RPI, RPIX, RPIY and CPI differences??

Question

Just the main differences and then which one is most accurate please :D

Answer 1

The CPI (Consumer Price Index) uses essentially the same basic price data as the RPI (Retail Price Index), but differs from it in some important respects, which are described in the references. The differences include:

• the goods and services covered by the index. For instance, the CPI does not include Council Tax and a number of housing costs faced by homeowners. But there are also some services covered by the CPI - such as charges for financial services - which are not in the RPI;

• the people whose expenditure is covered by the weights. The CPI covers a broader population than the RPI:

• the mathematical formulae used to calculate the price

changes for the most detailed components of the two indices. In practice this means that the CPI always shows a lower inflation rate than the RPI for given price data;

• the way in which the goods and services are classified. The CPI structure follows international definitions while the RPI  has its own specific structure.

RPIX is a measure of inflation in the United Kingdom, equivalent to the all items Retail Price Index (RPI) excluding mortgage interest payments. RPIX was used to define the Government’s inflation target prior to the switch to the CPI in 2003.

RPIY is a measure of the "core inflation rate", which excludes not only mortgage costs but also excludes indirect taxes such as VAT, excise duties and other specific taxes. It is a measure of underlying price change excluding the direct impacts of economic policy changes.

It is not possible to determine which of these indices is "most accurate" - consumer price indices are important

indicators of how the UK economy is performing, and each of the indices above will give you a somewhat different perspectives.

The figures are published each month on the National

Statistics website, www.statistics.gov.uk, in a First Release

and accompanying detailed Briefing Notes, on a Tuesday about a month after the index date. The publication dates are announced six months in advance.

A detailed explanation of the methodology used in compiling

the Consumer Prices Index and the Retail Prices Index is given in the Consumer Price Indices Technical Manual, available at: http://www.statistics.gov.uk/statbase/Pr...

A statistical evaluation and comparison of the Consumer Prices Index, as the Government’s inflation target, and the Retail Prices Index excluding mortgage interest payments (RPIX) is given in the following article: The new inflation target: the statistical perspective, available at:

http://www.statistics.gov.uk/cci/article...