CPI Inflation Up 2.7%

The CPI annual inflation for November 2012 was 2.7%, the same as in October. The index sttod at 124.4 (2005=100). The index was unchanged over all but there were significant changes both upward and downward within the CPI between October and November.

The most significant upward pressure to annual inflation came from food and non-alcoholic beverages, mainly bread, cereals and vegetables and housing and household services mainly gas and electricity. The main downward pressure came from motor fuel and furniture, household equipment and maintenance.

The RPI annual inflation stands at 245.6 in November or 3%, down from 3.2% in October. Motoring expenditure, household and household goods provided the main downward pressure. The main upward pressure came from food.

The CPI measures the changes in the general level of prices for goods and services bought for household consumption. It can be seen as a shopping basket of many different goods and services bought by households. The CPI is the main measure of consumer price inflation for macro-economic purposes. It is used as the basis for the Government's target for inflation that the Bank of England has to achieve. It is also used for the indexation of benefits, tax credits and public service pensions. It is known internationally as the Harmonised Index of Consumer Prices (HICP). HICPs are calculated in each Member State of the European Union. They are used to compare inflation rates across the EU.

The RPI is the longest standing measure of inflation in the UK and historically was used in the indexation of various prices and incomes, the uprating of pensions, state benefits and index-linked gilts and the valorisation of excise duties. Since April 2011 the CPI has been used for some of the previous uses of the RPI as mentioned above.

Some of the main differences between the CPI and the RPI include the population base, item coverage, index methodology and item coding. The CPI population base includes all private and institutional households and foreign visitors. The RPI only includes private households and excludes the highest income households and pensioner households (c.13% of household expenditure). The CPI excludes certain items related to housing costs like mortgage interest payments, house depreciation and council tax that are included in the RPI. The RPI uses the arithmetic mean, the CPI uses the geometric mean. The CPI uses a standard internatikonal classification scheme and the RPI uses a system unique to itself.

CPI And RPI Up In April

The Consumer Prices Index rose for the 4th month in a row in April by 2.3% to 110.1 compared to 2.9% in March mainly due to food and non-alcoholic beverages. The Retail Prices Index (RPI) grew more slowly but gained for the 4th month in a row in April as the % increase over 12 months fell again this time by 1.2% to 211.5 from 211.3 in March with the largest contribution from mortgage interest payments. The RPI excluding mortgage interest payments also continued to rise but again the increase was less than previous months at 1.7%.

Large downward contributions to the CPI were made by housing and household services, due to electricity and gas bills, restaurants, hotels, recreation and culture and food and beverages, vegetables and meat. Smaller downward contributions came from fruit, bread and cereals. Small partial offsetting effects were noticeable from insurance costs, AV equipment, cultural services and cable TV subscriptions. Large upward contributions came from vehicles, fuels and lubricants and air transport.

The main downward contributions to the RPI were from mortgage interest payments, house depreciation, rent, council tax and house insurance. Other downward contributions came from electricity and gas bills, food, alcoholic drinks and tobacco. There was a small downward contribution from catering. The largest upward contribution came from motoring, where car prices and car sales were both up on last year, fuel, vehicle tax and insurance. Household services also made an large upward contribution as landline telephone charges went up by more than last year and there was a small contribution from household goods.

The difference between the CPI and the RPI was 3.44% the main factors were mortgage interest payments and other housing components.