Consumer prices and private consumption in Poland and Austria

Abstract

Starting from a bilateral comparison of consumption levels in Poland and Austria in 1964, 1973, and 1978, the authors calculate the implicit price indexes for both countries. The confrontation of the implicit and official price indexes seems to prove that official data grossly understate price inflation and overstate real growth of consumption in Poland. The causes of this discrepancy are mainly seen in the systemic difficulty of properly measuring price changes in Poland's “shortage economy.” This problem may arise in all international comparison between centrally planned and market economies when official price indices are used.