Retail Price Index YoY

The Retail Prices Index (RPI) YoY is the all-items 12-month rate. It compares a month with the same month a year earlier. The Office for National Statistics (ONS) publishes it monthly in the consumer price inflation bulletin. It covers index households, households excluding pensioner and top 4% high-income cases, across the whole United Kingdom except the offshore islands.

The series began as an interim index in June 1947. Official RPI began in January 1956. The long-run series uses January 1987 = 100 as its base.

It uses about 150,000 quotes across 141 locations. The 2024 basket held 744 representative items. Unlike CPI (Consumer Prices Index), it covers mortgage costs and uses older averaging.

Local prices are collected over at least one working week near mid-month, mostly on its Tuesday. Collection dates are never published in advance.

The bulletin usually appears at 7am on the second or third Wednesday after each month. There is no pre-release access except in-confidence access for the Bank of England Monetary Policy Committee.

It appears with CPIH and RPIX. RPI is never revised, to protect index-linked contracts. A correction notice appears if errors move a headline annual rate by over 0.1 points.

• Food and catering: everyday groceries and meals eaten out.
• Alcohol and tobacco: drinks by outlet, plus tobacco.
• Housing: rents and occupancy costs, excluding ownership extras below.
• Fuel and light: energy, with gas and electricity tariffs by supplier, region and payment method.
• Motoring and travel: motoring costs and public fares.
• Clothing, leisure and services: clothes, leisure items, personal services, fees and subscriptions. Clothing leads the formula gap.

In October 2022 RPI reached 14.2%, against 11.1% for CPI and 9.6% for CPIH, the housing-inclusive gauge. The November 16, 2022 bulletin blamed housing and household services, food and transport, led by energy and motor fuel. That left RPI 3.1 points above CPI and 4.6 above CPIH, the wedge from averaging and housing cover. Treating RPI as interchangeable with CPI therefore misreads inflation by whole points under stress.

1. Elementary averages: without detailed weights, RPI uses Carli (mean of price ratios) or Dutot (ratio of mean prices); consumer gauges use Jevons (geometric mean). Shirts at 20, 30 and 50, rising to 22, 30 and 55, give Carli 106.7 and Dutot 107.0, against 106.6 for Jevons.
2. Higher-level average: higher levels use a Laspeyres-type average with weights in parts per 1,000. Shirts at 106.7 with weight 12 and trousers at 102.0 with weight 8 give 104.8 on a previous-January = 100 base.
3. Yearly chaining: each February the basket updates, with old and new items priced in January, then linked to the January 1987 = 100 series. A last-January link of 350.0 times 104.8/100 gives 366.8. Yearly chaining avoids price bounce, where the index stays high after prices fall.
4. Headline rates and rounding: YoY divides the 12-month index gain by the index a year earlier, times 100. An index of 366.8 against 352.1 a year earlier gives 4.2%. Contributions in percentage points sum to the headline rate. Indices and rates print to one decimal place, using published rounded figures.
5. Housing extras: mortgage interest follows rates and house prices; depreciation follows a smoothed house-price index. Council Tax usually moves only in April. Estate agent fees follow the average house price, plus VAT.
6. Seasonal handling: the headline index is not seasonally adjusted. Out-of-season items copy the parent monthly move. Out-of-season coats follow the garments class from April to August.

Key point: RPI is not the authoritative inflation gauge and cannot replace CPI or CPIH. The ONS calls it a very poor measure, sometimes overstating and sometimes understating inflation. It lost National Statistic status in 2013, often runs about 1 point above CPIH, and its publisher discourages its use. The old averaging alone adds about 0.6 to 0.7 points; RPI stays only for legacy index-linked contracts and gilts (government bonds).

RPI has no target level. CPIH methods and data sources are due to enter its calculation at a later date.