Are the inflation rates true?

CPI is pretty useless because it doesn't include housing costs like rent, mortgage, council tax, not sure about gas/electric. RPI and RPIX are better measures.

Car tax I think has gone down for people with smaller cars, mine has stayed the same as last year. Things like telecom prices, computer prices, manufactured goods etc tend to go down year on year so that'll bring the overall figure down. Also things like flight/holiday prices seem to be going down.

I've just taken out a student loan, where they say that the rate of interest is the rate of inflation. Funny, because if inflation is 2.4%, why do they say in the letter that it's 3.2%?

Marcus

They have taken anything out of the basket that might sway it to its real level. Welcome to nulab.

I suggest you read a copy of 1984 to find out who we're currently at war with too.

Governments continually fiddle the figures by bringing out all these new indices, but to avoid a revolution, (OK, that's over the top,) they continue to honour earlier commitments to update certain things according to the older more unflattering indices, so your loan is tied to one of these.

Tiddy Ogg.

CPI annual inflation - the Government?s target measure - fell to 2.4% in July down from 2.5% in June.

The largest downward effect came from household equipment and routine maintenance, due to special offers in July for furniture and furnishings being greater than a year ago, particularly for some items of bedroom and lounge furniture, following larger than usual price increases in June.

There were also large downward effects from:

- Miscellaneous goods and services, largely due to financial services, where increases seen a year ago were not repeated this July;

- Transport, where there were downward effects from air fares, petrol prices, which rose by less than last year, and other transport services, due to road tolls, where increases last July were not repeated this; and

- Clothing and footwear, where special offers on a wide range of clothing in July were greater than last year.

A small downward effect came from alcoholic drinks and tobacco.

The only large upward contribution to the change in the CPI annual rate came from price changes for food and non-alcoholic beverages due to upward effects from:

- Fruit, where prices for some items fell by less than a year ago;

- Milk, cheese and eggs, where shop bought milk prices rose in July following cuts earlier in the year; and

- Meat, where prices rose in July, especially for beef.

Small upward effects came from housing and household services, due to increased gas and electricity bills, and recreation and culture.

RPI inflation remained unchanged in July at 3.3%. The main factors influencing it were similar to those affecting the CPI although differences in expenditure weights between the indices meant that the RPI remained unchanged. RPIX inflation - the all items RPI excluding mortgage interest payments - is 3.1% in July, unchanged from June.

As an internationally comparable measure of inflation, the CPI shows that the UK inflation rate is around the average for the European Union as a whole. The provisional inflation rate for the EU 25 in June was 2.4%, compared with the UK figure for the same month of 2.5%.

No, they are nonsensical. Inflation has been running at much higher rates for the last 10 years at least. Probably at least double the government figures. We are highly taxed and that is inflationary.

We are currently at war with Eastasia. We have always been at war with Eastasia.

I don't believe you. Publish your figures and your methodology.

Here's how National Statistics calculate theirs -

Consumer Prices Index and Retail Prices Index: The 2006 Basket of Goods and Services Details of the shopping basket used in 2006 to compile the CPI and RPI.

"Calculating The RPI

More FAQs on the most familar measure of inflation

How is the RPI calculated?

The Retail Prices Index (RPI) is often described in terms of a shopping basket containing some 650 goods and services, chosen as indicators of price movements for a range of similar items. Taking bread as an example, several different types of bread are priced (e.g. large white loaves (sliced and unsliced), small brown loaf, large wholemeal loaf, bread rolls, pitta bread and french stick/baguette). These are considered as representative of the majority of bread consumption by most households.

Each price collector collects the price of a representative item (e.g. brand) for that price indicator in January and exactly the same item/ brand must be priced every month for a period of thirteen months. Each month price indices are constructed comparing the latest price with the price in the base month (January).

Finally price indices for price indicators are aggregated to items and then to sections which is the published level and rescaled to a reference point of January 19870. This allows price changes to be compared to a year earlier (i.e. the annual inflation rate) and to previous years.

How is it published?

Every month data is published on either the second or third Tuesday in a month (depending on the month) in a Consumer Price Indices First Release along with Additional Briefing Notes, which give the stories behind the figures. Data is also published in the electronic publication Focus on Consumer Prices available on the National Statistics website.

How often are the components reviewed?

The Office for National Statistics reviews the components of the RPI once every year, to keep it as up to date as possible, reflecting changes in consumers' preferences and the establishment of new products. Each year the changes are announced in a News Release and published in an article.

What are the origins of the RPI?

Although there were occasional official comparisons of prices for food in the nineteenth and early twentieth century, the Government first began a systematic, continuous check on the increase of the cost of living in 1914, but the coverage was very limited. After the Second World War a cost of living Advisory Committee was set up and an experimental price index known as the Interim Index of Retail Prices ran from 1947 to 1956. In January 1956, the first official Retail Prices Index began with various methodological changes implemented since then following reviews by RPI Advisory Committees. The latest Advisory Committees met in the early 1990s and made recommendations about the treatment of housing costs, holidays and car prices.

Why are there several different versions of the RPI?

No single inflation measure can meet all users' needs, so in addition to the all items RPI figure, the Office for National Statistics also publishes other inflation measures based on the RPI. These include:

- RPIX, which excludes mortgage interest payments;

- RPIY, which excludes mortgage interest rates and indirect taxes (VAT, council tax, duties vehicle excise duty, insurance tax and air passenger duty);

- Quarterly Pensioner Indices, which use the same price data as RPI, weighted for the typical spending of one and two-pensioner households and excluding items such as school dinners, work place canteen meals and housing; and the

- Tax and Price Index, which measures how much the average person's gross income needs to change to purchase the RPI basket after allowing for the average amount of income tax and national insurance paid on earnings.

In addition to these, there is the Consumer prices index (CPI) which is the government's inflation target, and is also used for international comparison. The CPI was previously published in the UK as the harmonised index of consumer prices (HICP)."