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  • inflation
    • consumer price index - prices on 710 goods and services from 200,000 shops. prices are combined using info on average household spending, which is worked out through the living costs and food survey. items are weighted
      • limitation - not totally representitve, doesnt include price of housing, hard to make comparisons with historical data
    • retail price index - includes housing costs, excludes top 4% and low income pensioners
    • effects of inflation
      • consumers
        • have to spend less if incomes dont rise, money worth less - those who saved will lose out, those in debt pay it off at cheaper value. feel less welloff (decrease in spending)
      • workers
        • if dont receive yearly pay rises - worse off, delfation could cause loss of jobs as there is lack of demand


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