Which of the following statements correctly identifies a difference in the construction, coverage, or calculation of the Consumer Prices Index (CPI) and the Retail Prices Index (RPI) in the UK?
CPI uses an arithmetic mean to aggregate prices at the lowest level, whereas RPI uses a geometric mean, meaning the formula effect typically makes CPI higher than RPI.
CPI includes mortgage interest payments and council tax, whereas RPI excludes housing-related costs entirely to focus on a representative basket of standard retail goods.
The RPI population sample excludes both the top 4%4\%4% of households by income and pensioner households mainly dependent on state pensions, whereas the CPI population has no such exclusions.
CPI is a chain-weighted index where the basket of goods and services is updated monthly to reflect consumer substitution, whereas the RPI basket is updated only once every five years.
