RPI (Retail Price Index)

Question 1

How is RPI different from CPI?

Answer 1

RPI includes housing costs, such as mortgage interest payments and council tax.

CPI (Consumer Prices Index) does not include these.

RPI uses the arithmetic mean, while CPI uses the geometric mean, which usually results in CPI being lower.

RPI is no longer a national statistic and is considered less reliable, but is still used in pensions, rail fares, and student loan interest rates.

🧠 Why it matters:
The choice of inflation measure can impact real wage growth, benefit indexation, and government fiscal planning.

📝 Exam angle:

“Compare and contrast CPI and RPI as measures of inflation.”