Inflation in the Uk
Inflation in the United Kingdom
Introduction: This Essay will be concentrating on inflation in the United Kingdom. It will examine what is inflation, what causes inflation, costs of inflation as well as figures to do with inflation in the UK. Inflation is defined as ‘the rate at which the general level of prices for goods and services is rising, and, subsequently, purchasing power is falling’. It is in fact measured as a percentage increase over a certain period of time in a given price index, for example: Retail Price Index or the GDP deflator. The reason for this is that effective comparisons are made possible when percentage changes are shown easily. The rate of inflation gives us a snapshot of how much prices have actually risen over a period of 12 months. The RPI is calculated where the government takes a basket of more than 650 services and goods on which we spend a majority of our money on. This can range from things such as a loaf of bread, as well as a drink at a popular bar in London - and then comes out with an average price to compare. There are two different types of measurements: the RPI Headline rate - this includes all the 650 item in the basket, as well as the RPIX underlying rate - which excludes mortgage interest repayments. In the United Kingdom, it is in fact the RPIX, which is used more as the UK has a large proportion of its population, which are homeowners. This therefore means that in the country there are many people who do actually have mortgages, which would
Introduction: This Essay will be concentrating on inflation in the United Kingdom. It will examine what is inflation, what causes inflation, costs of inflation as well as figures to do with inflation in the UK. Inflation is defined as ‘the rate at which the general level of prices for goods and services is rising, and, subsequently, purchasing power is falling’. It is in fact measured as a percentage increase over a certain period of time in a given price index, for example: Retail Price Index or the GDP deflator. The reason for this is that effective comparisons are made possible when percentage changes are shown easily. The rate of inflation gives us a snapshot of how much prices have actually risen over a period of 12 months. The RPI is calculated where the government takes a basket of more than 650 services and goods on which we spend a majority of our money on. This can range from things such as a loaf of bread, as well as a drink at a popular bar in London - and then comes out with an average price to compare. There are two different types of measurements: the RPI Headline rate - this includes all the 650 item in the basket, as well as the RPIX underlying rate - which excludes mortgage interest repayments. In the United Kingdom, it is in fact the RPIX, which is used more as the UK has a large proportion of its population, which are homeowners. This therefore means that in the country there are many people who do actually have mortgages, which would