A different form of the CPI is the Core CPI, which excludes prices for volatile items such as energy and food. The Core CPI is considered a better measure of inflation, as it excludes items that can distort the actual change in the cost of living.
In order to manage inflation the Bank of England may raise interest rates, which slows economic growth. Higher interest rates make holding the Pound more attractive to foreign investors, and the higher level of demand will place upward pressure on the value of the Pound. CPI figures are reported as the annualized month-to-month and annual percentage change in the index. “
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