Backward step

Letter in the Daily Telegraph By Prof. Philip Booth

Sir - The Chancellor of the Exchequer's decision to target inflation using the technically flawed harmonised index of consumer prices (HICP), familiarly known to economists as the Hiccup, instead of the present measure, the retail price index (RPI), is flawed.

The true measure of inflation is the rate at which the purchasing power of money is declining. Gordon Brown's Hiccup cannot represent this, because of how it is computed. It includes a narrower range of goods