The Institute RPIX
forecast is also significantly better than the same outturn based naive forecast.
The new target is 1/2 percentage point below the RPIX-based target, reflecting differences in the way that RPIX
and CPI inflation are measured.
With RPI at 1.6 per cent and RPIX
at 2.2 per cent in August, most commentators are sanguine about future inflation prospects.
There have been substantial falls in the consensus one-year ahead RPIX
inflation forecast (3) since the new monetary arrangements were put into place.
has proved to be an effective measure for the Bank, however, with the financial press and the public adapting to it over time.
As a result, HARP probably suffers from greater measurement problems than RPIX
. The use of RPIX
means that housing costs are under-represented in the inflation target.(4)
The government's stated aim for monetary policy is to achieve underlying inflation (RPIX
) of 2 1/2 per cent or less, looking ahead two years or so.
New York 14780.97 -58.83 Key indicators Base rate (Apr) 0.50pc Nationwide bse mge rate 2.50pc Oil Brent (May) $101.60 brl -$1.62 Gold (London) $1454.75 oz -$14.25 Inflation month year RPI (Apr 87=100) 248.7 +0.4% +3.3% RPIX
(target 2.5%) 248.0 +0.4% +3.2% CPI (Apr 96=100, tgt 2%) 125.6 +0.3% +2.8% Halifax house price index All (Feb) 529.5 +0.5% +1.9% Unemployment Dec - Feb 2.56m
First, we summarise and thereby make readily available the historical time-series of quarterly density forecasts of year ahead RPIX
(RPI excluding mortgage payments) inflation made by the National Institute for the period 1994Q1-2004Q4.
Under the old retail prices index (RPIX
) the MPC was set an inflation target of 2.5 per cent by the Government.
On Tuesday of this week inflation figures for the UK were released and came in well ahead of market expectations with the key RPIX
measure rising 2.8 to 2.9%.
On the domestic measure of retail prices excluding mortgage interest payments (RPIX
) as targeted by the central bank, inflation has averaged 2.1 per cent over that period, below the 2 1/2 per cent monetary policy target.