Originally published December 2022.

It began in 1947 as a refreshing new measure, but has long since become a Ridiculously poor price index; unless, that is, you own what it links to and/or happen to like antiquities. It is full of relics we no longer buy or those we still do in nothing like the volume we once did, or at the prices it claims, for the RPI fails to draw data from the tech-driven arrivistes who have been more than welcomed disinflationary invaders to our consumer lives.

I will not curate the antiques included in the RPI’s ‘museum of deceitful decrepit stuff’. Rather than take my word for it, this is what the ONS has warned for nigh on 10 years: the RPI is “a very poor measure of general inflation, at times greatly overestimating prices and how these are experienced” (see chart 1).

Now, what makes the Ridiculously poor price index presently far from funny is that it is the basis for payments to those who – during such overestimating times – are the lucky holders of the winning tickets that are Index-Linked Gilts. Lucky because at its last print, the RPI recorded inflation of 14.2%. It is also the fortunate reference used for those who use it for their pay demands. Lucky too for those in receipt of defined pensions that rise in line with it. Also welcomed by businesses – notably across telecoms – whose prices index to it. And, to repeat, since the RPI grossly exaggerates genuine inflation, those whose income is linked to it are being overpaid.