Last time I wrote: "Mervyn King has played 'good cop bad cop' with the Government this week: No rate cuts for two years, King hints as inflation heads towards 4 per cent. King being the bad cop of course, basically telling us that interest rates will not come down (i.e. we are playing the German game and sticking it out to fight inflation). This article mentions that inflation may go to 4% or even 5%. Shock, horror! most of our bills plus our food and petrol are rising more like 25%!"
Let's go and have a look at the Office of Natiopnal Statistics' website, where they helpfully explain these indices. That is nice and open of them, but you don't hear about it on the TV news, do you? Latest On CPI and RPI shows clearly why CPI is now quoted instead of the RPI. It's a lot lower!
Elsewhere, the Guide to Finding CPI/HICP Data explains that the CPI is the same as the HICP, the Harmonized Index of Consumer Prices, which appears to be a standardised interntational inflation index (presumably one that understates inflation everywhere)! I am fairly sure that I remember an old free handout, the HSBC Economic Bulletin that I picked up from the bank regularly a few years ago that mentioned the HICP and gave a graph of the HICP (CPI) vs the RPI. The RPI was then at about 2.9% and the CPI was at about 1.9%. In other words the CPI was a third lower!
You can clearly see from the graph at the above link that this is still true! The CPI has always been lower than the RPI. That's why the goverrnment and the media quote it, to maintain social order. Right now, the CPI is at about 3.0% and the RPI is at 4.2%, already over 4 then, thanks Merv!
At least in the UK, you can find the old RPI data, not like the mysterious invisible M3 money supply figure that was taken off all documents released by the Federal Reserve Central Bank a couple of years ago. And has since soared,according to reconstructions by eagle-eyed economist Walter 'John' Williams at shadowstats.com !
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