The UK's Retail Prices Index (RPI) was established in 1956 and updated regularly since then, and up until 2004 it was the country's only general consumer prices index. In that year the UK version of the European Union's Harmonised Index of Consumer Prices was renamed the Consumer Prices Index (CPI) and made the inflation target for the Bank of England, and from 2011 onwards it has also been used by the government for some uprating purposes. The RPI has continued to be used as the reference index for many private and public contracts and for almost all public and private index-linked bonds. The UK Statistics Authority confirmed in January 2012 that both the RPI and CPI were “national statistics” that were “produced according to sound methods” but in March 2013 it changed its mind and concluded that “the methods used to produce the RPI are not consistent with internationally recognised best practices,” and that the RPI should not be formally regarded as a “national statistic.” The criticism of the RPI by the UK Statistics Authority has had no practical effect, since, in line with the overwhelming opinion expressed by users and statistical experts, the Office for National Statistics (ONS) has decided to continue publishing the RPI using the existing methodology. However, the methodological criticism expressed by the ONS and the UK Statistics Authority has influenced the intellectual tone within government and the direction of the research effort of the Office of National Statistics. Accordingly, this paper summarises the justification for the RPI that has emerged over the last three years, not only as a legitimate fixed-basket consumer price index, but also as being the most accurate consumer price currently available in the UK.

This Palgrave Pivot reviews the history of the UK's Retail Prices Index (RPI) from its origins just after the Second World War to its controversial position today. Both the developments in the methodology of the index and the political and social context in which its development took place are closely examined. The authors explain how the RPI went from being the dominant measure of inflation for decades to its current position as an officially discredited index. Despite this status, it is still widely used and attracts much support from a range of stakeholders, including several areas of government. Important reading for anyone interested in both sides of the argument for and against RPI and the likely way forward for the measurement of inflation.

The consumer price index (CPI) measures the rate at which prices of consumer goods and services change over time. It is used as a key indicator of economic performance, as well as in the setting of monetary and socio-economic policy such as indexation of wages and social security benefits, purchasing power parities and inflation measures. This manual contains methodological guidelines for statistical offices and other agencies responsible for constructing and calculating CPIs, and also examines underlying economic and statistical concepts involved. Topics covered include: expenditure weights, sampling, price collection, quality adjustment, sampling, price indices calculations, errors and bias, organisation and management, dissemination, index number theory, durables and user costs.

Although inflation is much feared for its negative effects on the economy, how to measure it is a matter of considerable debate that has important implications for interest rates, monetary supply, and investment and spending decisions. Underlying many of these issues is the concept of the Cost-of-Living Index (COLI) and its controversial role as the methodological foundation for the Consumer Price Index (CPI). Price Index Concepts and Measurements brings together leading experts to address the many questions involved in conceptualizing and measuring inflation. They evaluate the accuracy of COLI, a Cost-of-Goods Index, and a variety of other methodological frameworks as the bases for consumer price construction.

This paper investigates the response of consumer price inflation to changes in domestic fuel prices, looking at the different categories of the overall consumer price index (CPI). We then combine household survey data with the CPI components to construct a CPI index for the poorest and richest income quintiles with the view to assess the distributional impact of the pass-through. To undertake this analysis, the paper provides an update to the Global Monthly Retail Fuel Price Database, expanding the product coverage to premium and regular fuels, the time dimension to December 2020, and the sample to 190 countries. Three key findings stand out. First, the response of inflation to gasoline price shocks is smaller, but more persistent and broad-based in developing economies than in advanced economies. Second, we show that past studies using crude oil prices instead of retail fuel prices to estimate the pass-through to inflation significantly underestimate it. Third, while the purchasing power of all households declines as fuel prices increase, the distributional impact is progressive. But the progressivity phases out within 6 months after the shock in advanced economies, whereas it persists beyond a year in developing countries.