We’re told that the banana price blow-out has hit the Consumer Price Index. According to the Australian Bureau of Statistics, fruit contributed 0.6 percentage points to the 4.0% through-the-year Consumer Price Index increase. And the rise in fruit prices was mainly attributable to an increase of approximately 250% in the price of bananas during the June quarter 2006.

But I would question the credentials of this statistic.

To formulate its CPI stats, the ABS considered the number of bananas Australians ate three years ago. The fact that most of us did no peeling in the June quarter of this year because Cyclone Larry wiped out the Queensland crop was irrelevant. The fixed basket of goods the ABS uses to determine the CPI means home buyers are now facing a higher interest rate for the increased price of something they did not eat. Welcome to the wonderful world of the statisticians.

In the real world of the supermarket shopper, when you cannot get, or cannot afford, the fruit you want, you buy an apple. The trolley of goods is a moveable feast not a fixed one but the CPI is based on the pattern of household expenditure in 2003-04. In this age of the supermarket scanners it is surely possible to calculate an inflation figure that take in to account substitution effects so that the real world is measured rather than an imaginary one.