ABSTRACT
A lte r a tio n s in general prices are usually measured by Index Numbers of General Prices. These index numbers are compiled by collecting records of the wholesale prices of the most important commodities and calculating their percentage alterations, and from these figures obtaining an average percentage alteration. The exact method is clearly explained in Sauerbeck's Chart, the best known of the English compilations. The alteration in general prices thus measured is not, however, the same thing as alterations in the cost of living. For one thing, the index numbers are based on wholesale, not retail prices, while they take no account of such important items as rent and fares, or of services such as those of the domestic servant or the doctor. Moreover, they take no account of alterations in mode of living, such as the consumption of margarine instead of butter. Attempts have lately been made to measure statistically alterations in cost of living, but it has proved no easy task. It may be said, however, that the cost of living moves in the same direction as the index of general prices, but more slowly since rents and fees are not so easily raised as the prices of commodities.
