Tuesday, 11 August 2009

An interesting puzzle

While researching for Diamond Geezers I discovered that the first donation made by Brighton Lions the sum of £100 to buy and train a guide dog for a blind Sussex person. That was in 1951 and I started to wonder what that sum would equate to now. The last I heard, which was a few years ago, was that it cost £2000+ to train a guide dog, so I assumed that the 1951 £100 would be at least £2000 today. But how to find out?

Not unnaturally, I turned to the internet and quickly found several sites where I could compare the 1951 dollar with today's greenback and, tucked away on page three of the search results, there was one site that was concerned with the pound sterling. But this just listed the annual inflation rate for each month of each year - the retail price index - and this returned to a base of 100 at irregular intervals. And the starting base was several years before 1951. So, I devised a spreadsheet to calculate the equivalent value today of £100 in 1951, using the annual rates of inflation shown on the web site. According to this, we would now need to spend in excess of £3000 to buy the same quantity of goods as we could have bought for £100 in 1951.

I was reasonably confident that my spreadsheet formula was correct, but sent it all to another Lion (a retired accountant) to check, and he agreed that my formula seemed correct and that I had used the correct inflation rates throughout. 'But,' he said, 'I have discovered a site where one can input a year and an amount and it tells you today's equivalent - and that site says that the 1951 £100 is worth £2300 today.'

We examined my spreadsheet again and still could see nothing wrong. I browsed to the site T told me about and tried a few examples. I had calculated that £100 in 1951 was worth £X in 1957 - and this site agreed with me. It agreed on everything I tried, but still differed on the 1951 to 2009 conversion.

I put it all to one side and searched the web again. This time I found the Government's Office for National Statistics where they list the rates of inflation without going back to base 100 every few years. I haven't done anything with it, but T has constructed another spreadsheet using the same formula that I had written - and we now have a third answer!

Perhaps I will just take the average of the three and hope for the best.

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