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Inflation in the United Kingdom - Statistics & Facts

Inflation is one of the most important economic indicators when analyzing the health of a country's economy, measuring price increases over time through a number of different indicators. In the United Kingdom, the three main inflation indices are the Consumer Price Index (CPI) , the Consumer Price Index including owner-occupiers' housing costs (CPIH), and the Retail Price Index (RPI). Although the CPI is the most recognizable of these three figures, the Office of National Statistics (ONS) promote the use of the CPIH as a more reliable indicator, as it includes some housing costs that the CPI does not. The RPI has been used for a longer period of time than the other two measures, but is seen to be outdated and flawed and has not been an official statistic since 2013.

Which index is the right one?

In general, the CPI is the most referenced figure despite the introduction of the CPIH and the historical context provided by the RPI. As of February 2021, the CPI inflation rate was 0.4 percent, indicating that prices in the UK had increased when compared with February 2020. For the same period the CPIH inflation rate was 0.7 percent, and the RPI inflation rate was 1.4 percent. Although no longer classed as a national statistic, the UK government still uses the RPI rate to calculate annual rail fare increases and interest on student loan debt. As the RPI typically overstates inflation the UK government's continued usage of the index is controversial, especially as the CPI rate is used by them more often, such as for calculating pension payments.

Will inflation be an issue in 2021?

According to a survey on important issues facing Great Britain, inflation is seen by just one percent of British people as being an important issue in 2021. This is in stark contrast to 1974, when 82 percent of people saw it as a crucial issue, although this was certainly due to the fact that prices were growing throughout that year and approaching a high of 26.9 percent by the summer of 1975. Although inflation has remained low in recent years, it is feared that the high levels of government spending seen in response to the Coronavirus pandemic, may cause prices to rise significantly in the near future. According to recent government forecasts however, the CPI is forecast to be slightly below the government's CPI inflation rate target of two percent, until at least 2025. Recent price falls in sectors impacted by the pandemic, such as restaurants and hotels have kept inflation low in 2020, and may continue to exert downward pressure on prices into 2021.

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Inflation in the UK

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Inflation in the United Kingdom - Statistics & Facts

Inflation is one of the most important economic indicators when analyzing the health of a country's economy, measuring price increases over time through a number of different indicators. In the United Kingdom, the three main inflation indices are the Consumer Price Index (CPI) , the Consumer Price Index including owner-occupiers' housing costs (CPIH), and the Retail Price Index (RPI). Although the CPI is the most recognizable of these three figures, the Office of National Statistics (ONS) promote the use of the CPIH as a more reliable indicator, as it includes some housing costs that the CPI does not. The RPI has been used for a longer period of time than the other two measures, but is seen to be outdated and flawed and has not been an official statistic since 2013.

Which index is the right one?

In general, the CPI is the most referenced figure despite the introduction of the CPIH and the historical context provided by the RPI. As of February 2021, the CPI inflation rate was 0.4 percent, indicating that prices in the UK had increased when compared with February 2020. For the same period the CPIH inflation rate was 0.7 percent, and the RPI inflation rate was 1.4 percent. Although no longer classed as a national statistic, the UK government still uses the RPI rate to calculate annual rail fare increases and interest on student loan debt. As the RPI typically overstates inflation the UK government's continued usage of the index is controversial, especially as the CPI rate is used by them more often, such as for calculating pension payments.

Will inflation be an issue in 2021?

According to a survey on important issues facing Great Britain, inflation is seen by just one percent of British people as being an important issue in 2021. This is in stark contrast to 1974, when 82 percent of people saw it as a crucial issue, although this was certainly due to the fact that prices were growing throughout that year and approaching a high of 26.9 percent by the summer of 1975. Although inflation has remained low in recent years, it is feared that the high levels of government spending seen in response to the Coronavirus pandemic, may cause prices to rise significantly in the near future. According to recent government forecasts however, the CPI is forecast to be slightly below the government's CPI inflation rate target of two percent, until at least 2025. Recent price falls in sectors impacted by the pandemic, such as restaurants and hotels have kept inflation low in 2020, and may continue to exert downward pressure on prices into 2021.

Interesting statistics

In the following 4 chapters, you will quickly find the {amountStatistics} most important statistics relating to "Inflation in the UK".

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