In 1911   a PurchaseFood, Clothing, Household Goods, Transport, Fuel ... of £30   s0   d0   £30   30 has a "real price" of £4,291.45 today as measured by inflating the amount by the Retail Prices Index (RPI) The RPI is an index of the cost of a bundle of goods and services the average household buys While the CPI is the more common index used now to compute inflation, it has only been available in the UK since 1996. The RPI was first created to be a compensation index for workers during First World War. Over the years economic historians have extended it back to the thirteenth century. For computations in this comparator, the RPI is used in order to have a consistent long-term series. .
If used as capital equipment, it has a "real cost" of £4,145.38 today as measured by the GDP Deflator The GDP Deflator is similar to the RPI in that it is a measure of average prices. The "bundle" of goods and services here includes all things produced in the economy, not just consumer goods and services that are reflected in the RPI. .

For discussion, these measures are defined as Real Price and Real Cost.

Real Price is measured as the relative cost of a (fixed over time) bundle of goods and services such as food, shelter, clothing, etc., that an average household would buy. In theory the size of this bundle does not change over time, but in practice, adjustments are made to its composition. This measure uses the Retail Prices Index (RPI).

Real Cost of a purchase is measured by comparing its cost to the cost index of all output in the economy. This measure uses GDP Deflator.

PAST PURCHASES IN TODAY'S TERMS