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  Using data on consumer spending from the following website that tracks consumer spending during the COVID-19 period (https://alphabeta

Writing Sep 03, 2020

 

Using data on consumer spending from the following website that tracks consumer spending
during the COVID-19 period (https://alphabeta.com/illiontracking/), provide a critique on the
calculation of the CPI in the June 2020 quarter by the ABS. (Note that the consumer spending
indices reflect price × quantity of items purchased).
Assume that prices in two of the twenty categories listed in the website in part (a) (food
delivery; furniture and office) have increased by 8 percent since the start of COVID-19 (i.e.
between Jan to July 2020), while prices for two other categories (travel and taxi/rideshare) have
decreased by 10 percent. Assume that prices for the remaining 16 categories remain constant.
Explain what effect this will have on the inflation rate, and how you arrived at your conclusion,
including any assumptions that you make.

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