In 1822, Scottish economist Joseph Lowe devised the concept of a "shopping basket," which tracks price changes over time by grouping various goods into a single basket. Attempts to compare prices by bundling goods had been made before, but Lowe was the first to apply weights rather than a simple average. His idea later developed into the "Laspeyres index" and the "Paasche index," which measure prices using a weighted arithmetic mean.
The consumer price index (CPI) was institutionalized as a national statistic in the wake of the severe inflation surrounding World War I. As industrialization and urbanization increased the number of wage workers in the late 19th and early 20th centuries, the focus of labor-management conflict shifted from nominal wages to real wages. When prices soared amid war and the Great Depression, demands grew for a systematic price index to serve as a benchmark for wages. In the United States, the Bureau of Labor Statistics (BLS) began publishing the CPI in 1913, and it became a representative inflation indicator as the Federal Reserve (Fed) used it in monetary policy.
In Korea, the Gyeongseong Chamber of Commerce and Industry first surveyed retail prices in 1936. The work was transferred to the Bank of Joseon in 1945, and the "Seoul Retail Price Index" was published in 1947. Later, the Economic Planning Board calculated the "All Cities Consumer Price Index" in 1965, establishing an official price index system. Statistics Korea replaces CPI items every five years to reflect changes in economic and social structures and consumption patterns. In the upcoming revision, 10 items including over-the-top (OTT) subscription fees and malatang will be added, while seven items including peanuts, bellflower root and bracken will be excluded.
However, as high prices persist and the gap between the CPI and perceived inflation widens, critics point out that the index fails to properly reflect reality. It applies an average weight for all households without sufficiently reflecting differences in consumption structures by income bracket. Another limitation cited is that, unlike major countries such as the United States, the United Kingdom and Japan, Korea uses owner-occupied housing costs only as a supplementary indicator. The CPI is a shopping basket that captures the times. As the government has even formed a minister-level task force (TF) to wage an all-out effort in price management, easing the weight of ordinary citizens' shopping baskets must begin with accurately capturing reality.
