Rate of inflation for the past 5 years.....

or

Regards

Andrew

Thank you for those , can i confirm based on the month to month inflation , i add up the 12 months of each year and divide by 12 for the rate of inflation for each given year :-

Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2006 2.4 2.4 2.4 2.6 3.0 3.3 3.3 12/09/06 2005 3.2 3.2 3.2 3.2 2.9 2.9 2.9 2.8 2.7 2.5 2.4 2.2 2004 2.6 2.5 2.6 2.5 2.8 3.0 3.0 3.2 3.1 3.3 3.4 3.5 2003 2.9 3.2 3.1 3.1 3.0 2.9 3.1 2.9 2.8 2.6 2.5 2.8 2002 1.3 1.0 1.3 1.5 1.1 1.0 1.5 1.4 1.7 2.1 2.6 2.9 2001 2.7 2.7 2.3 1.8 2.1 1.9 1.6 2.1 1.7 1.6 0.9 0.7 2000 2.0 2.3 2.6 3.0 3.1 3.3 3.3 3.0 3.3 3.1 3.2 2.9

No, you take the index value for the first date and the latest index value, and divide the second by the first.

e.g. RPI for August 2001 = 174.0 RPI for July 2006 = 198.5

198.5/174=1.141 which is the factor to use.

Terry thank you , but i'm a tad confused , could you tell me what is the rate of inflation for 2001 ? so i can see the working out and the result .

from what you say the rate of inflation between august 2001 to july 2006 around 14% ?

In article , TV MAGIC writes

If your friend's contract says the change in the price over the whole period, then a calculation like Terry's is all you need taking the first and last dates.

If you want the rate for each year take either:

the average of the 12 index values for 2002 divided by the average of the 12 for 2001, etc.

Or the index value for December 2002 divided by December 2001, etc. for the other years.

The contract should say what you need, and yes, they will be different.

Sheila

Current inflation rate is 3.3%, measured by RPI. Does any one know the Bank Of England's target figure?

Bitstring , from the wonderful person GB said

The bank no longer has a target figure for RPI. It has a target figure for CPI (and that target is 2%). When it =did= have a target for RPI, it was 2.5% iirc.

Not the rate, the index rose by 14.1%

The annual rate in August 2001 was 2.05%, the month-on-month increase from July 2001 was 0.40%.

It means that retail prices rose by 14.1% over that 59 month period, which means the average inflaton rate during the period was 2.72%.

So is the U.K's inflation rate a combinations of CPI and RPI ? , when inflation is talked about is it generally RPI or both added together ? sorry to confuse matters .

Thanks - that's useful to know.

It's not you who's confusing matters, it's the government. Essentially, "inflation" means whatever the person uttering the word wants it to mean at the time.

A more useful measure of inflation, it seems to me, would be that not of retail or "consumer" prices, but of spendable income, i.e. net of taxes and pension contributions.

In message , Ronald Raygun writes

That is wage inflation which is not what the government want to limit. The underlying inflation that they are trying to restrict is inflation of the money supply. The theory is that the rules of supply and demand will control this according to the current discount rate applied, i.e. bank base rate.

A perceived symptom of excessive growth in the money supply is increased prices and that is measured by an artificial measure which the government fiddles with to suit itself. Its a bit like trying to control the health of the body by trying to control its temperature not the disease which is altering the temperature..

Using wage inflation as your measure is one further step down the line, i.e. instead of measuring the symptom you are measuring an effect of the symptom, not the underlying disease.

You may be too young to remember the days of Edward Heath as PM in which he inherited raging price inflation, which was coped with by employers by awarding huge pay rises. The Govt stepped in and linked pay to price inflation to restrict excessive pay rises. Excessive spending power at that time would have meant yet higher prices and this would result in an increase in the supply of money. If they had realised then that all they needed to do was restrict the supply of money by decreasing supply by increasing the discount rate so that, in real terms, i.e. so that it was higher than the inflation rate, then it may not have been so bad. And of course we had Wilson's disastrous *credit squeeze* which defeats words. I dont think he ever realised that banks got round this by issuing accommodation bills(1) and discounting them.

The public generally misunderstand what 'inflation' is about and assume it is only about prices or wages. It isnt either, it is all about money supply.

(1) = Bills of exchange drawn and accepted for payment at a future fixed date for which there was no underlying commercial transaction. The Bank then discounted the bills thereby, in effect, granting credit.