![]() ![]() Beyond the methodological limitations of the RPI, these indices are not well suited to this task as their coverage is limited to those pensioner households excluded from the coverage of the RPI (that is to say where the head of the household is of pensionable age and economically inactive and where at least three-quarters of the household’s income is from state benefits). Some respondents to the consultation noted significant use of the RPI pensioner indices in monitoring the inflationary pressures on pensioners. Whilst CPIY has a policy application, this is less evident for RPIY and there was relatively little support for it in the consultation. The RPIY excludes mortgage interest payments and indirect taxes. RPI excluding mortgage interest payments and indirect taxes (RPIY) Producing this on a CPIH basis would require considerable resource investment, which is not justified given the level of interest. There was very little support for TPI in the consultation responses and we are not aware of wider use of the index. The TPI measures how much the average person’s gross income needs to change to purchase the basket of goods, allowing for the average amount of Income Tax and National Insurance paid on earnings. For this reason, we will publish an estimate of the formula effect on RPI, but it will not form part of the family of price indices. However, it is clear that there is value in having a measure that specifically illustrates the formula effect on the RPI, a purpose that is currently served by RPIJ. This will be adapted to compare RPI and CPIH, at the point when CPIH becomes the preferred measure. We currently produce a reconciliation between RPI and CPI, which includes an estimate of the formula effect. To continue with a measure of inflation that has these shortcomings will not help to create clear and coherent understanding of inflation in the UK. Whilst the RPI and thereby the RPIJ, will continue to be maintained through routine changes, we will not invest additional resource into its development RPIJ shares the weaknesses of the RPI that go beyond the Carli formula, such as population coverage and use of a direct measure of house prices to estimate owner occupiers’ housing costs Unless there is a strong justification, having multiple measures does not encourage a clear understanding of inflation in the UK The National Statistician’s letter published in March 2016 stated that RPIJ would be discontinued.Īlthough some additional uses of RPIJ have since emerged, there remain strong arguments against continuing to publish it: ![]() There was also little support for the measure from respondents to the consultation. It recommended that ONS consults on discontinuing RPIJ and should continue to produce a reconciliation of the difference between RPI and the main measure of inflation. ![]() The Review of UK consumer price statistics, led by Paul Johnson, noted that the RPIJ was not widely used and appeared to lead to confusion. The RPIJ was developed in early 2013 to highlight the impact of the use of the Carli formula on the RPI. We will adapt the current reconciliation of RPI and CPI to compare RPI and CPIH and will publish a direct estimate of the formula effect on RPI. Indices that will be discontinued RPIJĭecision: Discontinue publication. Developing a new method for calculating average prices using CPIH is reflected in our development plan. There remains significant interest in these data. For subsequent months, this price is uprated using the relevant RPI component index. Currently, an average price is calculated using January data. We publish average prices for a range of homogeneous products in the inflation basket of goods and services. Average pricesĭecision: Continue to publish and explore moving away from the RPI basis used for uprating prices There is value in maintaining a long-run series for research and comparability purposes and exploring the option of using CPIH for more recent data is reflected in our development plan for Consumer Price Indices. This constructs a long-run series from various sources, going back to 1750. Composite Price Indexĭecision: Continue to publish and explore using the Consumer Prices Index (CPI) and CPIH for more recent data A full list of sub-components is available in Annex A. These indices, along with all sub-components of the RPI, are considered essential and will continue to be published. Similarly, the RPIX is used in a range of contracts and exposure is traded in swap form. The RPI is used in a large number of commercial contracts, including index-linked gilts. Indices and data that will continue to be published RPI, RPIX, sub-components of RPI ![]()
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