Prices have risen 50-fold since first survey in 1914
Thursday 28 April 1994
The Central Statistical Office today celebrates 80 years of cost-of-living surveys by comparing current prices with those of 1914, when official price monitoring started. Since then, prices have gone up 50-fold - the 1914 pound is now worth two pence.
In 1914, when Shaw's Pygmalion opened in the West End and Blackburn Rovers last won the Football League championship, a pint of beer cost twopence-halfpenny (one new penny), a four-cylinder car cost pounds 730 and dinner at the Savoy was seven shillings and sixpence (37 1/2 pence). The Prime Minister, Herbert Asquith, was paid a salary of pounds 5,000.
In 1994, a pint of beer, according to the CSO, costs pounds 1.38 - the price has nearly tripled in real terms - but a 1.4 litre car, instead of costing about pounds 36,500, is a mere pounds 6,995 - a tribute to improvements in technology and cheap mass- market manufacturing. Dinner at the Savoy, pounds 31 today, has almost doubled in price.
If prime ministerial pay had kept pace with inflation, John Major would earn pounds 250,000, instead of the pounds 78,292 he receives. MPs, however, look a bad bargain. Their salary in 1914 was pounds 400. Inflation would have brought it to pounds 20,000 - but they receive pounds 31,687.
A front-row stall seat at the Royal Opera House, meanwhile, is twice the 'real' price of 80 years ago: pounds 102 for a recent performance of Rigoletto against pounds 1 1s ( pounds 1.05) for a 1914 version of Die Meistersinger.
Eighty years ago, according to Andrew Machin, the statistician responsible for the retail price index, you could buy a large loaf, a pint of milk, a pound of sirloin beef, a quarter of a pound of tea, six eggs and a pound of sugar and still have enough change from half a crown (12 1/2 new pence) for the penny tram ride home.
Earning that half-crown, however, would have taken you half a day if you were a bricklayer. Today's labourers achieve the same purchasing power in less than an hour.
The contents of price surveys reflect the vast 20th-cen tury increase in disposable income, the advent of consumerism and the pace of technological change. The 1914 cost-of- living index was aimed at the basic welfare needs of the working classes: 60 per cent was devoted to food, 16 per cent to rent and rates and 12 per cent to clothing. Alcohol was not thought worth measuring.
In 1994, the food content is down to 14 per cent - reflecting changes in household spending tracked by the family expenditure survey - but alcohol has arrived (7 per cent). So, too, have motoring (14 per cent), leisure goods and services (12 per cent) and household goods and services (12 per cent). In the 1914 version these were crammed into the 4 per cent of the index dealing with 'other items'.
By 1947 the survey was losing credibility and was replaced by an index measuring prices rather than the cost of living. 'People had more to spend on things that were not basic,' Mr Machin said. Many people, he added, now viewed dishwashers and washing machines as basic needs.
Perpetual flow of inflationary tide
PRICES have risen by an average of 5 per cent a year since 1914, according to the Central Statistical Office. Between the wars prices doubled, but since 1945 they have increased more than 20-fold. Inflation over the last 20 years has averaged 9 per cent. The record yearly rise was nearly 27 per cent in 1975. The last year in which prices fell (by 0.8 per cent) was 1960. Inflation is currently 2.3 per cent.
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