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What Is The RPI And Why Is It So Important

The RPI (otherwise known as the Retail Price Index) is a measurement which is used to track the changing cost of living and inflation. It is calculated using a basket of general goods which everyday families would purchase on a regular basis and the changes are shown as percentage movements on a monthly and annual basis.

The RPI figure is usually compared to the corresponding period a year earlier so as to reflect seasonal trends which can influence the cost of certain goods. It is also interesting to know what the basket of goods used to calculate the RPI is amended and adjusted on a regular basis to ensure that it reflects the ever changing environment which we live in. For example 50 years ago the TV would not have been included in the RPI and 20 years ago the Video recorder only came to the fore.

The RPI is the main index which is used to track the general cost of living across the UK although as we are seeing today it can mask certain niche markets such as food inflation which is running at around double the growth in the Retail Price Index.

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