Editing Retail Price Index (section)

==History==
RPI was first introduced in 1956,<ref>{{cite web|url=http://www.ons.gov.uk/ons/rel/cpi/consumer-price-indices/history-of-and-differences-between-the-consumer-prices-index-and-retail-prices-index/index.html|title=History of and differences between the Consumer Prices Index and Retail Prices Index|publisher=Office for National Statistics|year=2011|access-date=2015-01-16|url-status=live|archive-url=https://web.archive.org/web/20150924122038/http://www.ons.gov.uk/ons/rel/cpi/consumer-price-indices/history-of-and-differences-between-the-consumer-prices-index-and-retail-prices-index/index.html|archive-date=24 September 2015|df=dmy-all}}</ref> replacing the previous Interim Index of Retail Prices that had been in use since June 1947. It was once the principal official measure of inflation. It has been superseded in that regard by the [[Consumer Price Index (United Kingdom)|Consumer Price Index]] (CPI).<ref>[http://www.statistics.gov.uk/cci/nugget.asp?ID=19 National Statistics Online] {{webarchive|url=https://web.archive.org/web/20090303184647/http://www.statistics.gov.uk/CCI/nugget.asp?ID=19 |date=3 March 2009 }}. 2008-10-14. Retrieved 2008-10-22</ref><ref name="bbc">{{cite news |title=Consumer inflation falls to 4.5% |url=http://news.bbc.co.uk/2/hi/business/7734522.stm |quote=The Consumer Prices Index (CPI) measure dropped to 4.5% from 5.2% in September. ... Retail Prices Index (RPI)... fell from 5% to 4.2% |publisher=BBC News |access-date=2008-11-29 |date=18 November 2008 |url-status=live |archive-url=https://web.archive.org/web/20081128205105/http://news.bbc.co.uk/2/hi/business/7734522.stm |archive-date=28 November 2008}}</ref>

The RPI is still used by the government as a base for various purposes, such as the amounts payable on index-linked securities, including [[Gilt-edged securities#Index-linked gilts|index-linked gilts]], and social housing rent increases.<ref name=landlords/> Many employers also use it as a starting point in wage negotiation.<ref name=bbc-april2009/> Since 2003, it is no longer used by the government for the inflation target for the [[Bank of England]]'s [[Monetary Policy Committee (United Kingdom)|Monetary Policy Committee]]<ref>{{cite web | url = http://www.bankofengland.co.uk/archive/Documents/historicpubs/mpcminutes/remitletters/2003/annex031210.pdf | title = The new inflation target and the monetary policy framework | date = 2003-12-10 | publisher = [[Bank of England]] | access-date = 2016-03-08 | quote = In accordance with the Bank of England Act (1998), the Chancellor has decided to change the inflation target, from today, to the CPI measure of inflation. | url-status = live | archive-url = https://web.archive.org/web/20160308184918/http://www.bankofengland.co.uk/archive/Documents/historicpubs/mpcminutes/remitletters/2003/annex031210.pdf | archive-date = 8 March 2016 | df = dmy-all }}</ref> nor, from April 2011, as the basis for the indexation of pensions of former public sector employees.<ref>{{cite news | last = Evans | first = Richard | title = Public pensions: switch from RPI to CPI declared 'lawful' by the High Court | newspaper = [[Daily Telegraph]] | date = 2011-12-02 | url = https://www.telegraph.co.uk/finance/personalfinance/pensions/8930868/Public-pensions-switch-from-RPI-to-CPI-declared-lawful-by-the-High-Court.html | access-date = 2016-03-08 | url-status = live | archive-url = https://web.archive.org/web/20160226170901/http://www.telegraph.co.uk/finance/personalfinance/pensions/8930868/Public-pensions-switch-from-RPI-to-CPI-declared-lawful-by-the-High-Court.html | archive-date = 26 February 2016 | df = dmy-all }}</ref> {{As of|2016}}, the UK state pension is indexed by the highest of the increase in average earnings, CPI or 2.5% ("the triple lock").<ref name="hm-treasury.gov.uk">{{cite web|title=Autumn Statement 2011 – pension increases|url=http://www.hm-treasury.gov.uk/as2011_index.htm|date=12 August 2012|url-status=live|archive-url=https://web.archive.org/web/20120816222118/http://www.hm-treasury.gov.uk/as2011_index.htm|archive-date=16 August 2012|df=dmy-all}}</ref><ref>{{cite web | url = https://www.gov.uk/government/publications/spending-review-and-autumn-statement-2015-documents/spending-review-and-autumn-statement-2015 | title = Spending review and autumn statement 2015 | date = 2015-11-25 | publisher = [[HM Treasury]] | access-date = 2016-03-08 | quote = The Spending Review and Autumn Statement confirms that the basic State Pension will once again be increased by the triple lock to £119.30 a week from April 2016 and sets the rate of the new single tier pension at £155.65 a week | url-status = live | archive-url = https://web.archive.org/web/20160309041155/https://www.gov.uk/government/publications/spending-review-and-autumn-statement-2015-documents/spending-review-and-autumn-statement-2015 | archive-date = 9 March 2016 | df = dmy-all }}</ref> 

The highest annual inflation since the introduction of the RPI came in June 1975, with an increase in retail prices of 26.9% from a year earlier. By 1978, this had fallen to less than 10%, but it rose again towards 20% over the following two years before falling again. By 1982, it had fallen below 10% and a year later was down to 4%, remaining low for several years until approaching double figures again by 1990. Aided by a [[Early 1990s recession|recession]] in the early 1990s, increased interest rates brought inflation down again to an even lower level.<ref>{{cite news | url=http://news.bbc.co.uk/1/hi/in_pictures/4446012.stm | work=BBC News | title=Thatcher years in graphics | date=18 November 2005 | url-status=live | archive-url=https://web.archive.org/web/20080120062129/http://news.bbc.co.uk/1/hi/in_pictures/4446012.stm | archive-date=20 January 2008 | df=dmy-all }}</ref>

From March to October 2009, the change in RPI measured over a 12-month period was negative, indicating an overall annual reduction in prices, for the first time since 1960.<ref name=bbc-april2009>[http://news.bbc.co.uk/1/hi/business/8009718.stm Inflation measure turns negative] {{webarchive|url=https://web.archive.org/web/20090424061059/http://news.bbc.co.uk/1/hi/business/8009718.stm |date=24 April 2009 }}, BBC News, 21 April 2009</ref> The change in RPI in the 12 months ending in April 2009, at −1.2%, was the lowest since the index started in 1948.<ref>[http://www.timesonline.co.uk/tol/news/politics/article6322818.ece Threat of deflation as retail price index falls to lowest-ever level] {{webarchive|url=https://web.archive.org/web/20100601220713/http://www.timesonline.co.uk/tol/news/politics/article6322818.ece |date=1 June 2010 }}, ''The Times'', 20 May 2009</ref>

[[Housing association]]s lobbied the government to allow them to freeze rents at current levels rather than reduce them in line with the RPI, but the [[HM Treasury|Treasury]] concluded that rents should follow RPI down as far as −2% per annum, leading to savings in [[housing benefit]].<ref name=landlords>[https://archive.today/20130420215725/http://www.insidehousing.co.uk/story.aspx?storycode=6505399 Landlords lose rent cuts battle], ''[[Inside Housing]]'', 10 July 2009</ref>

In February 2011, annual RPI inflation jumped to 5.1%<ref name=econ-2011-03-24>{{cite news | url=http://www.economist.com/node/18443342?story_id=18443342&CFID=159949614&CFTOKEN=32873403 | newspaper=The Economist | title=Output, prices and jobs | date=24 March 2011 | url-status=live | archive-url=https://web.archive.org/web/20111201231905/http://www.economist.com/node/18443342?story_id=18443342&CFID=159949614&CFTOKEN=32873403 | archive-date=1 December 2011 | df=dmy-all }}</ref> putting pressure on the Bank of England to raise interest rates despite disappointing projected GDP growth of only 1.6% in 2011.<ref name=econ-2011-03-24/> The September 2011 figure of 5.6%, the highest for 20 years, was described by the ''Daily Telegraph'' as "shockingly bad".<ref>{{cite news|title=Inflation is disastrous for our economic future|url=https://www.telegraph.co.uk/comment/telegraph-view/8833963/Inflation-is-disastrous-for-our-economic-future.html|access-date=20 October 2011|newspaper=Daily Telegraph|date=18 October 2011|location=London|url-status=live|archive-url=https://web.archive.org/web/20111019205908/http://www.telegraph.co.uk/comment/telegraph-view/8833963/Inflation-is-disastrous-for-our-economic-future.html|archive-date=19 October 2011|df=dmy-all}}</ref>

After a thorough review, in 2012 the National Statistician's Consumer Prices Advisory Committee (CPAC) determined that due to the use of the [[List of price index formulas#Carli|Carli formula]] in certain subcomponents, the RPI is biased upwards compared to other indices by a "formula effect" of roughly one percentage point. CPAC concluded that "the use of the Carli formula is no longer appropriate" due to the weak axiomatic properties of the Carli method. (The weak property is the fact that after a price bounce and a subsequent full return to original prices, the Carli method shows positive aggregate inflation.).<ref>{{cite web|title=CPAC(12)24 – The formula effect gap between the Retail Prices Index and the Consumer Prices Index|author=National Statistician's Consumer Prices Advisory Committee|quote=[RPI no longer an official national statistic – UKSA]|publisher=[[Office for National Statistics]]|date=September 2012|format=zip|url=http://www.ons.gov.uk/ons/guide-method/development-programmes/other-development-work/consumer-prices-advisory-committee/cpac-papers/cpac-papers---september-2012-meeting.zip |access-date=2015-04-14 |url-status=live|archive-url=https://web.archive.org/web/20130202091546/http://ons.gov.uk/ons/guide-method/development-programmes/other-development-work/consumer-prices-advisory-committee/cpac-papers/cpac-papers---september-2012-meeting.zip |archive-date=2 February 2013}}</ref>

In 2013, following a consultation on options for improving the RPI, the National Statistician concluded that the formula used to produce the RPI does not meet international standards and recommended that a new index known as [[List_of_price_index_formulas#Jevons|RPIJ]] be published.<ref name="National Statistician announces outcome of consultation on RPI">{{cite web|url=http://www.ons.gov.uk/ons/rel/mro/news-release/rpirecommendations/rpinewsrelease.html|title=National Statistician announces outcome of consultation on RPI|website=www.ons.gov.uk|date=10 January 2013|access-date=8 May 2018|url-status=live|archive-url=https://web.archive.org/web/20151227183744/http://www.ons.gov.uk/ons/rel/mro/news-release/rpirecommendations/rpinewsrelease.html|archive-date=27 December 2015|df=dmy-all}}</ref> Subsequently ONS decided to no longer classify RPI as a "national statistic".<ref name=MoneyMarketing>[http://www.moneymarketing.co.uk/rpi-no-longer-an-official-national-statistic-uksa/1067887.article RPI no longer an official national statistic – UKSA], John Greenwood, ''MoneyMarketing'', 18 March 2013</ref> However, ONS will continue to calculate RPI, among several versions of the inflation index, in order to provide a consistent historic inflation time series. The index factors continue to be used to adjust for inflation in the calculation of chargeable (capital) gains for inclusion in the tax computation for entities subject to corporation tax in the UK.

In January 2018, [[Mark Carney]], Governor of the Bank of England, said that RPI should be abandoned.<ref>{{cite news|url=https://www.telegraph.co.uk/business/2018/01/30/mark-carney-calls-meritless-rpi-measure-axed/|title=Mark Carney calls for 'meritless' RPI measure to be axed|first=Tim|last=Wallace|newspaper=The Telegraph|date=8 May 2018|access-date=8 May 2018|via=www.telegraph.co.uk|url-status=live|archive-url=https://web.archive.org/web/20180201183703/http://www.telegraph.co.uk/business/2018/01/30/mark-carney-calls-meritless-rpi-measure-axed/|archive-date=1 February 2018|df=dmy-all}}</ref>

In November 2021, inflation has risen faster than projected to its highest level in nearly a decade, putting pressure on the Bank of England to increase interest rates.<ref>{{Cite news|last1=Wearden|first1=Graeme|last2=Ambrose|first2=Jillian|last3=Osborne|first3=Hilary|last4=Partington|first4=Richard|last5=Partridge|first5=Joanna|last6=Partridge|first6=Joanna|date=2021-11-17|title=UK's decade-high inflation makes December rate rise 'more likely'; gas prices climb again – business live|language=en-GB|work=The Guardian|url=https://www.theguardian.com/business/live/2021/nov/17/uk-inflation-ten-year-high-fuel-energy-food-cars-stock-markets-ftse-business-live|access-date=2021-11-17|issn=0261-3077}}</ref> According to data from the ONS, the annual rate of the CPI increased to 4.2 percent in October, up from 3.1 percent in September. Inflation surpassed the Bank of England's target of 2% and was higher than the 3.9 percent predicted by experts. Higher rates for transportation, restaurants, and hotels mainly contributed to the price increase in October.<ref>{{Cite web|title=Consumer price inflation, UK - Office for National Statistics|url=https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/consumerpriceinflation/october2021|access-date=2021-11-17|website=www.ons.gov.uk}}</ref>