Guide to
Measuring Inflation Monitoring prices to
produce various inflation measures National
Statistics produce a number of measures of inflation covering consumer
prices, producer prices and corporate services prices.
Consumer
Prices Index (CPI) In the Pre-Budget Report on 10 December 2003,
the Chancellor of the Exchequer changed the UK inflation target from one
based on the Retail Prices Index excluding mortgage interest payments
(RPIX) to one based on the Harmonised Index of Consumer Prices (HICP).
Reflecting the new role as the main UK domestic measure of
inflation for macroeconomic purposes, the National Statistician has
decided that the UK HICP will now be known as the Consumer Prices Index in
all National Statistics releases and publications. This should not be
interpreted as implying that there is any intention to develop the CPI
differently from the HICP. The CPI and HICP will remain one and the same
index.
Like the RPI, the CPI measures the average change from
month to month in the prices of consumer goods and services. However it
differs in the particular households it represents, the range of goods and
services included, and the way the index is constructed.
Retail
Prices Index (RPI) The Retail Prices Index is the most familiar
general purpose measure of inflation in the United Kingdom and is
continuously available from June 1947. It measures the average change from
month to month in the prices of goods and services purchased by most
households in the United Kingdom. The Chancellor of the Exchequer, in the
Pre-Budget Report statement on 10 December 2003, confirmed that uprating
of pensions and benefits and index-linked gilts will continue to be
calculated with reference to the RPI or its
derivatives.
Harmonised Index of Consumer Prices
(HICP) In the UK this measure, from 10 December 2003, is known as
the CPI (see above). Eurostat will continue to publish this measure as the
UK HICP. The HICP was launched in 1997 in response to the need for a
Europe wide comparable measure of inflation (as required by the Maastricht
Treaty). The HICP measures inflation, each month, in the European Monetary
area as a whole and individually measures and compares each Member
State.
Producer Price Index (PPI) The Producer Price
Index is a monthly survey that measures the price changes of goods bought
and sold by UK manufacturers. The output price index - sometimes referred
to as factory gate prices - measures prices of goods sold by UK
manufacturers. The Input index measures the prices of materials and fuel
purchased by manufacturers. In addition there are a number of export and
import price indices available.
Corporate Services Price Index
(CSPI) The Corporate Services Price Index is a quarterly survey of
prices charged for services provided by UK businesses to other UK
businesses and government. Industry-specific series covering about half
the total corporate services sector are currently published as
experimental statistics. The 'experimental' status means the indices are
still under development and may be subject to revision. Price indices for
industries not yet covered, eg computer services, are under development
and are being added progressively to the published series.
Produced by the Office for National
Statistics
Published on 10 December 2003
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