Description: Measures the change in prices for retail goods and services, including food and gas. The CPI is the key measure of inflation for the UK and is used by the Bank of England in making interest rate decisions. The report tracks changes in the price of a basket of goods and services that a typical British household might purchase. An increase in the index indicates that it takes more Sterling to purchase this same set of basic consumer items.
Release Date: 8:30 (GMT); monthly, mid-month following the reporting month.
A different form of the CPI is the Core CPI, which excludes prices for volatile items such as energy and food. The Core CPI is considered a better measure of inflation, as it excludes items that can distort the actual change in the cost of living.
In order to manage inflation the Bank of England may raise interest rates, which slows economic growth. Higher interest rates make holding the Pound more attractive to foreign investors, and the higher level of demand will place upward pressure on the value of the Pound.
CPI figures are reported as the annualized month-to-month and annual percentage change in the index.