Consumer price index is a measurement of inflation on the consumer prices in the United Kingdom. CPI for short, Consumer Price Index was also referred to as the Harmonized Index of Consumer prices or HICP, prior to December 2010. The UK Consumer Price Index forms one of the important economic indicators for the UK. The UK started tracking the CPI since 1996 and the responsibility for setting the inflation targets lies with the Bank of England’s Monetary Policy Committee. The CPI data is published every month, annualized month on month as well as reporting the annual change in the index.
The UK’s Consumer Price index takes into account the average increase of prices on some most commonly consumed/used goods and services (approximately 600) that a typical British household would purchase. An increase in prices of these basket of goods and services therefore indicated that more British Pounds are needed to purchase these basic set of consumer items.
The data is collected across the nation from across 120,000 retail outlets. When calculating the CPI, the geometric mean to aggregate the items at their lowest levels. This is because consumer spending changes based on the price movements of the common household consumption goods.
The CPI data usually makes up as the basis for the government’s inflation target. It was only since April 2011 did the government’s made its intentions clear to use CPI data for indexation of tax credits, public services and so on. CPI data is widely used across businesses and economists and the society in general. Changes in the CPI data can affect import benchmark rates such as the interest rates of the Bank of England, tax allowances, state benefits, pensions amongst many others. CPI data also shows the impoact of inflation on family budgets as well.
UK CPI – Historical Data
The CPI data release usually has an immediate impact on the GBP currency and thus can impact currency pairs with the British Pound. A better than expected data is considered to by bullish for the British Pound as it would likely lead to increase interest rates, making the GBP attractive especially to foreign investors. On the contrary a lower than expected reading of the CPI is bearish for the GBP and usually results in lower interest rates.
To learn more about inflation prices and the UK’s CPI here are some resources for additional reading.
UK Consumer Price Index – Summary
Measures: Changes in prices for common household items/Inflation
Released: Monthly, mid-month
Release Time: 0830 GMT
Release Address: http://www.ons.gov.uk/ons/rel/cpi/consumer-price-indices/index.html