Which Price Index?

[Coldicote]

Can someone please explain in simple terms the difference between the Consumer Prices Index and the Retail Prices Index and what effect do they have on us? High finance is so complex these days I sometimes think ordinary mortals are not meant to understand it.

[dasherman]

RPI includes housing costs such as mortgage interest and council tax and tends to be higher, CPI doesn't and tends to be lower.

The inflation rate tells us, on average, how much things have gone up over the last year.
RPI & CPI are also used for annual increases in pensions.

[Coldicote]

Thank you dasherman. I thought it might be something like that, but I'm not sure how mortgage interest and council tax can be described as 'Retail Prices'. If we are buying/paying for services then I would have thought 'Consumers Prices' would be appropriate. To my way of thinking, a combined 'Living Prices Index' would make more sense. I've heard it said that statistics can be made to prove anything!