In this year’s June quarter,the cost of living for working households rose a sharp 1.5%, driven overwhelmingly by higher mortgage payments. This is despite the Reserve Bank suggesting that interest rate rises are “not really” an increase in the cost of living.

Economics and finance is purposefully confusing. Those in the know are pretty happy for you to be ignorant so they can carry on their operation without much fuss. The RBA and a few economists have been rather bemused by the results of an RBA survey showing that 25% of respondents “assessed correctly that higher interest rates would ultimately lead to lower inflation, while more than half indicated that higher interest rates would lead to higher inflation”.

The “correctly” is doing a bit of heavy lifting; more accurately the RBA hopes that higher interest rates will lead to lower inflation – and sometimes not even that.

For example, in May, the governor of the RBA, Michele Bullock told reporters that “these interest rates rises are not going to do anything for inflation in the next six months. That’s done and dusted.”

Instead, she talked of “inflationary pressures” and making sure the oil price shock “does not lead to higher inflation expectations over the longer term”.

The RBA cares about this because, as Bullock also noted, people would try to make up “the hit they’ve taken from inflation by asking for higher wages” and “the extent to which they can achieve them depends on the tightness of the labour market”.

Raising rates aims to reduce that tightness (ie increase unemployment).

So, we went from being told rate rises would not do anything to reduce inflation in the short term to instead talking about “pressures” and “expectations” because of future wage negotiations.

Little wonder that people trying to pay their bills are not answering the surveys in the way the RBA thinks they should.

And never mind that inflationary expectations are mostly driven by petrol prices, because that is the price most of us see every day.

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But the confusion was heightened when last week Bullock suggested one reason it didn’t surprise her that people think interest rate rises lead to higher inflation was because “people who have mortgages … see increases in interest rates as an increase in the cost of living, but it’s not really”.

Well, I’m sorry but it is. Really.

And Wednesday’s cost of living index figures from the Australian Bureau of Statistics show this in stark numbers.

In the June quarter, cost of living for employee households rose 1.5%, well above the official inflation rate of 0.6%, and in the past six months it rose 3.2% compared with a mere 1.7% increase in inflation:

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The overriding reason why cost of living has increased by more than the consumer price index (CPI) is because mortgages are counted in cost of living, but not in the CPI data.

It was actually the RBA in the late 1990s that sought to split cost of living from inflation.

From 1986 to 1998, the CPI included mortgage repayments. The RBA didn’t like this because it meant when it raised interest rates it raised the cost of mortgages so it looked like it was making things worse.

Thus in 1998 mortgages were removed and replaced with the cost of “new home purchases by owner occupiers” (which is essentially the cost of building a home and pointedly does not include the cost of the land). Instead, mortgage repayments were included in a new measure called the “selected living cost indexes”.

When interest rates are rising, as they did in the June quarter, the two measures are rather different.

During April, May and June, about 70% of the increase in cost of living for employee households was due to higher mortgages – and yet none of it was included in the CPI figures:

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Now you might think, oh well. But when the CPI has been changed to purposefully not count the cost of living, it’s pretty poor to tell mortgages payers they don’t really understand their own finances because they need to exclude what is easily the biggest cost they pay each month.

And let us not pretend interest rate rises don’t also drive up other prices. Anyone who rents knows that when interest rates go up, they are likely to receive a message from their landlord telling them that, alas, their rent is also about to rise:

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The RBA would like us to all believe it knows what it is doing.

But people truly do know the impact of the RBA’s decisions on their cost of living.

Being told they don’t while also being told that rate rises will do nothing to inflation in the next six months, will only serve to make people wonder just why they should be trusted.

• Greg Jericho is a Guardian columnist and chief economist at the Australia Institute