United Kingdom
Official title
Retail Prices Index.
Scope
The index is computed monthly and covers the goods and services
purchased by all households, apart from those in the top four per
cent of the income distribution, and pensioner households
deriving at least three-quarters of their income from state
benefits. The index covers the whole of the United Kingdom.
Official base
January 1987 = 100.
Source of weights
The weights and selected items are revised at the beginning of February
each year using the latest available results of the household
expenditure survey. Generally the data for the year ending in June of
the previous year are used to calculate the weights to be used from
February of the next year. Adjustments are made to take account of this
time lag when implementing new weights, on the assumption that
expenditure on individual categories of goods and services will have
changed in line with their price movements (not allowing for any
increase or decrease in the volume of consumption).
All types of private household in the United Kingdom are covered
in the survey, which is a continuous survey covering over 7,000
households in the course of a year, selected in such a way that every
household has an equal chance of being included. Each household
records its expenditure over a period of two weeks, and also
provides information for a longer period about payments which are
made relatively infrequently.
The number of items and weights used in 1992 are as follows:
Weights and composition
| Major groups
| Number of items
| Weights
| Approximate number of price quotations
|
| Food
| 127 | 152 | ...
|
| Meals taken outside home
| 4 | 47 | ...
|
| Alcoholic drinks
| 9 | 80 | ...
|
| Tobacco
| 4 | 36 | ...
|
| Housing:
|
| Rent
| 2 | 35 | ...
|
| Owner-occupiers' mortgage interest payments, insurance of dwellings, etc.
| 2 | 72 | ...
|
| Repairs and maintenance
| 12 | 25 | ...
|
| Rates and water
| 4 | 40 | ...
|
| Fuel and light
| 11 | 47 | ...
|
| Durable household goods and services
| 57 | 125 | ...
|
| Clothing and footwear
| 66 | 59 | ...
|
| Transport and vehicles
| 17 | 163 | ...
|
| Miscellaneous goods
| 69 | 75 | ...
|
| Services
| 10 | 44 | ...
|
| Total
| 394 | 1000 | 130000
|
Household consumption expenditure
Consumption expenditure include income in kind, home-ownership
costs, trade-in of used goods in part payment for new ones,
licence fees, insurance associated with specific consumer goods
and health care. Excluded are income taxes and other direct taxes,
life insurance premiums, remittances, gifts and similar
disbursements, contributions to social insurance and pension
funds, savings and investments and charges for credit.
Method of data collection
The 180 localities where price are collected are selected
so as to be a representative sample of the country as a whole.
Within each area, a price collector familiar with local shopping
facilities is given considerable discretion to select typical
outlets, with broad guide-lines designed to ensure that each type
of outlet is adequately represented.
- Prices are collected each month for all goods and most
services.
- The index relates to a single day in each month, normally
but not invariably the second Tuesday of each month.
On the index day, most retail outlets used for price
collection purposes are visited by officials of the Central Statistical
Office. For some large supermarket chains charging the same
prices in all their outlets, the Office obtains price lists
centrally. Information for items such as electricity, gas, public
transport fares, telephone and postal charges is collected from
the head offices of the organisations concerned.
- A field organisation already exists for other unrelated purposes.
Data are collected through Unemployment Benefit Offices which send forms
each month to a central point.
- The prices used for the index are net of discounts, provided
that they are available to all potential customers and/or
financed by the seller.
- Sale prices are regarded as price reductions unless they
are for goods of inferior quality to those whose prices were
previously collected.
- Hire-purchase and credit terms are ignored.
- Second-hand prices and trade-in values are covered in
principle, but in practice the only second-hand prices used are
for motor cars.
- Imported goods are not separately distinguished.
- Price quotations for items with fixed prices (&eg newspapers,
postage, etc.) are collected singly from a central point.
- Price quotations for items with varying prices are collected from
many retail outlets all over the United Kingdom; about 130,000
quotations are collected to cover 600 items. The number of quotations
sought for specific items is broadly in line with their relative
weights.
Housing
The index covers all types of dwelling which can normally be
rented. Most such property is owned by local authorities who
review their rents only in April and October-November. The relevant
information is collected at these times by postal enquiry. The
price indicator is the average rent charged, without deductions for
any rebates or allowances received. Mortgage interest payments
are included in the index as a proxy for the housing costs (other
than rates, repairs, etc. which are separately covered) of
owner-occupiers.
Specification of varieties
Specifications vary from product to product and year to year.
Some brand names and specifications are currently included. The
local collector selects the most representative brand of the
specified item in each of the outlets visited.
Substitution, quality change, etc.
Price collectors have the opportunity to notify changes in
quality, which are taken into account as far as possible when
preparing the index. Items are reviewed each year to reflect
changes in consumer taste and behaviour.
Seasonal items
Prices of seasonal items are collected when they are available.
In general, the weights for seasonal items do not vary from month
to month, but the relative weights attached to different
varieties of fresh fruit and vegetables do vary in the course of
the year (within a fixed total weight for fresh fruit and fresh
vegetables) to reflect changes in consumption patterns.
Computation
The index is calculated as a Laspeyres' chain index with linking in
January each year. Indices for individual varieties of fresh fruit and
vegetables are combined using a Paasche-type formula. Depending on the
item, price averages or price relatives are calculated. Missing or
unusable price quotations are replaced by values imputed on the
assumption that the actual prices have changed in line with those
of items for which valid data have been collected elsewhere. The
index is computed directly at the national level.
Other information
Since 1989, the Central Statistical Office has been responsible for
collecting the current price data and computing the index.
A Tax and price index
is also calculated and published by
the Central Statistical Office.
Organisation and publication
Central Statistical Office: Monthly Digest of Statistics
(London). Department of Employment: Employment Gazette
.
Idem: A short guide to the Retail Price Index
, published in
the August 1987 issue of the Employment Gazette
.