Prices and Inflation

Many Central Banks now gear their monetary policy towards achieving a target value for inflation. We describe two key measures of an economy’s prices – the Consumer Price index (CPI) and the GDP deflator. In the commentary we present evidence on the behaviour of inflation in the UK and other countries over the last 50 years. We also explain the concept of core inflation.

Consumer Price Indices

Consumer Price indices measure the overall or average price of a collection of consumer goods and services. The percentage rate of change of such an index is a measure of the inflation rate. This page shows how such a measure has behaved over the last 50 years for a number of countries.

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GDP Deflator

Less commonly used than the Consumer Price Index, the GDP deflator is a measure the average price of all the goods and services that an economy produces. This page explains its derivation and presents evidence on is recent behaviour for a number of countries.

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Commentary - Inflation

The commentary outlines the inflationary experiences of the UK and examines the relationship between the standard measure of inflation and ‘core’ inflation.

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