Association of Chartered Certified Accountants (ACCA) Certification Practice Test

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What does RPIX measure?

The overall consumer inflation rate
The RPI excluding mortgage interest payments
The inflation rate in the housing market
The rate of price changes for food items

The correct answer is: The RPI excluding mortgage interest payments

RPIX measures the Retail Price Index (RPI) excluding mortgage interest payments. This index is used to gauge inflation and is often a key indicator for assessing the purchasing power of consumers in an economy. By excluding mortgage interest payments, RPIX provides a clearer picture of the underlying inflation trends that affect consumers, as mortgage costs can fluctuate significantly and may distort the overall inflation statistics. This measure focuses on the prices of goods and services that a typical household may purchase, making it particularly relevant for understanding domestic inflation without the additional volatility introduced by changes in interest rates and housing finance costs. RPIX thus serves as a useful tool for policymakers when considering monetary policy, as it reflects the inflationary pressures that the general public is more directly impacted by.