MINISTRY OF ECONOMIC AFFAIRS, _23rd August, 1922_.
_To the Chairman, Provisional Government, Ireland._
By minute dated the 10th June last we were appointed by the Government to determine the cost of living in Ireland for the months of March and June, 1922, as compared with the cost of living in July, 1914, on such a basis as would show the average increase in the cost of maintaining the same standard of living for a family dependent on wage earnings. We were asked to complete our calculations not later than July 15th, if possible, but owing to the fact that a considerable proportion of our staff were unable to reach our offices during the recent troubles in Dublin we were given until the 25th to complete our work. The following letter was sent to the Head of the Government on the 26th July:--
"A Chara,--The Report of the Cost of Living Committee is not yet finally drafted, but the main lines of it have been agreed upon. We think, therefore, that we ought to acquaint you at once that our investigations show that the percentage increase in the Cost of Living of Wage Earning Classes in Ireland between July, 1914, and June, 1922, is 85.2 per cent. and the increase between July, 1914 and March, 1922, is 91.4 per cent.
The following Report, while bringing out the points essential to a purely Irish cost of living inquiry, can hardly be regarded as exhaustive, in view of the mass of figures collected which could be examined from many different points of view. Had we been able to spend a longer time in digesting these figures we should not have arrived at any different final result as regards the Irish cost of living figure; but we think that many interesting and important facts might be brought out by a further analysis of the figures which we have not had time to undertake, and we suggest, therefore, that the Government should request the Ministry of Economic Affairs to investigate more thoroughly, from the point of view of their general economic significance, the figures collected and compiled.
Method of Compiling Cost of Living Figures.
In every country in which cost of living figures have been obtained the same method, as far as broad lines are concerned, has been followed. The method adopted is to ascertain the average retail prices for a number of representative commodities for the dates to be compared and then to combine these retail prices in a single figure representing the change in retail prices as a whole. This combination is not effected by a plain average, but the individual price changes are "weighted" according to a comparison of the amounts spent on each of the commodities concerned (_e.g._, a change in the price of a commodity such as bread, must obviously be given more "weight" than a change in the price of such commodities as cheese or soap) and in order to determine the proper "weight" to attach to the retail price changes, representative family budgets are obtained showing the details of the actual expenditure of a large number of households. By combining these budgets it is possible to discover the relationship between the consumption of the various items; for instance, 12s. may be spent on meat for every 5s. 6d. spent on butter, and so on. The retail price changes can then be "weighted" according to the results given by the budgets and the final figure arrived at by combining them on these lines.