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Inflation


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Inflation
A sustained increase in the general price level.
CPI
The most commonly used means to assess changes in the price level (inflation)
RPI
A measure of inflation that was more commonly used in the past but is still published. It includes housing costs so is often used when considering wage increases.
Expenditure and Food survey
A survey of 7000 households spending patterns which is used to help produce the CPI figure for inflation.
Price survey
A survey undertaken to establish the prices of the 650 most commonly used goods and services in the economy.
Indexing
A process whereby the values of a variable are 'set' to a round value such as 100 or 1000. Changes in this variable are then easy to see.
Weighting
An attempt to give values in the CPI which are appropriate to the importance of the good. E.g. if 10% of income is spent of food then changes in food prices should contribute 10% to the value of CPI.
Base year
A year that is chosen to compare other years to.
Basket of goods
The 650 goods which the expenditure and food survey determines are most commonly consumed by the 'typical' household. It will change over time.
Mortgage payments
The monthly sum paid to repay loans taken out to buy houses. Although a major household expenditure item it is excluded from the CPI inflation measure.