First the subtle lie of the US CPI, the Consumer Price Index that supposedly measures the change in prices for the ordinary, everyday things purchased by everyday people.

There are always changes going on with any CPI because the basket of goods measured has to change as an economy generates new goods. Obviously we’re not measuring buggy whips nowadays.

Still, when you see a measurement gap like that between the 1980-based CPI and today’s CPI you have to wonder if the economists have got the basket right. Try telling anybody going into a supermarket that inflation “only” peaked at about 7% and you’re likely to get a dirty look.

It’s at this point of distrust that you have to look at other measures – like real wages, which tell the truth.

I’ve not looked at the NZ data and I’m not aware of anybody having done a comparison between our CPI of today and that of 1980, but I’d bet we have a similar issue.