Experts query use of CPI inflation measure

The use of the Consumer Prices Index (CPI) has been questioned by leading UK statisticians.

In a letter to the UK Statistics Authority (UKSA), which operates at arm’s length from government, the Royal Statistical Society (RSS) raises a number of concerns about the CPI. Its concerns have grown since the decision by chancellor George Osborne to link a number of benefits and pensions to this measure rather than Retail Prices Index (RPI) measure from next April.

The RSS is also concerned about way in which the CPI has over the years gained increasing prominence in Office for National Statistics material, which is overseen by the UKSA, and which is now the headline index even though it is not necessarily the best index for all purposes.

More importantly, David Hand, the society’s president, says in his letter: “Giving prominence to CPI ahead of other indices means that users are implicitly being encouraged to use it for purposes, such as wage negotiations, for which it is not ideal. Naturally, this is exacerbated by the resulting impact on media commentary, and the lack of clear guidance on the appropriate use for the range of inflation measures available.”

www.rss.org.uk/pdf/Letter_RSSPresident_ChairUKStatisticsAuthority_CPI_RPI.pdf