CPI & the Budget
0.04 percentage points on inflation
Office for National Statistics (ONS) estimates that changes to duties in the March 2005 Budget will add 0.13 percentage points to the one-month change in the Consumer Prices Index (CPI), if duty changes are passed on immediately and in full to consumers.
This compares with an increase of 0.09 percentage points from the measures that were implemented following their announcement in the March 2004 Budget. Once last year's Budget changes are taken into account, the net effect of the two most recent Budgets on the CPI annual inflation rate is estimated to be +0.04 percentage points.
The implemented March 2004 Budget measures are now fully reflected in the CPI; the effects of the 2005 Budget will feed into the index over several months.
For the Retail Prices Index, it is estimated that this year's Budget will add 0.15 percentage points to the one-month change. This compares with an increase of 0.09 percentage points from the 2004 Budget. Overall, the net effect of the two most recent Budgets on the RPI annual inflation rate is estimated to be +0.06 percentage points.
Source: Office for National Statistics
This is a helpful guide for users of the CPI and the RPI. ONS accepts no liability whatsoever for losses of any kind arising as a result of reliance on this note.
The effects of the Budget given above are estimates only; they are based on average retail prices as measured in January 2005 indices.
Vehicle excise duty (VED) is not included in the CPI but is included in the RPI. VED rates were frozen in the 2004 Budget but were increased in the 2005 Budget for certain categories of vehicle, and therefore contribute to the overall effect of the Budget measures on the RPI.
The March 2004 budget announced increases in road fuel duties in September 2004 which were not implemented. The contributions to the one-month change, had the increases taken place, were estimated to be +0.06 percentage points for the CPI and +0.08 percentage points for the RPI.