It's all in the mind. So worldly-wise readers of this column may have muttered a couple of weeks back when they saw headlines in other newspapers whose readers claimed that their own household living costs have inflated by anything up to 12 per cent.

That just didn't square with three per cent inflation measured by Gordon Brown's Consumer Prices Index, or even the 4.4 per cent flagged up by the old Retail Prices Index. Official numbers may be dodgy now and again, but they don't miss two-thirds of what is really happening.

Now it turns out that those indignant newspaper readers were not imagining it all. The Bank of England's Mervyn King explained yesterday that prices of things we buy frequently have been rising far faster than the CPI. That applies, to a slightly lesser extent, even to items that are bought just once a year.

A lot of that has been offset by hefty falls in the prices of infrequent purchases – like wide-screen TVs, or cars which come with more air-conditioned bells and whistles for the same money – things that nobody funds out of the monthly house-keeping.

Unless you happen to buy one of these things you don't notice that they have got cheaper. And if you cannot afford them you never benefit at all.

That doesn't mean that the CPI gets it wrong (except by leaving out all home-owning costs and council tax). It gets the things it does cover right – well, industrious statisticians go to great pains to get them right.

But it doesn't mean that the people who say the result is a travesty of their real-life experience are wrong either.

What matters is how that experience colours their view of what is going to happen to the buying power of their money in the coming months – "inflationary expectations" in the jargon. You might have expected them to go flat out with pay claims to protect their standard of living as they perceive it.

Well, so far it simply has not happened. Average earnings across the economy did nothing much in December. More important, industry's big month for wage deals, January, passed with no hint of a manufacturing pay explosion at all. Perhaps employers who are doing well promised fat bonuses and those are not played tough.

No matter, if the Bank is half right about the coming cuts in gas and electricity prices everybody will have more spending money. n n n Nationwide is a mutually owned building society. The people who pay for its #980,000 Financial Services Authority fine are not risk-taking shareholders, but everybody with a Nationwide mortgage or savings account. Their interest rates will be fractionally less favourable.

The FSA's job is to see that financial organisations have systems that prevent confidential details about their customers getting into the wrong hands. The case of the stolen laptop showed Nationwide did not. The FSA couldn't very well turn a blind eye. Yet the individual who left this laptop with its sensitive contents where it could be stolen is not censured – not even named. Odd.

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