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Inflation

Answer

The information requested falls within the responsibility of the National Statistician who has been asked to reply.Letter from Karen Dunnell, dated 12 October 2006"As National Statistician I have been asked to reply to your recent Parliamentary Question, asking how the rate of inflation is calculated; and when is the next plan to review the formula for calculating it. (92752)""Both the Consumer Prices Index (CPI) and Retail Prices Index (RPI) are based on the prices of a ““basket”” of around 650 goods and services that are purchased by the vast majority of UK households.""Each product or service is weighted to reflect its relative expenditure with weights derived from a number of sources including the ONS Expenditure and Food Survey (in the case of the RPI) and National Accounts (in the case of the CPI). Each year the selection of products for the basket is reviewed and updated expenditure weights calculated with considerable care taken to ensure that the final selection is representative of UK household spending patterns and so the basket is kept up-to-date.""Around 120,000 prices are collected each month. 110,000 prices are collected from retail outlets in around 150 shopping areas or out of town retail park areas throughout the UK. In addition a further 10,000 prices are collected centrally each month, typically for things like holidays, housing and air-fares.""The index is ““chain linked”” to allow comparisons to be made over more than one year and by comparing the index at one point in time with the corresponding time point the previous year, an annual rate of change (often termed ““inflation””) can be calculated.""Further information can be found on the National Statistics website: www.statistics.gov.uk."

Secondary information

Type

Written question

Reference

92752; 450 c877W;450 c883W

Session

2005-06

Subjects

Inflation

Link

View this Written question on www.publications.parliament.uk