Which Inflation Number Is The Real One?

The UK doesn't have just one official inflation measure — it has several, and they can tell noticeably different stories about the same economy at the same time.

Why RPI usually runs higher

A large part of the gap comes down to the statistical method used to average individual price changes into an overall index. CPI mostly uses a geometric-mean-based approach for combining prices at the most detailed level, which tends to produce a lower figure than the older arithmetic-mean method RPI still relies on for parts of its calculation — a well-documented statistical quirk often called the "formula effect," rather than a reflection of genuinely different prices being measured. RPI also includes housing costs like mortgage interest payments and council tax, which CPI (though not CPIH) leaves out, and which can swing significantly with interest rate changes.

Why it still matters which one is used

Despite losing its official National Statistic status, RPI is still published and still used to set the terms of a range of real financial contracts — including index-linked government bonds (gilts), some rail fare increases, and historically some student loan interest calculations. Because RPI tends to run higher than CPI, whichever measure a contract references can make a real, meaningful difference to the amount actually paid — this is a genuine, ongoing point of dispute in some of those areas, since a higher index generally favours whoever is receiving the index-linked payment over whoever is paying it.

What's changing

The UK Statistics Authority has been working to align RPI's methodology with CPIH, with reforms due to take effect from February 2030 — effectively bringing RPI's calculation approach in line with the newer, more methodologically robust measure over time.