During a budget review, the Kingdom of Oakhaven announced a 3.2% increase in the state pension payout for the upcoming financial year. Meanwhile, economic forecasts project that the Retail Prices Index (RPI) inflation rate will reach 6.5% over the same period.
Explain why pensioners will experience a "real-term reduction" in their retirement income despite the nominal increase in their payouts.
77 exam-style questions on OCR A Level Economics Inflation. Each one has a worked solution and a mark scheme showing where the marks go.