The UK has three different inflation measures, and the differences matter

Most countries have one headline inflation index. The UK has three, and they give substantially different numbers. Understanding which one is being used in any given context is important because different government decisions use different measures.

Index	What it includes	Used for	Typical gap
CPI (Consumer Prices Index)	Standard basket, excludes owner-occupier housing costs	BoE inflation target (2%), most news headlines	Baseline
CPIH (CPI including Housing)	CPI + owner-occupier costs (imputed rent)	ONS preferred measure	Usually slightly higher than CPI
RPI (Retail Price Index)	CPI + mortgage interest payments + Council Tax	National Rail fares, student loan interest (Plan 1/2), index-linked gilts, some pension increases	Typically 1-2% above CPI

In 2022, RPI peaked at 14.9% while CPI peaked at 11.1%. UK students on Plan 1/2 loans saw interest calculated at RPI, meaning their debt was growing faster than headline inflation suggested.

Historical UK inflation context

Period	Peak rate	Cause
1974	~25 % CPI	Oil shock + wage-price spiral
1980	~21 % CPI	Continued energy and labour costs
2008-2009	~5 %	Sterling devaluation
2022-2023	~11 % CPI / ~15 % RPI	Energy crisis + supply chains

UK vs. global extreme inflation

UK 2022 inflation felt severe after 25 years of low inflation. But globally, extreme cases illustrate the true destructive power of runaway prices: Turkey (~65% in 2024), Argentina (~130% in 2023), Zimbabwe in the 2000s reaching billions of percent monthly. At 10% annual inflation, £100 of purchasing power becomes just £39 in 10 years.

Compound inflation table

Annual rate	£100 after 20 years	After 30 years
2% (BoE target)	£148	£181
3%	£181	£243
5%	£265	£432
10%	£673	£1,745

ℹ️ UK CPI/CPIH/RPI data updated monthly, Source: ONS (ons.gov.uk). Historical data from 1988. US CPI from BLS (bls.gov). Current BoE base rate at bankofengland.co.uk.