From CPI to stagflation: how the UK tracks price rises and what key inflation terms mean

theguardian.com:

On its website the Bank of England has a tool allowing users to find out how prices have changed ever since King John was on the English throne back in 1209.

By its calculations, goods and services costing £10 six years before Magna Carta was sealed would today cost £16,427.96.With the latest cost of living figures due out on Wednesday morning, Threadneedle Street’s ready reckoner puts the UK’s inflation record into historical perspective.

It also highlights the many different ways – official and unofficial – in which changes to the cost of living are calculated.The Bank pieced together its guide from a number of sources; a cost of living index provided by Prof Greg Clark for 1209 to 1750; a composite prices index for the years 1750-1947; and the consumer prices index (CPI) and retail prices index (RPI) for the years since then.But what exactly do these indices measure, and what are the benefits and limits of these methods?

Here are some of the key terms deployed by statisticians, central bankers, politicians and economists to understand changing prices and what they mean.The Office for National Statistics (ONS) provides three main measures of inflation each month Its preferred measure of the cost of living is CPIH – the consumer prices index adjusted for housing costs.