30 Year Record Inflation RPI Hits 8.2%pa and CPI 6.2%pa

Published / Last Updated on 23/03/2022

The Office for National Statistics (ONS) has this today released UK inflation figures for February 2022, ahead of Rishi Sunak’s Spring Statement later today.

Consumer Prices Index (CPI) has hit a 30 year high at 6.2%pa in February 2022 (5.5%pa in January, 5.4%pa in December, 5.1%pa in November and 4.2%pa in October).  This is yet again its highest rate in over 30 years.

The ONS put the inflationary increases price increases down to:

  • Transport and energy, as Ukraine and Russian energy restrictions start to bite
  • Recreation and culture
  • Furniture and household goods

On the downside, clothing and footwear prices fell back a little.

What about the old inflation measure of the Retail Prices Index (RPI)?

The old measure of inflation RPI, which is an arithmetical mean of the average prices of a basket of household spending, hit yet another 30 year high in February of 8.2%pa (up from 7.8% in January, 7.5% in December, 7.1%pa in November and 6%pa in October).  The last time RPI was at these levels was in March 1991 when inflation was 8.4%pa and we are likely moving to break that record the Bank of England suggesting it could 10% without more intervention.

We repeat our message on inflation in that we still believe that RPI is a more accurate measure as it is the costs of a standard amount of a set of goods and services divided by the number of goods and services called an arithmetical mean whereas the newer measure of inflation, CPI is a geometrical mean i.e., prices multiplied together and then the nth root of the same number of goods and services.

The Bank of England’s next move?  We expected another 0.25%pa interest rate increase in February, and we got it.  We expect a further two or three rises by the end of 2022 and suggest rates could be back to 2.0% in 2023.

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