Maths - Investigating inflation

5th October 2012 at 01:00

What it's all about

We have had 90 years of the BBC. It is a venerable institution that has done a lot for news and period drama. But what, you might ask, has it ever done for maths, writes Jonny Griffiths.

Any answer would certainly include Radio 4's excellent More or Less, which tackles topical statistical problems with admirable brio and perception.

More or Less gave us this example: our basket of goods contains a shirt costing pound;20 and a blouse costing pound;25. Over the year, the shirt goes up to pound;25 (a 25% increase), while the blouse drops to pound;20 (a drop of 20%). Using one method of calculating inflation, we can say that inflation overall is the average of these, or (25 + (-20))2 = 2.5%. So far, so good.

Suppose the next year the shirt drops back to pound;20, while the blouse rises back to pound;25. What is our inflation percentage for this year? Again, we have ((-20) + 25)2 = 2.5%, so over the two years inflation would seem to be steady at 2.5%. But the prices of our clothing items, over the two years, are unchanged, so surely any sensible measure of inflation must give us 0%.

This looks like a magic trick. The scary thing is that we can reveal that the retail price index (RPI) is calculated in this kind of way and, at times, benefits and pensions have been based on that.

Hopefully this will leave students gasping - and ready to question figures they are handed in their own financial lives.

What else?

Introduce inflation with a PowerPoint from AFJ88, bit.lyinflationintro. You can also get pupils to revise inflation terminology using Howdrey's bingo game, bit.lyinflationbingo.

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