Retail Price IndexIntroduction

The RPI as we know it today was first introduced in June 1947. However, a Cost of Living Index was first produced by the Government in July 1914 to protect workers from price rises during the First World War and ran until 1947. An Interim Index of Retail Prices was published from 1947 – 1956. In an attempt to simplify matters, many publications collectively refer to these as the RPI and give the date range 1914 – 2000.

Definition

Retail Price Index is " An inflationary indicator that measures the change in the cost of a fixed basket of retail goods"

Consumer Price Index

CPI is "An inflationary indicator that measures the change in the cost of a fixed basket of products and services, including housing, electricity, food, and transportation"

The CPI is the most widely used measure of inflation. The report is released at 8:30 am EST around the 15th of each month and reflects the previous month’s data. The CPI measures the change in the cost of a bundle of consumer goods and services. The bundle includes about 200 types of goods and thousands of actual products, ranging from foods and energy to expensive consumer goods. The prices are measured by taking a sample of prices at different stores. In addition to the overall CPI number, it is important to also look at the "core rate" The core rate excludes volatile goods like food and energy and gives a closer measure of real inflation. Most reports of the CPI numbers will include both the overall and the core numbers. The CPI is also important because it is used to adjust the annual changes to Social Security Payments. There has been much debate about how well the CPI measures inflation, and some feel that it is an imperfect way to track rising prices. To see the latest report, visit the Bureau of Labor Statistics.

Producer Price IndexDefinition

PPI is "An inflationary indicator published by the US Bureau of labor statistics to evaluate wholesale price levels in the economy" Previously it was called Wholesale Price Index.

As mentioned above, the PPI is one of the two most important ways to measure inflation. The Producer Price Index is released at 8:30 am EST during the second full week of each month and reflects the previous month’s data. The index measures the price of goods at the wholesale level. So, while the CPI tracks the cost paid by consumers for goods, the PPI tracks how much the producers are receiving for the goods. There are three types of goods measured by the PPI: crude, intermediate, and finished. Crude goods are raw materials used in production of something else, intermediate goods are components of a larger product, and finshed goods are what is actually sold to a reseller. The finished goods data are the most closely watched because they are the best measure of what consumers will actually have to pay. The latest report can be found at the Bureau of Labor Statistics.

Retail Price Index had been increased from 117.59 to 118.50 in MAR 2009

In March 2009, the Retail Price Index went up by 0.77 % over the previous month. This primarily reflected an increase of 5.55 % in the Clothing and Footwear Index, mainly due to seasonal price increases in women’s outerwear.The Food Index went up by 1.62 %, mainly on account of an increase in the price of vegetables.An increase in the rents paid by tenants and in the price of certain electrical equipment, brought about a rise of 0.20 % in the Housing Index.Upward movements in the price of hairdressing services were the main cause behind an increase of 0.20 % in the Personal Care and Health Index.The Household Equipment and House Maintenace Cost Index went up by 0.19 %, mainly on account of higher prices for house decoration articles.The Other Goods and Services Index registered an increase of 0.15 %, mainly due to an increase in the prices of non-durable household goods.Higher prices of wine and non-alcoholic beverages underlay an increase of 0.09 % in the Beverages and Tobacco Index.The Transport and Communication Index dropped by 0.19%, mainly on account of lower fuel prices.The Recreation and Culture Index went down by 0.12 %, mainly due to a decrease in the price of a horticultural product.

In March the twelve-month moving average rate of inflation stood at 4.32 %, whereas the annual rate stood at 4.26 %.

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