It stands for retail price index; an inflation indicator that measure the change in the monetary cost of a basket of retail goods/ products/ services. The index is calculated as a weighted average of the proportionate changes in the prices (inflation) of the underlying basket of consumer goods and services between two different point in time.
The retail price index (RPI) captures the change of average prices over a certain period of time. The measurement is made by observing and selecting the essential goods and services that consumers are expected to buy, compiling by the same an imaginary shopping basket. The measurement or reading of the index is presented as a single figure which indicates the price change in the basket. This is calculated by using a base year (the year when calculation starts) and comparing the price of goods to that year.
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