How the pound in your pocket took a pounding

Fifty years of the retail price index has produced a fascinating snapshot of changes in our way of life
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The Independent Online
The pound in your pocket will now buy you only one-twentieth as much as in 1947, thanks to inflation. The 2,000 per cent increase in prices since the Second World War is in sharp contrast to the near absence of any increase in the general price level during the previous 150 years.

It goes to show that when your elderly parents boast about getting change from a shilling after a night in the pub and a fish and chip supper, they are not exaggerating.

A pint of beer, costing an average of pounds 1.65 now, was only 7p (or 1s/4d ) in 1947, and a pound of potatoes that cost 23 pence in June 1997 would have been 0.5p (or 1d) half a century earlier.

The official measurement of prices by the Retail Price Index (RPI) celebrates its 50th birthday this year, its history coinciding with the era of inflation. But some prices have increased far more than the average, according to the Office for National Statistics.

The cost of housing, for example, is thirty-five times what it was five decades ago, mainly because of successive house price booms. Just after the war a six-bedroom house in suburban Wimbledon went for pounds 7,250. It would go now for pounds 775,000 - and climbing fast.

On the other hand, clothes prices have gone up by a mere sevenfold on average in 50 years. Buying a women's suit would cost an average of pounds 203.99 this year, compared with the equivalent of pounds 23.15 plus 12 ration coupons in 1947.

But the forthcoming royal marriage that year of Princess Elizabeth needed Parliament to approve an extra clothing coupon allowance for her wedding dress.

The RPI is one of the most important barometers of the health of the economy and also a telling indicator of social change. The "shopping basket" of items whose prices make up the index has changed dramatically over the years.

For example, in 1947 - when Clement Attlee was Prime Minister, India had just been granted independence and England won the Test match cricket series against South Africa - amongst the food items included were unskinned rabbits, lard and condensed milk. That compares with 1997's burgers, fromage frais and restaurant meals.

Ice cream and brown bread were added in the 1950s, fish fingers in the 1960s, wine and yogurt in the 1970s and frozen ready meals in the 1980s.

Drinking habits have changed over the decades too, as the staple pint of bitter of the Fifties has been joined by sherry, wine, low-alcohol lager and, this year, by alcopops.

The appliances whose prices were measured half a century ago were items such as radio sets, prams and mangles. These have given way to portable CD players, computers and microwave ovens

Trolleybus fares have been replaced by foreign package holidays and Channel Tunnel fares, corsets and "seamless rayon hose" by T-shirts and leggings.

In 1947 the RPI did not need to cover healthcare. In 1997, it measures the cost of NHS prescription charges, private medical insurance, eye tests and condoms.

The government started collecting information about prices in a systematic way in 1914, when it started to measure the "cost of living index for the working classes", on the grounds that the poor would be the biggest losers from the inflation expected to be caused by the impending war.

This index included only 80 "essentials" such as food, clothes, housing, heating and tobacco - but not alcohol.

The modern RPI was begun in 1947 and differed from the pre-war version by covering what people actually spent their money on, rather than what a Whitehall official deemed essential. The "shopping basket" of items that is included is now updated every year using information from a national survey of family spending patterns.

The statisticians also adjust the RPI for changes in the quality of goods and services - something they started in 1947 to compensate for the fact that the Government massively watered down the alcohol content of beer rather than rationing it. Quality adjustments now are more likely to take account of faster computer speeds, for instance.

The twentyfold rise in the price level during the past 50 years corresponds to an average inflation rate of 6.3 per cent. Inflation was negative during the early 1960s but hit a peak of 26.9 per cent in August 1975. With an inflation rate of 2.5 per cent - the Bank of England's current aim - it would take more than a century for prices to climb twentyfold.

However, although these price increases sound alarming, average earnings have also risen faster. This means that the real standard of living is higher. It would have taken somebody twice as long in 1947 to earn enough to buy the typical basket of goods as it takes now.

Fifty 50 years ago, it would have taken 10 weeks to pay for a two-week foreign holiday, but just three weeks' effort now. The two and a half weeks' work needed to buy a dress in 1947 has shrunk to a mere 11 hours. .TEXT: Prices ain't what they used to be...


pounds 7,250 in 1947

pounds 775,000 today


pounds 416 in 1947

pounds 12,000 today


7p in 1947

pounds 1.65 today


pounds 23 in 1947

pounds 200 today

1947 1997

1947 1997

Frock pounds 15 pounds 69

Woman's suit pounds 23 pounds 200

Woman's cardigan pounds 4 pounds 35

Cold cream 11p pounds 2.65

Bar of chocolate 7p 79p

Pint of beer 7p pounds 1.65

Road tax pounds 1 pounds 145

Family saloon car pounds 416 pounds 12,000

Over to You by Roald Dahl 38p pounds 5.99

Six-bedroom house (Wimbledon) pounds 7,250 pounds 775,000

Two weeks in Lucerne pounds 57 pounds 815

Headache tablets 7p pounds 1.85

Man's wristwatch pounds 6.40 pounds 29.50

Copy of the Observer 1p pounds 1

Copy of the Daily Hansard 3p pounds 5

12" classical music recording 24p Spice Girls' latest album pounds 15.99