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Title: International Comparison of the Formula Effect Between the CPI and RPI - 2012

Release date: 20 March 2012 at 9:30am
Theme: Economy | Department: Office for National Statistics | Coverage: UK
Geographic breakdown: UK and GB | Designation: National Statistics
Summary: There are a number of differences between the Consumer Prices Index (CPI) and Retail Prices Index (RPI), including their coverage, population base, commodity measurement and methods of construction. Combined, these differences have meant that, for most of its history, the CPI has been lower than the RPI. One of the main reasons to this difference is the method of construction at the lowest level, where different formulae are used in the CPI and RPI to combine individual prices. This difference is usually referred to as the formula effect. This article will investigate similar formula effects present in the inflation measures of other countries, and where necessary will attempt to explain why the magnitude of the formula effect experienced by other countries differs from that of the UK.