In this case, increases in nominal compensation would not translate into increased purchasing power for workers but would add to inflation pressures.

NPR: Bernanke: U.S. Growth 'Moderate' as Inflation Rises

To start with probably the least important aspect of all this, I am surprised by how little emotion has been sparked by Mr Carney's remarks, that there might be a case for replacing narrow inflation as a target with nominal GDP target, or the cash value of annual economic output.

BBC: Can the Bank of England hit any target?

They explain that monetary policy has actually been far too tight in the last four years, and they make the case for shifting monetary policy to focus on achieving a steady growth in nominal (that is, non-inflation-adjusted) incomes.

FORBES: Monetary Policy Isn't a Partisan Issue

But in the case of goods that change in quality every year, it is much harder to split an increase in nominal ouput or spending between a change in volume and a change in price.

ECONOMIST: The numbers racket | The