Inflation

There are two rates of inflation, the CPI and the RPI, the former once being called the HCPI, or Harmonised Consumer Price Index, being internationally harmonised for comparison with other countries, specifically the EU.

We have been told that inflation came down in November, but that's the RPI, or Retail Price Index, not the CPI.

As you can see from the above charts, the RPI came down, while the CPI increased, although the rate of increase slowed between October and November, having jumped considerably in October.

So, we must be careful when comparing our rate of inflation with that of other countries, using the CPI and not the RPI.

The RPI is an arithmetic mean; the prices of everything to be included in it are simply added up and divided by the number of items. The CPI is a geometric mean; it is calculated by multiplying the prices of all the items together and then taking the nth root of them, where “n” is the number of items involved.