Which of the following is considered less accurate due to its calculation method?

The Retail Price Index (RPI) is considered less accurate than other measures like the Consumer Price Index (CPI) due to several factors in its calculation method.

RPI includes costs that are not typically found in the standard basket of goods used for measuring inflation, such as housing costs and mortgage interest payments. This makes it more prone to fluctuations based on the housing market, which can vary significantly over time. Additionally, RPI employs a different methodology for calculating index values; it uses a formula that does not account for substitution effects—where consumers might shift their purchasing habits toward cheaper alternatives when prices change.

These aspects of RPI's calculation can lead to a distortion in reflecting the true cost of living and inflation, making it less reliable compared to CPI, which is generally regarded as a more stable and accurate measure because it uses a geometric mean. The adjustments and exclusions in CPI take into account consumer behavior more effectively and include a wider range of goods and services, leading to a more holistic view of inflationary pressures.

CPIY and CPIH also employ methods and inclusions that address some of the limitations found in RPI, focusing more closely on capturing the consumer experience accurately. Thus, the inherent calculation method and the components included in RPI