Why Should Governments Be Concerned About Inflation?

... Why Should Governments Be Concerned About Inflation? Inflation can be defined as the persistent tendency for prices and money wages to increase.1 Inflation is usually measured with reference to its rate in terms of a percentage, rather than a cumulative figure. Inflation in the UK is calculated with reference to various different measures, the most important of these being the Retail Price Index (RPI). In fact this was the only major measure of inflation in the UK until 1979. However, since then, other prices and measures have been brought into consideration in order to gain a wider, more accurate overall picture. The modern RPI was first compiled in 1947 and is a measure of the month to month change in the cost of a representative 'basket' of goods and services of the type bought by a typical household, and is compiled by the Office for National Statistics.2 The RPI is used by

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