•Particularly relevant for poorer developing countries with low Particularly relevant for poorer developing countries with low wages and high poverty rates
•Most straightforward method
•Statistical issues:
–Need to define the composition of a basket of goods/services that reflect a reference living standard (eg minimal quantity that reflect a reference living standard (e.g. minimal quantity and quality standards of food, clothing, health care and shelter)
-Availability and reliability of statistics on cost of living
–Data sources: Household income and expenditure surveys (monthly per capital consumption expenditure) CPI/Cost of Living surveys