Retail Price Index MoM

RPI MoM is the one-month change in United Kingdom retail prices from the Office for National Statistics. Checks began in 1914, the interim index in June 1947, the official index in January 1956. It rests on about 760 items, about 180,000 prices and about 20,000 outlets via local and central collection.

It covers index households across the United Kingdom except the Channel Islands and the Isle of Man. Index households exclude people in institutions and foreign visitors. Also excluded: pensioner households on at least 3/4 state pensions and benefits, and the top 4% of households by income.

It is not the CPI target nor a cost-of-living gauge, and it lost National Statistic status in early 2013. It excludes direct taxes and outright house purchase.

Local collection spans at least one working week near mid-month, mostly on Tuesday; a Monday-bank-holiday week is never used. For petrol, RPI uses the single collection-date price.

The bulletin lands at 7:00am United Kingdom time, usually the second or third Wednesday after the reference month. That is generally the 13th to the 21st, within four to five weeks after index day.

Along come CPIH, CPI, RPI subcomponents and RPIX, plus briefing notes on drivers. RPI is never revised after publication; a public correction notice covers errors above 0.1 percentage points. Read the annual change first, then the monthly change and component contributions in percentage points.

14 groups drive moves, with annual weights mainly from the Living Costs and Food Survey.

• Food and catering: home food plus eating and drinking out.
• Alcoholic drink and tobacco: off-trade and on-trade alcohol plus tobacco products.
• Housing, Council Tax, fuel and household services: rents, property tax, energy, dwelling depreciation and home services.
• Mortgage interest payments (MIPs): interest on a fixed base-period mortgage stock, driven by rates and house prices.
• Clothing, household and personal goods: garments, shoes, furniture and health and personal goods and services.
• Transport, leisure and fees: cars and fuel, fares, leisure and fees.

The 16 November 2022 bulletin for October 2022 put annual RPI inflation at 14.2%, against 11.1% for CPI and 9.6% for CPIH. The largest upward contributions came from housing and household services, food and non-alcoholic beverages, and transport. The RPI-CPI gap showed coverage and formula gaps: RPI covers mortgages and uses arithmetic not geometric averaging.

Under the Energy Price Guarantee from 1 October 2022, gas rose 7.8 to 10.3 and electricity 27.2 to 34.0 pence per kilowatt hour. The same bulletin corrected a record-high claim.

1. Fixed basket: The index prices a fixed basket at 100 times current over base-period cost. It is a Laspeyres-Lowe type measure with quantities held fixed.
2. Elementary aggregates: Without weights, RPI uses Carli, a mean of price ratios, and Dutot, a ratio of mean prices. CPIH and CPI use Jevons, a geometric mean; the gap is the formula effect.
3. Higher-level aggregation: Higher levels weight lower indices together, from items to sections to groups to the all-items index. Example: food up 1.0% on weight 200 and housing up 0.5% on 300 in 1000 gives 0.35% monthly.
4. Annual chaining: Each January the index is chain-linked on the previous January as 100 with fresh weights and items. The chain runs back to January 1987 as 100. Monthly chaining would overstate Carli moves, called price bounce.
5. Growth rates: Monthly change is 100 times the index move over the prior index. The annual rate spans the same month 12 months apart. Example: 300.0 to 302.4 is a monthly 0.8%; from 280.0 a year earlier, an annual 8.0%. Derived figures are published rounded to one decimal place.
6. Contributions: A contribution is the all-items move if only that part moved, in percentage points.
7. Seasonal adjustment: Headline RPI and its rates use the raw chain-linked index; adjusted data are only a supplement.