How to Calculate Retail Price Index

Written by ben jones
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How to Calculate Retail Price Index
RPI is one measure of economic change in the United Kingdom. (economy image by Madera from

The Retail Price Index (RPI) is one of the more usual measures of inflation in the United Kingdom. The number is published once a month by the U.K. Office for National Statistics to track the changes in prices in the nation. The RPI is derived from a combined 120,000 different prices that are assembled throughout the nation. The RPI has been officially replaced by the Consumer Price Index, though it is still calculated and indexed for several purposes.

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  1. 1

    Select a baseline against which to compare future RPI numbers. The U.K. RPI has been measured since June 1947. The baseline can be anything: The year you were born, the month the economic downturn began or simply the original number from the start of RPI tracking. To track inflation, you need at least two points in time to compare.

  2. 2

    Collect the statistical basis of goods and service costs for your baseline period. The U.K. government does this by polling the cost of 600 different items, including staples such as milk and bread. These items are derived from 120,000 different retail outlets in 150 different areas of the United Kingdom.

  3. 3

    Calculate baseline RPI. This is done by adding up the total costs of the different items and dividing by the total number of items.

  4. 4

    Select the time period to which you will compare the baseline average. The U.K. Office for National Statistics has RPI data available for every month since June 1947.

  5. 5

    Collect the prices of goods and services for your comparison time period. This is done by adding the total costs of all items measured and dividing it by the total number of items to get an average.

  6. 6

    Calculate the percentage change in RPI for the time period by subtracting your baseline RPI from your comparison RPI and then dividing by your comparison RPI. Finally, multiply that number times 100 to get the percentage change.

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