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125:(RPI), which was first calculated in the early 20th century to evaluate the extent to which workers were affected by price changes during the First World War. The main index was described as the Interim Index of Retail Prices from 1947 to 1955. In January 1956, it was rebased and renamed the Index of Retail Prices. In January 1962, this was replaced by the General Index of Retail Prices, which was again rebased at that time. A further rebasing occurred in January 1987, subsequent to the issue of the first index-linked gilts.
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207:. This means that the CPI will generally be lower than the RPI. The rationale is that this accounts for the fact that consumers will buy less of something if its price goes up, and more if its price goes down; it also ensures that if prices go up and then revert to the previous level, the CPI also reverts to its previous level (which is not the case with the calculation method used for the RPI). The
167:. This committee is given the responsibility of adjusting interest rates in order to meet an inflation target set by the Chancellor. The initial target rate of inflation was an RPIX of 2.5%. The committee meets once per month to decide whether any changes to the interest rate are necessary. If, in any month, inflation deviates from the target by more than one percentage point, the
148:, which is the RPI calculated excluding mortgage interest payments. This was felt to be a better measure of the effectiveness of macroeconomic policy. It was argued that if interest rates are used to curb inflation, then including mortgage payments in the inflation measure would be misleading. The Treasury set interest rates until 1997.
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The CPI calculates the average price increase as a percentage for a basket of 700 different goods and services. Around the middle of each month it collects information on prices of these commodities from 120,000 different retailing outlets. Note that unlike the RPI, the CPI takes the
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The change in the CPI over the 12 months to August 2008 was 4.7%, while the corresponding figure for RPIX (which excludes mortgage interest) was 5.2% and that for RPI (which includes mortgage interest) was 4.8%. The CPI, the RPIX, and the RPI are published monthly by the
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There has been criticism of CPI as being a less effective measure of price rises than the Retail Prices Index, accusing it of being easier to manipulate and less broad based (for example excluding housing).
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In
January 2013 the Office for National Statistics announced its conclusion that the RPI did not meet international standards and it is no longer formally ranked as a UK 'National Statistic'.
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Since 1996, the United
Kingdom has also tracked a Consumer Price Index figure, and in December 2003, the inflation target was changed to CPI of 2% from the previous target of RPIX of 2.5%.
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is required to write an open letter to the
Chancellor explaining the reasons for this and proposing a plan of action for bringing inflation back towards the target.
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The
Consumer Prices Index, including owner-occupiers' housing costs (CPIH), became the lead inflation index in UK official inflation statistics on 21 March 2017.
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The basket of goods and services chosen is intended to reflect changes in society's buying habits. For example, on 23 March 2009,
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estimates this difference in averaging method accounts for about 0.9% of the average 1.15% annual difference between CPI and RPI.
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MP, has said that CPI targeting meant that interest rates were set lower at a time of rising (RPI) inflation.
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How independent is the Bank of
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were added to the basket, whereas volume bottled cider and boxes of wine were removed.
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219:(ONS). A history of CPI and RPIX going back to 1989 can be found at the ONS' website.
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government handed control over interest rates to the politically independent
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Consumer Price
Inflation (includes all 3 indices – CPIH, CPI and RPI) QMI
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announced that CPI was to be more widely adopted, including for setting
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The traditional measure of inflation in the UK for many years was the
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of prices to aggregate items at the lowest levels, instead of the
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453:"New Inflation Target: CPI (Consumer Prices Index) replaces RPIX"
506:"National Statistician announces outcome of consultation on RPI"
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An explicit inflation target was first set in
October 1992 by
378:"Differences between the RPI and CPI Measures of Inflation"
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RPI vs CPI: seconds out, round two | Straight
Statistics
367:, published 20 December 2017, accessed 31 August 2019
285:2021–present United Kingdom cost of living crisis
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411:. Government Actuary's Department. March 2017
88:in the United Kingdom. It is also called the
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333:"1976 sterling crisis details made public"
307:"FAQs: The UK target measure of inflation"
110:inflation hit 24% in 1975 and in 1976 the
144:. Initially, the target was based on the
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140:, following the UK's departure from the
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524:"Consumer Price Indices: A brief guide"
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27:Official measure of inflation in the UK
578:Bank of England's inflation calculator
238:the incoming Conservative Chancellor
156:On election day in May 1997, the new
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194:Shortened version of ONS infographic
545:"Chicken in the basket of UK goods"
90:Harmonised Index of Consumer Prices
387:. 14 December 2010. Archived from
331:; Giles, Chris (9 December 2005).
25:
437:. 6 November 2007. Archived from
352:"Brown sets Bank of England Free"
551:. London, UK: BBC. 23 March 2009
608:Inflation in the United Kingdom
363:Office of National Statistics,
236:UK general election of May 2010
209:Government Actuary's Department
169:Governor of the Bank of England
598:Office for National Statistics
531:Office for National Statistics
510:Office for National Statistics
435:Office for National Statistics
385:Office for National Statistics
311:Office for National Statistics
217:Office for National Statistics
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80:) is the official measure of
234:Nevertheless, following the
406:"Measuring price inflation"
135:Chancellor of the Exchequer
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114:occurred, followed by the
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165:Monetary Policy Committee
142:Exchange Rate Mechanism
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482:johnredwoodsdiary.com
244:benefits and pensions
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108:Uk inflation history
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394:on 14 December 2010.
280:1976 sterling crisis
116:Winter of Discontent
74:Consumer Price Index
57: CPIH (CPI+OOH)
32:Consumer price index
30:For other uses, see
573:National Statistics
441:on 6 November 2007.
431:"Latest Indicators"
419:– via gov.uk.
152:Introduction of CPI
123:Retail Prices Index
603:1947 introductions
512:. 10 January 2013.
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43:Uk Inflation data
508:(Press release).
484:, 23 January 2007
317:on 11 March 2007.
67:housing inflation
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18:UK inflation
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291:References
63: OOH
341:. London.
261:wine and
82:inflation
555:23 March
549:BBC News
463:14 April
269:See also
533:. 2013.
480:, from
415:15 July
100:History
227:, the
158:Labour
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527:(PDF)
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381:(PDF)
557:2009
465:2009
417:2023
259:rosé
178:CPIH
146:RPIX
129:RPIX
94:HICP
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