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Retail price index
This is weighted average of price relatives based on an average household in the base year. The items consumed are divided into groups as liker food, transport, housing, alcoholic drinks, fuel, footwear, light, water, services household goods, e.t.c. all item involved in the index is described a weighting and a price relative to the base is calculated. Modified form of laspeyre's price index formula is utilized as a weighted arithmetic mean (a.m.) of price relatives.
Retail Price index
The index is utilized by the Government as a guide in finding the minimum wages, pension rates unemployed benefits in UK. Trade unions employ, it as a basis for their wages claims.
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