The measure of the rate of inflation in the United Kingdom, the Retail Price Index calculates the cost of buying a standard basket of goods and expresses this as a percentage of the base year index. For example, when the base year is 100 and the current Retail Price Index is 150, this indicates that prices have risen by 50% since the base year. Note, however, the constituents of the basket change over time to reflect consumer preferences. For example, LPs have been replaced by compact discs and pilchards by pasta sauce. The usual Retail Price Index (the headline figure) takes into account mortgage interest payments, on the basis that this is a typical cost for a household. There are however two alternative RPI measurements. RPI( X) excludes the impact of mortgage interest payments while RPI( Y) excludes the impact of mortgage payments and indirect taxes, such as VAT. Dresdner Kleinwort Wasserstein financial glossary
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► See RPI.
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retail price index UK US noun [C, usually singular] (ABBREVIATION RPI) ECONOMICS
► in the UK, a list of the prices of some basic goods and services, showing how they change over time, as a way of measuring inflation: »
Interest payments are increased in line with changes in the retail price index.
»The retail price index was up 3.6% from a year earlier.
the retail price index increases/decreases »The Retail Price Index (RPI) increased by 0.4% in May to an annual rate of 2.8%.
→ See also CONSUMER PRICE INDEX(Cf. ↑consumer price index), COST OF LIVING INDEX(Cf. ↑cost of living index)
Financial and business terms. 2012.