Quote ="sally cinnamon"Mortgages are included in the Retail Prices Index but excluded from the Consumer Prices Index. For long run inflation comparisons its best to use RPI as the CPI only started being used in 1996.
The media most commonly reports the CPI as the 'headline figure' but the ONS announces both in the same release. Previously benefits, pensions etc were uprated in accordance to RPI until 2010 when George Osborne linked them to CPI instead (as its lower because it excludes mortgage payments). Also the Bank of England's target is based on CPI not RPI.'"
Excellent, so now we BOTH agree that the process of measuring inflation has changed since the 70s.
I should also say that it doesn't take enormous effort to dig up some pretty heated debates (in admittedly indigestible econo-jargon) relating to divergences in the calculation of RPI and CPI - especially across nations.
Quote I know what you are getting at that the cost of living seems harder for lots of people but I think the story there is less one of inflation being underrated and more one of wage inequality getting stronger. People at the lower end have not seen their wages rise much for a long time whilst wage rises for those above the middle end have been very good for a while. So those that are fairly well off have enjoyed rocketing living standards as they can enjoy more consumption due to consumer goods being cheap. Those at the lower end are more exposed because things like energy, petrol and food take up a greater portion of their spending.'"
I think I've been pretty clear about the issue of wage stagnation (whose genesis can be traced back to Ford and Nixon).
