Economic Affairs Committee
Measuring Inflation

Fifth Report of Session 2017-19 - published 17 January 2019 - HL Paper 246


Summary of conclusions and recommendations

Chapter 1: Consumer price indices

Box 1: Statistical authorities in the UK

Inflation and price indices explained

The ‘inflation’ basket

Box 2: Changes to the inflation basket for 2018

The weighting of items in the inflation basket

Calculating a price index

Box 3: A method of calculating an average price change

Uses of price indices

A brief history of consumer price indices

The Cost of Living Index

The Retail Prices Index

The Consumer Prices Index

Box 4: Price aggregation

Table 1: Formulas used in price indices, per cent of total index weight (2012)

Figure 1: Annual percentage change in CPI, CPIH and RPI from January 1997 (January 2006 for CPIH) to November 2018

Chapter 2: Criticism of the Retail Prices Index

Recent issues with RPI

Figure 2: Difference between 12 month changes in RPI and CPI due to the formula effect, January 2005 to November 2018 (%)

Effect of the changes to clothing price collection

Figure 3: RPI’s estimate of the annual price change of women’s outerwear, 1987 to 2017 (%)

Figure 4: Comparison between the CPI’s and RPI’s estimate of the annual price change of clothing items, 2005 to 2017

Response from the statistical authorities

RPI as a legacy measure

Current position of the statistical authorities on RPI

Should RPI be a legacy measure?

Shortcomings of the Carli formula

Box 5: Illustrating upward bias in the Carli formula

Other shortcomings of the RPI

The decision to make no further improvements to RPI

Box 6: Summary of the legal duties of the UK Statistics Authority when producing official statistics

Chapter 3: Towards a single measure of inflation

The need for multiple measures of inflation

Recent government practice of ‘inflation shopping’

Table 2: Government use of consumer price indices for uprating

Which is the best index for a single official measure?


CPI, CPIH and the treatment of owner-occupier housing costs

Household cost indices

Index-linked gilts

New issuances of CPI-linked gilts

Existing RPI-linked gilts

Private sector bonds and pension schemes

Appendix 1: List of Members and declarations of interest

Appendix 2: List of witnesses

Appendix 3: Call for evidence

Appendix 4: Chained and direct Carli indices

Evidence is published online at and available for inspection at the Parliamentary Archives (020 7219 3074).

Q in footnotes refers to a question in oral evidence.

© Parliamentary copyright 2019