How to calculate inflation between two dates.

Imagine you wanted to work out what an inflation-rate increase between two dates is? Here’s an outline that I’ve drafted with extensive help from Nick Kardahji in the Prospect research team.

Say you are preparing a pay claim for some workers who haven’t had a pay rise since October 2017. Currently, the most recent figures available are for February 2022. Say, you want to know what a level-with-inflation increase would be for someone who hasn’t had a pay rise since January 2017. You will need to use the “inflation indices” (see below for an explanation of what these are).

Stage one: Get the data.

Behind the easy-to-read web pages that tell you the current rates of inflation, the Office for National Statistics (ONS) website also publishes all of this data in spreadsheets that can be downloaded from their website. For this purpose, you are going to need CPI and RPI data. These can be found by downloading the spreadsheet from this page (look for the green button – “Current edition of this dataset”).

Finding inflation data You can open this in MS Excel or other compatible spreadsheet programs. Look for the tabs – the CPI figures are in the “Table 20A, 20B, 20C” tab, and the RPI figures are in “Table 36”.

Stage two: Do the (easy) sums

Let’s start with RPI.

You will see that, in January 2017, RPI had an index of 265.5  while the most recent index (Feb 2022) is 320.2

  • 265.5 ÷ 100 = 2.655
  • 320.2 ÷ 2.655 = 120.60
  • So the percentage increase is  20.6%

Unions tend to argue for RPI, and employers tend to prefer the lower CPI rate, so it may help you to know what they are going to offer.
Then we can do the same for CPI.

In January 2017, CPI had an index of 101.4. The most recent index (Feb 2022) is 115.8. So all you need to do is calculate what 115.8 is as a percentage of 101.4

  • 101.4 ÷ 100 = 1.014
  • 115.8 ÷ 1.014 = 114.20
  • So the percentage increase is 14.20%

Stage three: think about how you use this information

There is the question of which measure to choose – and unions have generally gone for RPI as a more accurate measure to apply to cost-of-living increases. The Independent gave coverage to the debate here, and Unite’s general secretary Sharon Graham was on the record recently saying:

“The RPI, which includes housing costs, is a more accurate cost of living index than the CPI, which is always lower as it does not include housing and related costs. Employers favour the CPI as it creates a lower base rate for inflation as an element in possible wage claims. In that respect, the CPI is a hidden tax on workers’ wages if it is used as a base for cost calculations.”

There’s also a strong argument for using RPI here. The ONS currently prefer another measure – CPIH – but it’s a subject that is curiously sidelined in most practical discussions.

One thing that will really help you though – see if you can get some of your members to sit down with the ONS household inflation calculator. If you have almost no option but to drive to work (as many freelancers do) you will have higher fuel costs than most and this may be an important factor for you. Ultimately, in a tight labour market, employers need to know that workers will look for work with an aim of maintaining – and increasing – their standard of living – and staying ahead of your personal inflation calculation is a good way of doing that.

What are inflation indices (e.g. RPI and CPI) exactly?

The inflation indices (RPI, CPI etc.) represent the weighted average price of a basket of common goods and services consumed by UK households.

The percentage rate of inflation published each month by the ONS is the increase in those indices over the last twelve months (e.g. the February 2022 RPI inflation rate is the increase in the RPI between Feb 2021 and Feb 2022).

For more information on how to make sense of these numbers, there’s an excellent briefing on using inflation statistics from the House of Commons Library here [pdf].

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