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Economics A Level (DONEEEEEEE)

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Question:

What is the Consumer Price Index? [CPI] -How is it Calculated - any differences to the RPI? -What does it show?

Author: eric_galvao



Answer:

-Similar to the RDI [Measurement of Inflation] but 3 Differences 1. Some Items are Banished from the CPI, main ones being Mortgage Interest Payments & Council Tax 2. Different formula to calculate the CPI 3. Bigger sample is needed for the CPI -This makes the CPI a little lower than the RPI, unless Interest Rates are Low. But they have the same long term trend -The UK uses the CPI officially, and Internationally to an Extent


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