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CPI is usually lower, though this is due more to the differences in the calculation formulas for the indices than to the differences in coverage. The UK Government announced in the June 2010 budget that CPI would be used in place of RPI for uprating of some benefits with effect from April 2011. [24]
The Government Actuary's Department estimates this difference in averaging method accounts for about 0.9% of the average 1.15% annual difference between CPI and RPI. [6] 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 ...
A CPI is a statistical estimate constructed using the prices of a sample of representative items whose prices are collected periodically. Sub-indices and sub-sub-indices can be computed for different categories and sub-categories of goods and services, which are combined to produce the overall index with weights reflecting their shares in the total of the consumer expenditures covered by the ...
Any rate rise from the Bank, aimed at bringing inflation lower, would have the side effect of raising interest payments on variable-rate mortgages, causing higher inflation on any broad measure such as RPI. Targeting RPI would thus create a vicious circle of higher rates, something avoided by using RPIX as the target.
Limited price indexation (LPI) is a pricing index used to calculate increases in components of scheme pension payments in the United Kingdom.Currently, the statutory requirement for occupational pension schemes is that pensions in payment must be increased by the lower of RPI and 2.5%.
The CPI looks at how the prices for a basket of goods and services changes over time to measure how prices are changing.The CPI is the most widely cited measure of inflation and is used by ...
The CPI includes housing costs - not just mortgage interest but items such as insurance, television licence fees and utilities costs - while the RPI does not (this does not of course mean that the housing element of an income adjusted by the CPI remains unadjusted, simply that the basket is differently constructed).
Since 1996 the United Kingdom has also tracked a Consumer Price Index (CPI) figure, and in December 2003 its inflation target was changed to one based on the CPI [39] normally set at 2%. [40] Both the CPI and the RPI are published monthly by the Office for National Statistics. Some rates are linked to the CPI, others to the RPI.