CPI (Consumer Price Index)

The Consumer Price Index (CPI) is a measure that examines the weighted average of prices of a
basket of consumer goods and services. The CPI Index is used to track price changes associated with
the cost of living. In the commercial property market leases are often granted with rent reviews
occurring by reference to either the Consumer Prices Index, or more commonly, the Retail Prices
Index (normally on an upwards only basis). There are a number of differences between the CPI and
RPI indices – the most well-known of which is in the area of mortgage payments, which are excluded
from the CPI but included in the RPI. The CPI was first introduced in 1996 and in 2003 the
Government announced that the UK inflation target would be based on the CPI, replacing the Retail
Price Index for this purpose.