HousePriceLottery Posted November 1, 2006 Share Posted November 1, 2006 Can someone point me to any articles highlighting the difference between the two or even better any list of exactly how they are calculated.... Following on from Merv's comments on introducing housing costs to the CPI I thought it might be worth chasing this one up. Quote Link to comment Share on other sites More sharing options...
dnd Posted November 1, 2006 Share Posted November 1, 2006 (edited) Yep, they are both full of sh*t... CPI = current ipod prices RPI = house prices + other stuff people use everyday CPI was introduced to keep IR low and create the huge asset bubble thats kept Labour in power for 9 years Just take the RPI figure and triple it to get the true inflation figure... Edited November 1, 2006 by dnd Quote Link to comment Share on other sites More sharing options...
Jason Posted November 1, 2006 Share Posted November 1, 2006 Here you go: http://www.statistics.gov.uk/pdfdir/cpi1006.pdf It mentions the components and their weightings half way down. Quote Link to comment Share on other sites More sharing options...
JustYield Posted November 2, 2006 Share Posted November 2, 2006 http://www.statistics.gov.uk/cci/nugget.asp?id=181 What are the differences between the CPI and the RPI? In terms of commodity coverage, CPI excludes a number of items that are included in RPI, mainly related to housing. These include council tax and a range of owner-occupier housing costs such as mortgage interest payments, house depreciation, buildings insurance, estate agents' and conveyancing fees. CPI annual inflation – the Government’s target measure – fell to 2.4 per cent in September, down from 2.5 per cent in August. The only large downward effect on the CPI annual rate came from fuels and lubricants as the price of petrol fell by 6.4p per litre between August and September this year, from 97.5p to stand at 91.1p on collection day, but rose by 4.6p last year. Diesel prices exhibited similar movements. This was partially offset by upward contributions from changes in air and sea fares. RPI inflation rose to 3.6 per cent in September, up from 3.4 per cent in August. Housing costs excluded from the CPI had a large upward effect on the RPI this month, mainly due to mortgage interest payments increasing in September, as the August interest rate rise was passed onto borrowers. In contrast, last year mortgage interest costs decreased following a cut in interest rates in August 2005. A further small upward contribution came from the depreciation component (the amount needed to maintain the dwelling at constant quality). The other main factors influencing RPI were similar to those affecting the CPI. RPIX inflation – the all items RPI excluding mortgage interest payments – was 3.2 per cent in September, down from 3.3 per cent in August. === RPI's divergence from CPI is telling: some 50% higher and widening. What would have happened to house prices if RPI was targeted instead of CPI? Given that CPI was only ever meant to be used to compare European economies, its continued use as a measure to set targets for domestic retail inflation is lunacy, as we are seeing. Quote Link to comment Share on other sites More sharing options...
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