Consumer Price Index and Retail Price index

Question 1

How is CPI calculated?

Answer 1

-A base year selected and a family expenditure survey is carried out to work out average spending habits.

-Representative basket of goods is used which is reviewed each year to reflect consumer spending patterns.

-Weights are attached to each item based on their importance in people’s spending.

Question 2

What is CPIH

Answer 2

CPI plus owner-occupier housing costs (the amount you would have to pay to rent a property) and council tax.

Question 3

Why is RPI more inclusive than CPI?

Answer 3

Because it includes mortgage interest repayments and council tax.

Question 4

_____ tends to be above the _______

Answer 4

RPI tends to be above the CPI

Question 5

The ONS discourages the use of _____

Answer 5

RPI

Question 6

Why is RPI not a national statistic

Answer 6

-The formulae used are no longer considered best practise so RPI is not longer a national statistic.

Question 7

When did RPI stop being a headline measure of inflation?

Answer 7

It was a headline measure of inflation until 2003.

Question 8

What part of the population does RPI exclude and why?

Answer 8

The top and bottom 4% as they are not representative of the average household.