RPI Calculator - How Is RPI Calculated UK

RPI Calculation:

\[ RPI = \frac{\sum (Current\ Period\ Prices \times Weights)}{\sum (Base\ Period\ Prices \times Weights)} \times 100 \]

RPI Index Value:

Price Change (%):

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1. What is the Retail Price Index (RPI)?

The Retail Price Index (RPI) is a measure of inflation in the United Kingdom that tracks changes in the cost of a fixed basket of retail goods and services. It's a weighted average of price changes designed to reflect consumer spending patterns.

2. How RPI is Calculated

The RPI calculation formula:

\[ RPI = \frac{\sum (Current\ Period\ Prices \times Weights)}{\sum (Base\ Period\ Prices \times Weights)} \times 100 \]

Where:

Current Period Prices — Prices of items in the current period
Base Period Prices — Prices of the same items in the base period
Weights — Proportion of consumer spending on each item

Explanation: The RPI compares the current cost of a basket of goods and services to their cost in a base year (index = 100). The weights reflect the relative importance of items in typical household expenditure.

3. Importance of RPI

Details: RPI is used for index-linked bonds, wage negotiations, pension increases, and some regulated price adjustments. Though officially replaced by CPIH for many purposes, it remains important for certain contracts.

4. Using the Calculator

Tips: Enter the base period price (typically from a previous year), current price, and the item's weight (proportion of total spending). The calculator shows both the index value and percentage change.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between RPI and CPI?
A: RPI includes housing costs (mortgage interest payments) and uses a different mathematical formula (arithmetic mean vs geometric mean for CPI).

Q2: Why is RPI usually higher than CPI?
A: The formula effect (arithmetic mean tends to produce higher values) and coverage differences (RPI includes some items with faster rising prices).

Q3: What items are included in RPI?
A: The basket includes food, clothing, housing, household goods, transport, health, education, and leisure items - about 700 items in total.

Q4: How often is RPI updated?
A: The UK Office for National Statistics publishes RPI monthly, typically around the middle of the following month.

Q5: Is RPI still officially used?
A: While no longer a National Statistic, RPI remains in use for index-linked gilts, private sector pensions, and some commercial contracts.