What are the two main measures used to track UK inflation?

What are the two main measures used to track UK inflation?

• A. CPI and RPI
• B. PPI and GDP deflator
• C. Unemployment rate and wage growth
• D. Balance of trade and exchange rate

Answer: (A)

Inflation in the UK is tracked primarily with two price indices: the Consumer Prices Index and the Retail Prices Index. CPI measures how the prices of a broad basket of goods and services bought by households change over time. It’s the measure used by the Bank of England for its official inflation target, and it excludes mortgage interest payments. RPI is an older index that includes housing costs such as mortgage interest and uses a different calculation method, so it tends to show higher inflation and isn’t the official target measure anymore, though it’s still published. Other metrics exist, like PPI for prices faced by producers or the GDP deflator for the overall price level of all goods and services in the economy, but the two main measures used to track inflation are CPI and RPI.

Inflation in the UK is tracked primarily with two price indices: the Consumer Prices Index and the Retail Prices Index.

CPI measures how the prices of a broad basket of goods and services bought by households change over time. It’s the measure used by the Bank of England for its official inflation target, and it excludes mortgage interest payments.

RPI is an older index that includes housing costs such as mortgage interest and uses a different calculation method, so it tends to show higher inflation and isn’t the official target measure anymore, though it’s still published.

Other metrics exist, like PPI for prices faced by producers or the GDP deflator for the overall price level of all goods and services in the economy, but the two main measures used to track inflation are CPI and RPI.