caption: Inflation  The most common way of measuring this in the UK is the CPI  When the rate of inflation is published it means the percentage increase in the CPI over the previous 12 months (annual inflation)  When we learn micro economics we see that prices go up and down all the time  In macro we are describing a general movement of all prices  The current CPI target is 2% plus or minus 1%  This diagram shows recent UK data for both the RPI and the CPI  The CPI excludes housing costs Inflation: a sustained increase in the general price level Consumer Price Index: the headline measure of inflation derived from movements in a weighted basket of consumer goods over a 12 month period Insert fig 12.1 P136
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