Tax and Price Index (TPI)
What it is:
Used primarily in the United Kingdom, a tax and price income would have to increase to compensate for increases in and .measures the amount that a consumer’s
How it works (Example):
Assume John Doe has $50,000 in disposable income this year. Next year, increases by 2% and Doe’s increase by 5%, which dramatically decrease the purchasing power of John’s $50,000. To keep up, his $50,000 would need to increase by 7%. Similarly, the tax and price measures, in more sophisticated and accurate terms, how much consumer incomes would need to increase in order to have the same purchasing power. Because the measure is an , its calculations are relative to a historical year.
Why it Matters:
The tax and price purchasing power. It is in some ways an enhancement to the consumer price because it accounts for the additional burden of tax increases.is a measure of consumer