Statistics of Prices

PRICES, STATISTICS OF. The following article deals with the movement of wholesale prices, (A) since 1782 in the United Kingdom ; (B) since 1913 in the United States and other countries; (C) the wholesale prices of selected commodities ; (D) the movement of retail prices of food in the United Kingdom.

These general movements are measured by index numbers (see INDEX NUMBERS), which are averages, computed in various ways, of the changes of prices of selected commodities. The relative importance given to the various classes of commodities in the principal index numbers for the United Kingdom are indicated in the table at the left.

During the very rapid and diverse price movements from to 1922 the results obtained by the three methods diverged (see table IV.) : that of the Board of Trade is on the broadest and most scientific basis.

A. The United Kingdom.

Table I. and fig. 1 exhibit the general movement of wholesale prices, so far as it can be measured, for nearly 150 years. With the outbreak of the French wars in 1793 prices rose, and after some fluctuations, especially at the date of the Peace of Amiens in 1802, reached in 1810 a level nearly twice as high as in 1790. A considerable fall took place immediately after the battle of Waterloo, and, again with fluc tuations, prices tended downwards to a minimum about 185o, when they were 25% lower than in 1790. In consequence of the Californian and Australian gold discoveries in 1847 and 1851 prices moved upwards on the whole till 1873. With renewed de mand for gold in consequence of the demonetization of silver on the Continent, a considerable fall in prices followed and the minimum of the 150 years under review occurred in 1895-97. With the development of the South African gold mines prices then rose till the outbreak of the World War, and in 1913 reached approximately the same level as in 1844 and 1881.

This general view is of course based on the average of the movements of prices of many commodities and eliminates the effects of the variations in supply and demand on the prices of particular goods. The only complete record at all easily obtainable for one nearly unchanged commodity is that of the prices of Brit ish wheat, which are shown in Table II. and fig. 1. The fluctuations in the price of wheat were extreme over the whole period 1782 to 1878; after the latter of these dates the increased availability of the American and other distant sources of supply partially steadied the price, which no longer was dependent on the English harvest as in the Napoleonic wars. On a broad view it is

seen that the price of wheat has moved with the prices of things in general—both the general index-number and the price of wheat had in 1927 returned nearly to their levels of 1783—but the rise of wheat prices was much the greater of the two in the Napoleonic wars and much the less in the World War, while its fall was de layed in the decades following 182o. A detailed study of the dia gram would show the sharp rise in prices during the Crimean War, 1854-55 (especially on wheat prices), the American Civil War, 1861-63, the Franco-Prussian War, 187o-71, and the South African War, especially in 1899-190o, as well as in the two great movements in 1790-1815 and 1913-21. Also the dates of the well known commercial crises are marked by sudden drops of price, e.g. in 1825, 1836, 1839, 1873, 188o, 1891 and 1907.

It is interesting also to study the only record of retail prices that is available throughout the century, namely the price of bread in London (Table III.). It will be found on examination that there is a fairly constant relationship between the prices shown in tables II. and III. expressed by the formula :—price of the 4-lb. loaf in pence=2.o6+(number of pence per quarter of wheat±98).

Immediately after the declaration of war in 1914 prices began to rise, and with certain interruptions continued to mount up till the spring of 192o, when the index numbers reached their maxi mum (Statist 323, end of April; Economist 326, end of March; Board of Trade 357, average of July). Till Oct. 1917 the increases showed a remarkable regularity, averaging 2% monthly, equivalent cumulatively to 27% per annum; on this scale the index in the successive Octobers would reach 106 in 1914, 135 in 1915, 171 in 1916, 217 in 1917 and 258 in 1918, numbers which (except the last) are in close agreement with those shown in Table IV. There was, however, a definite seasonal movement superimposed on this regularity; in the first three or four months of each year prices moved up with special rapidity, while in the summer the increase was slackened and in some cases was replaced by a fall. The check in the increase in the summer of 1917, following a specially rapid rise, is attributable to the control of prices which by that date was general. From Aug. 1917 prices continued to rise in spite of con trol till Sept. 1918, but the rise in these 13 months aggregated to only 13% (239 against 213).