Record Inflation RPI Hits 7.8%pa and CPI 5.5%pa

Published / Last Updated on 16/02/2022

The Office for National Statistics (ONS) has this morning released UK inflation figures for January 2022.

Consumer Prices Index (CPI) has hit another high at 5.5%pa in January (5.4%pa in December, 5.1%pa in November and 4.2%pa in October).  This is its highest rate in 31 years.

The ONS put the inflationary increases down to price increases in

  • Clothing and footwear
  • Housing and household services
  • Furniture and household goods

With only restaurants and hotels and transport pulling prices down from a potential higher position.  February’s inflation figures will make interesting reading after minor interest rate increases but fuel and power ‘going through the roof’ with the Russia/Ukraine crisis so housing, household costs and transport may balloon inflation in the next month’s figures.

What about the old inflation measure of the Retail Prices Index?

The old measure of inflation, which is an arithmetical mean of the average prices of a basket of household spending, hit yet another 30 year high in January of 7.8%pa (up from 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 without Bank of England intervention.

We repeat our message on RIP 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.

Let’s see what the Bank of England’s next move is.  We expect another 0.25%pa interest rate increase either later this month or next.

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