The omission of owner-occupier housing costs in the CPI should be rectified once European states agree upon a common approach.

ECONOMIST: The switch in price indices

For example, a renter who lashes out on electronics will currently have a lower rate whereas an owner-occupier with a big mortgage loan will have a higher one.

ECONOMIST: Inflation

Second, and explaining the remaining difference, the RPI includes owner-occupier housing costs, which are left out of the CPI because of the difficulty in establishing a common procedure across Europe.

ECONOMIST: The switch in price indices

But if the CPI does in fact broadly represent inflation more accurately, then Mr Osborne's decision seems justifiable, certainly once the index starts to take account of owner-occupier housing costs.

ECONOMIST: The switch in price indices

Just as the price of a share should equal the discounted present value of future profits, so the price of a house should reflect the future benefits of ownership either rental income or the implicit rent saved by an owner-occupier.

ECONOMIST: The higher they climb, the further they will fall

Just as the value of a company's shares should equal the discounted present value of its future profits, so the price of a house should reflect the future benefits of ownership, either as rental income or in the rent saved by an owner-occupier.

ECONOMIST: Global house prices

Just as the price of a share should equal the discounted present value of future dividends, so the price of a house should reflect the future benefits of ownership, either as rental income for an investor or the rent saved by an owner-occupier.

ECONOMIST: Global house prices