RPI, CPI and GDP

• Retail Price Index (RPI) 


  shows rate of change (inflation/deflation) of prices of everyday goods, such as mortgage, food and heating
• RPI is calculated monthly by comparing prices to the same month of the previous year – this is because there can be seasonal variations
• Consumer Price Index (CPI) 


  Official measure of inflation used by the UK Government
• It is similar to RPI but does not include mortgage payments.
• Pensions and benefits in the UK are updated each year in line with the CPI
• CPI is weighted to reflect importance of different items the average shopping basket. The weightings change each year to reflect consumer spending
• Gross Domestic Product (GDP)

  value of goods and services produced in a country in a given amount of time
• If the GDP falls in two (or more) successive quarters the economy is in recession
• Weighted Index Numbers

  takes into account proportions (similar to weighted mean). weightings reflect the importance of different items.
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