which show no important seasonal movement, home- half as much as that for all Groups other than food produced manufactured foods and those imported combined, that is by lOj^ per cent, compared with foods (both manufactured and other) which have not 21 per cent. The movements in the all-items and Group been subject to any marked chanGe in price in the indices are irreGular, resultinG from the operation of period covered by the review. This Group has a weight various factors. of 210(2). mi) In the last section of the article the annual chanGes Potatoes, milk and eGGs are important contributors I in the all-items index are analysed into chanGes in the to the movement of the seasonal Group. The price 91 sections of which it is composed. It will be seen that 'l>^ trends of potatoes are influenced by two main factors: « \ prices were constantly chanGinG and that movements in the size and keepinG quality of the crop and, at the a •1' 5 i t the all-items index were the results of many chanGes, end of the crop year, whether the next crop is earlier J" some up and some down. or later than usual. The hiGhest prices usually occur in 1*^. The index is calculated monthly, normally in respect the period of replacement of old crop supplies by new, jl^ 'Mr: of the Tuesday nearest to the 15th of each month. and the incidence and amplitude of the seasonal peak DurinG the period covered by this review it had 17 varies from one year to another. The price of milk is r January 1956 as its base date and its weiGhtinG pattern usually reduced durinG the summer, but the period of n;• %- was derived from the averaGe pattern of expenditure in reduction varies; in 1958, 1959 and 1960 it lasted for ' i - 1953 (revalued at January 1956 prices) representative six months, but there was no reduction in 1961. The i | : of the great majority of households in the United price of eGGs usually falls in the spring and later rises i . KinGdom, includinG practically all waGe earners and to a higher level which persists from about AuGust most small and medium salary earners. AlthouGh the until the end of the year, but here too the incidence of exact movements between index dates are not known the seasonal pattern varies appreciably from year to the charts in this article use the normal convention of year. The averaGe price movements of the seasonal •4 If 'M joininG the points plotted for the various index dates items Group is therefore sometimes the result of con­ fr^l by a continuous line. The weiGhts of the components flictinG movements in its components. The peaks in S5- SV&: of the index total 1,000 and the weiGht of each Group is April 1956, July 1957, June 1958, June 1960 and June U rXi, Vj_=4.-Sr:^;.•ic-*" Given at the beGinninG of the commentary. 1961 were associated with relatively hiGh prices for potatoes, while the low point in March 1957 reflects The main groups of the index ■ unusually low prices for potatoes and eggs and a drop in the prices of other veGetables, particularly tomatoes. Food {weight 350) HiGh eGG prices contributed to the peak in December For this review, the items in the food Group have 1957. The relative stability from October 1958 to May been divided into three cateGories, in order to show the 1959 was due largely to potato prices which were at a effects of the considerable fluctuation of the ‘seasonal’ comparatively hiGh level durinG most of this period. (’) The total weight of this group varied slightly according to which vegetables were in season. (*) The exact weight varied slightly according to the distribution of the weight for vegetables between fresh vegetables in season (see footnote (') ) and canned and frozen vegetables. 74 •4 — H « IitA !/ F. ^8es ij = « in Prices n ®PP'e and ^'«toes »k ‘’“•ler 3 total weish’i „ f „ , ,7 ^ J S |jblySr ' "'ri than,h?T the P"“*ijdej ^tome-produced foods easonal movement, hom^ those imported f other) which have not 0 change in price in the '’• This group has a weight jummer, A. i L i i i 4 ^ 'p » i , In most years there is a low point in September. The HousinG {weight 87) fact that the seasonal pattern varies considerably from The rents of most privately-owned dwellinGs let year to year both in timinG and deGree of fluctuation unfurnished to the types of household covered by the makes it particularly difficult to estimate a normal index were subject to control throuGhout the six years seasonal movement. 1956-1961, althouGh some dwellinGs were decontrolled The pattern of price chanGes for the second Group of and others are becominG decontrolled under the items was quite different. ThrouGhout the period provisions of the Rent Act, 1957. Before October 1957 covered by this review apart from the months October the only chanGes in rents permitted for most of these 1959 to January 1960, the- averaGe price of butter was dwellinGs were in respect of local rates, althouGh the lower (and usually substantially lower), than at the HousinG Repairs and Rents Acts which came into effect base date in January 1956, the lowest levels beinG in 1954 permitted increases in the net rents of some recorded in May and June 1958. DurinG 1957 and dwellinGs in certain circumstances. However, relatively most of 1958, the averaGe price of cheese also was lower few increases resultinG from this leGislation were than in January 1956, reachinG its lowest level about reported in 1956 and 1957. The General increases the end of 1957. However, by the end of 1958, it was permitted by the Rent Act, 1957, in the net rents of well above the base level and rose further durinG 1959. privately-owned dwellinGs let unfurnished, began to take The averaGe price fell aGain in the sprinG of 1960 to effect in October 1957, but by January 1962 few new just below the January 1956 level and subsequently increases in controlled rents under this Act were being remained relatively stable. The averaGe price of im­ reported, althouGh increases were still occurrinG as ported beef rose markedly between March and October dwellinGs became decontrolled throuGh chanGe of 1958 and continued fairly stable at the hiGher level tenancy. durinG the remainder of the period covered by this review. The rises in the index for the Group between The rents of dwellinGs owned by local authorities are not subject to the Rent Restrictions Acts, and the April and June 1957 and between June and September averaGe net rents of these dwellinGs rose in each of the 1960 and the falls between January and April 1959 and years 1956-1961. between June and October 1961 were due larGely to chanGes in the price of bacon. The averaGe amount of local rates and water charges As will be seen from Chart A the index for the other payable on dwellinGs rose from April 1956 when the new rates and water charGes were levied on the basis food Group rose sharply in 1956, was relatively stable I from March 1957 to March 1960, but thereafter con­ of the revised rateable values resultinG from the tinued to rise throuGhout the period under review. General revaluation of properties in EnGland and The rises in March and October 1956 were largely due Wales. The averaGe level of rates and water charges to increases in the prices of bread followinG a reduction in EnGland and Wales rose sharply in April 1957 and *J.
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