The Office for National Statistics (ONS) has announced that the country’s key inflation measure, the Retail Price Index (RPI) will retained.
The RPI measures the change in the cost of a basket of retail goods and services. It is used for index-linked gilts and bonds, and linked to a wide variety of services and investments including pensions and social housing rent levels.
The National Statistician, Jil Matheson, accepts that the formula used to produce the RPI does not meet international standards but says that, while ONS would not chose the arithmetic formulation were it constructing a new price index, the formulae used to calculate the RPI should remain unchanged. ONS consulted last year on whether to ditch RPI – of 406 replies, 332 wanted no change.