This is a post attempting to illustrate how seriously we should take the idea that there’s a thing called “the price level”, and that it’s the one thing we can measure so accurately that it should be used as the nominal anchor.
I’ve graphed the change in the level of all the broad price indices for which the ONS have a data series. (I couldn’t find a series for the old “Tax and Prices Index” which Andrew Sentance mentioned.)
Has the UK “price level” gone up 20% over the last five years or less than 10%? You tell me.
GDE = Gross Domestic Expenditure, so the deflator is for everything counted as “Consumption” or “Investment” in the national accounts. GDP is measured at market prices; GVA is the “basic price” deflator, so ignores changes in indirect taxes which do affect market prices.