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Outline the shortcomings of consumer price index numbers .

Outline the shortcomings of consumer price index numbers .

Answers

John
1. It is practically difficult to distinguish one category of people from another.
2. It is also difficult to eliminate the effect of change in quality and grade of goods and services purchased by households.
3. This type of index cannot be used for comparing the price changes in consumption of goods and services in two localities or two households in the same locality as number of two households can be homogeneous.
4. As the construction of consumer price indices involves the sampling of goods and services, sampling errors and biases may affect the indices.
5. During the course of household budget inquiry, the price of goods and services and their demand may change.
Jonmhumble answered the question on November 9, 2017 at 14:14

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