Post 66. How do we measure inflation?

 

How do we measure inflation?

There are several ways which are used to measure inflation.

The Retail Price Index (RPI) measure the rise in prices of a given set of products and services over time. The UK ONS sets the baseline of 100% for January 1987. In October 2020 it was 204%, by July 2022 it had risen to 343%. [1] The UK annual RPI inflation rate was 12.3% in July 2022, up from 11.8% in June 2022 [2]

The Consumer Prices Index (CPI) represents the percentage change in the price of an agreed basket of goods and services consumed by households in a given time period. The CPI in the UK rose by 10.1% in the 12 months to July 2022, up from 9.4% in June 2022. This was largely driven by a rise in food prices. This compares with the time period from July 2012 when the CPI fluctuated between 0 and 2.5% [3]

The Consumer Price Index (CPIH) including housing costs in the UK it rose by 8.8% in the year to July 2022, up from 8.2% for the year in June 2022. [3]

Between June 2021 and June 2022 - average wages in the UK rose from £540 to £568 per week a rise of 5.2% [4] - however there is a large difference between private sector and public sector wage rises.

[1] https://www.ons.gov.uk/economy/inflationandpriceindices/timeseries/chaw/mm23 

[2] https://commonslibrary.parliament.uk/research-briefings/sn02792/ 

[3] https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/consumerpriceinflation/july2022

[4]

https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/earningsandworkinghours/timeseries/kai7/emp