Arborbridge wrote:
You can see why HMG like CPI and ordinary folk prefer RPI. CPI is a good wheeze for the government to put its hand in your pocket (notwithstanding the "known defects" in RPI - where known defects probably = disadvantage to HMG)
Arb.
I have always trusted the RPI rather than the CPI. The CPI is said to be a better way of comparing inflation among countries because it uses items and services common to all countries, but is not so useful to those actually living in a country. e.g. In the UK, Council tax and railways are used in RPI but not CPI. Yet I think that most would agree that council tax especially is a significant part of a household's budget. RPI is used to decide those train fare increases, as well as student loans. Take a place like France or Italy where higher education and public transport is much cheaper and we start to see how complex the system is. In places like Italy and Malta, there is no council tax - at least on your primary residence.
So I reckon that CPI is useful for comparing differences in general inflation between parts of the world, but UK RPI gives a closer approximation to the real situation as felt by the population.
Steve