Wrong URL generated when website located in a subfolder

My website is located in let's say http://www.example.com/public
So when I make a newsletter from a bunch of node teasers where the title is set as a link to the full view of the node, the link should be something like http://www.example.com/public/node/12
Instead, I get http://www.example.com/public/public/node/12

I don't have any problem with the images urls. They render perfectly in the e-mail. (maybe because the src URLs are absolute in the node content already)

I tried to set the $base_path variable (which is optional) and cleared the cache. It didn't solve the problem or affect the rest of the website. I think I can find a work around with a redirection but I thought this is quite a big issue that needs to be reported.