Inflation rate

What is the inflation rate? According to the Labour government it is the Consumer Prices Index (CPI). Why the CPI and not the Retail Price Index (RPI) as used to be the case or even the RPIX (RPI excluding mortgage interest payments) as was the case until 2003? The answer is obvious, because the CPI always gives a lower figure than the RPI and is less affected by changes in interest rates as it excludes - mortgage interest payments, Council Tax and some other housing costs. Council Tax has increased on average by 100% in the 10 years since this Labour government came to power but that is not reflected in the CPI. You can see what is included in each of these measures by referring to this pdf from the Office for National Statistics (ONS). Take a look at this document and see if you can see what else is missing from the CPI...

The BBC gives an explanatory page on their website entitled "Q&A: UK inflation measures". This, as you would expect, gives us the governments reasons why "CPI was a better measure for the purposes of setting monetary policy" but no reasons why this might not be the case.

The CPI was adopted in 2003 so as to harmonise our inflation measure with that in use across the Euro Zone, partly as a sop to Tony Blair for Gordon Brown's refusal to join the Euro yet.