Guide to
RPI & Finding Data FAQs on the UK's
most familiar measure of inflation What is the
Retail Prices Index? It is an average measure of change in the
prices of goods and services bought for the purpose of consumption by the
vast majority of households in the UK. It is compiled and published
monthly. Once published, it is never revised.
Where do I find
Retail Prices Index data? - The latest released Retail Prices Index
(RPI) and all items RPI excluding mortgage interest payments (RPIX) are
available from the Economic page - see Latest RPI and other economic
indicators.
- Further RPI and RPIX data can be found in table RP02,
RP04 and RPIX.
- Detailed latest released figures can be found in
the Consumer Price Indices Press Release and the RPI and CPI monthly web
publication, Focus on Consumer Price Indices, has comprehensive RPI and
CPI data tables. The CPI was previously published as the Harmonised Index
of Consumer Prices (HICP).
What is it used for? Measures
of inflation are vital tools for economists, business and government. The
RPI continues to be used for the indexation of pensions, state benefits
and index-linked gilts. Wage agreements, leases, maintenance and child
support payments are often linked directly to the RPI. Also utility
regulators impose restrictions on price movements based on the
RPI.
Which items are included in the Retail Prices
Index? The RPI includes prices for food and drink, tobacco,
housing, household goods and services, personal goods and services,
transport fares, motoring costs, clothing and leisure goods and services.
A list of price indicators used in the construction of each year's RPI is
available online, see RPI methodology and articles.
Who gathers
the prices? Prices are collected in two ways. The local price
collection is carried out by a market research firm who collect over
110,000 prices per month. ONS has procedures in place to quality assure
the local price collection carried out by the contractors.
ONS
staff collect a further 10,000 prices centrally each month for a number of
reasons including efficiency (e.g. prices in catalogues, national
newspaper prices, utility prices), availability (e.g. prices that may not
be available in retail areas such as sea fares, road tolls, internet
prices), prices that are methodologically difficult to measure (e.g.
mortgage interest payments) and items where quality adjustments may be
important (e.g. personal computers).
Where are prices
collected? Random sampling of locations was introduced in 1995. The
geographical coverage is defined as the whole of the UK - but this does
not include the Channel Islands or Isle of Man. In all, retail outlets in
around 150 shopping areas or out of town retail parks areas are selected
for the price collection each year. This sample is changed by about
one-fifth each year with new locations replacing old
locations.
Are all items represented equally? No. The RPI
is a weighted index - for example, since most people spend far more on
electricity than on processed fruit, a price rise for electricity would
have more effect than a similar-sized one for processed fruit. The
principal guide to weighting is the rolling Expenditure and Food
Survey.
Are all households' spending patterns represented in the
RPI? No. The spending patterns of two types of households are
excluded: pensioner households which derive at least three quarters of
their total income from state pensions and benefits, and high-income
households, defined as those whose income lies within the top 4% of all
households. These two groups are considered likely to have atypical
spending patterns; including them in the scope of the RPI would distort
the overall average.
Do the prices apply to a specific day of
the month? In theory, yes. The RPI is intended to reflect prices on
the second or third Tuesday of each month, depending on the month. This
day is known as Index Day. In practice, it is not possible to collect
every single price in one day so prices are usually collected between the
Monday and Wednesday. However, prices for fresh fruit, vegetables, petrol
and oil are particularly volatile and so are always obtained on Index Day
itself.
Are special offers included in the
calculation? Discounted or subsidised prices are included in the
calculation, as long as the offer is available to anyone with no
conditions - so money-off coupons and loyalty card offers are ignored.
Sale prices are included if they are temporary reductions on goods likely
to be available again at normal prices, or are end of season sales.
Clearance prices where availability is seriously limited to certain sizes
or seconds where quality is reduced are excluded. No account is taken of
free gifts, or temporary 'extra free' offers. Other issues may be
considered on a case-by-case basis.
Produced by the Office for National
Statistics
If you have any queries about RPI or Consumer Prices,
please e-mail: rpi@ons.gov.uk
Published on 10 December 2003
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