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The new inflation target: the statistical perspective
This article provides a statistical evaluation and comparison of the Consumer Prices Index (CPI), the Government's new target measure of inflation, and the Retail Prices Index excluding mortgage interest payments (RPIX).
In December 2003 the Chancellor of the Exchequer announced that the UK inflation target would henceforth be defined in terms of the Consumer Prices Index (CPI), previously published in the UK as the Harmonised Index of Consumer Prices (HICP). This article sets out the statistical background to the announcement, providing a detailed evaluation and comparison of the CPI and the previous target measure, the Retail Prices Index excluding mortgage interest payments (RPIX). The article describes the historical background to the two indices, how they measure inflation, the broad similarities and more detailed differences between them, and their relative merits as indicators of UK inflation.
Published in web format: 15 January 2004 at 9:30 am
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