Prices

Abstract

There is a considerable array of material on prices available for most countries far back in time, before the period covered here. Most of this, however, is intractable in the extreme, and it has been decided to include none of it in this work. Instead, there are two sets of indices, based on this material but reducing it to some sort of readily comprehensible order. It was felt that annual average prices, in local currency, of (say) a kilogram of wheat were unlikely to be of use except to the specialist, and that a general indication of overall price levels would be more widely useful. Of course, there is oversimplification and distortion in the process. and, like all index numbers, those presented here require careful interpretation. In order to achieve exact comparability of an index over long periods of time, the commodities and their weightings must remain unchanged. However, in a changing economy first the weightings, and then possibly the commodities themselves will cease to be appropriate representations of the quantities and things actually used. All indices, therefore, must compromise between continuity and relevance, and the more rapid is economic change, the more frequent must be the breaks in continuity. In the period since the Second World War, the official indices in some countries have been changed very frequently indeed; whilst, at the other extreme, some of the eighteenth and nineteenth century indices remain unchanged for very long periods. Usually this does not involve much danger of lack of representativeness, since commodity consumption patterns changed very little in most countries until the second half of the nineteenth century, when increasing incomes and increasing urbanisation both began to have effects. A more serious problem in some of the early indices is lack of sufficient variety of information. Price series exist only for the most important commodities traded; and most of the series, certainly for the eighteenth century, are of prices paid by institutions, often on contracts rather than in the market place.