RPIX
Encyclopedia
RPIX is a measure of inflation in the United Kingdom
, equivalent to the all items Retail Price Index
(RPI) excluding mortgage interest payments.
was given the task of setting interest rates to meet an inflation target of 2.5 per cent on the RPIX measure.
Mortgage interest payments were excluded from the inflation target because otherwise the Bank's behaviour would be distorted. Any rate rise from the Bank, aimed at bringing inflation lower, would have the side effect of raising interest payments on variable-rate mortgages, causing higher inflation on any broad measure such as RPI. Targeting RPI would thus create a vicious circle of higher rates, something avoided by using RPIX as the target.
In December 2003 the Bank's target measure was changed to the Consumer Price Index
, or CPI, and the target was set at 2 per cent.
(ONS).
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
, equivalent to the all items Retail Price Index
Retail Price Index
In the United Kingdom, the Retail Prices Index or Retail Price Index is a measure of inflation published monthly by the Office for National Statistics. It measures the change in the cost of a basket of retail goods and services.-History:...
(RPI) excluding mortgage interest payments.
History
It was the UK's target rate of inflation from October 1992 to December 2003. From June 1997, the Bank of EnglandBank of England
The Bank of England is the central bank of the United Kingdom and the model on which most modern central banks have been based. Established in 1694, it is the second oldest central bank in the world...
was given the task of setting interest rates to meet an inflation target of 2.5 per cent on the RPIX measure.
Mortgage interest payments were excluded from the inflation target because otherwise the Bank's behaviour would be distorted. Any rate rise from the Bank, aimed at bringing inflation lower, would have the side effect of raising interest payments on variable-rate mortgages, causing higher inflation on any broad measure such as RPI. Targeting RPI would thus create a vicious circle of higher rates, something avoided by using RPIX as the target.
In December 2003 the Bank's target measure was changed to the Consumer Price Index
Consumer Price Index (United Kingdom)
The Consumer Price Index is the official measure of inflation of consumer prices of the United Kingdom. It is also called the Harmonised Index of Consumer Prices .-History:...
, or CPI, and the target was set at 2 per cent.
Publication
The RPIX continues to be published each month by the Office for National StatisticsOffice for National Statistics
The Office for National Statistics is the executive office of the UK Statistics Authority, a non-ministerial department which reports directly to the Parliament of the United Kingdom.- Overview :...
(ONS).