Retail price index

In the United Kingdom, the Retail Prices index or Retail Price Index (RPI) is a measure of inflation published monthly by the Office for National Statistics. It measures the change in the cost of a representative sample of retail goods and services.

As the RPI was held not to meet international statistical standards, since 2013 the Office for National Statistics no longer classifies it as a "national statistic", emphasising the Consumer Price Index instead.

RPI was first calculated for June 1947, largely replacing the previous Interim Index of Retail Prices. It was once the principal official measure of inflation. It has been superseded in that regard by the Consumer Price Index (CPI)

The RPI is still used by the government as a base for various purposes, such as the amounts payable on index-linked securities including index-linked gilts, and social housing rent increases. Many employers also use it as a starting point in wage negotiation. Since 2003, it is no longer used by the government for the inflation target for the Bank of England's Monetary Policy Committee nor, from April 2011, as the basis for the indexation of the pensions of former public sector employees. As of 2016^[update], the UK state pension is indexed by the highest of the increase in average earnings, CPI or 2.5% ("the triple lock").

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 recession in the early 1990s, increased interest rates brought inflation down again to an even lower level.

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. The change in RPI in the 12 months ending in April 2009, at −1.2%, was the lowest since the index started in 1948.

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