Index-linking calculator

How it works

Index-linking an amount means recalculating it with a price index so that it keeps its value as prices rise. The new amount is the old one multiplied by the index for the review month and divided by the index for the base month. With an index of 100 in the base month and 130 in the review month, £1,000 becomes £1,300. The tool uses the published index figures, which you can see in the table below the answer.

Contracts nearly always name one country’s index and a particular month rather than an annual average. A monthly figure is published a few weeks after the month ends, so both parties can work out the same amount well before the next payment is due. Annual averages appear only after the year is over and smooth out changes, which makes them a poor fit when an amount has to change on a fixed date.

A clause such as “the rent shall be increased by the percentage change in CPI between the base month and the October before each review date” makes the base month’s index the starting point and measures each new rent against October in the year the contract names. It is the month the index refers to that counts, not the month it is published: October’s CPI comes out in mid-November. Always check the contract’s exact index, base month and review month, and whether the amount may fall or is rounded. The calculator does the arithmetic; it does not interpret contracts and is not legal advice.

Once published, UK CPI and RPI figures are not revised, and neither is the Swedish KPI. Other countries publish some figures as provisional first or recalculate a series when the base year changes, and the calculator marks the latest months of such series. If the statistics office rebases its index, the contract’s own rule for carrying the amount forward normally applies.

The inflation calculator uses World Bank annual averages and suits comparing the value of money between years, such as what a 1990 salary is worth today. This calculator uses the statistics office’s monthly figures and suits a contract that names a particular index and month.

In the United Kingdom most new contracts and many statutory uprates use CPI. RPI survives in older leases, pension schemes and index-linked gilts. It lost its status as a National Statistic in 2013, and from 2030 it is to be calculated with the methods and data of CPIH, which will bring it close to that index.

Elsewhere the index and the custom differ. In Sweden KPI is used in commercial leases and many other contracts and also sets the price base amount (prisbasbelopp); since January 2026 Statistics Sweden has published the fixed KPI figures with 2020=100 and says that series should normally be used for indexation, while older contracts often use 1980=100, which gives the same ratio up to rounding. In Italy rents and maintenance payments are updated with ISTAT’s FOI index excluding tobacco, and for non-residential premises the law caps the increase at 75% of the change, which the tool applies when the share is set to 75. French residential rents follow the IRL, a separate INSEE index this calculator does not use. In Brazil IPCA is the official inflation measure while INPC is used for the minimum wage among other things; Polish contracts speak of waloryzacja by the GUS price index; Spanish leases often use the IPC but have had temporary caps on increases in 2022–2024 and later special rules; Mexico uses INEGI’s INPC and Romania the INS consumer price index.

What £1,000 from an earlier year is worth today

The table uses the same index figures as the calculator above: the amount multiplied by the index for the most recent published month, divided by the index for January of the year you start from.

The index figures come from Consumer Prices Index (CPI), published by Office for National Statistics. The latest month available is August 2026.

What index-linking is, and what it is not

Index-linking an amount means restating it in the money of another year. The arithmetic is a simple proportion: the new amount is the old one multiplied by the index for the comparison month and divided by the index for the base month. The index itself has no unit and no value; only the ratio between two index figures means anything.

What is restated is average purchasing power, not the price of any one thing. A consumer prices index follows a basket of goods and services that households buy, with weights the statistics office updates every year. Rent, food and energy carry a lot of weight, while a single item that has grown cheaper or dearer than the average goes its own way. A computer that cost £1,000 in 1995 is not matched by a computer at the index-linked figure today, because computers have fallen enormously against everything else.

Nor does index-linking say anything about what was a reasonable price at the time. It answers one question only: how much money it takes today to buy as much of the same average basket.

The base month and the base year are different things

The base month is the month you start from: when the contract was signed, the rent was set or the amount was paid. The base year is something else, the year the statistics office has set the index to 100. The series in the calculator has a base year shown under the answer, and it changes whenever the office rebases the series.

Rebasing changes every index figure but not the ratios between them, and therefore not the answer. Anyone working it out by hand does have to keep the series apart: a figure from a series based on 2015 = 100 must never go in the same fraction as one from a series based on 1987 = 100.

When a series is rebased the office restates the old figures on the new base, and it is those restated figures that are used here. An index figure in the calculator can therefore differ from the one printed in the paper that year without the answer changing.

Contracts that follow an index

A contract meant to track prices should say three things: which index applies, which base month applies, and when the recalculation happens. “The index of retail prices” on its own invites a dispute over which series and which month, and often over what happens when the index falls.

Britain has two long-running measures that behave differently. The Consumer Prices Index is the one the Bank of England targets, while the Retail Prices Index runs higher, because of the way it averages prices and because it includes mortgage interest and council tax. The UK Statistics Authority withdrew the RPI’s designation as a national statistic in 2013, and from February 2030 it is to be aligned with CPIH. Index-linked gilts, many pensions and a good deal of commercial rent still refer to the RPI, so a contract that names it should say what happens after the change.

A clause should also say what applies when the figure is not published in time or the series is discontinued. The statistics office names a successor, but a contract that does not mention one is hard to apply.

Going backwards, and what cannot be worked out at all

The conversion runs both ways. To find what an amount today would have been earlier, turn the fraction round: the amount multiplied by the index for the earlier year and divided by the index now. The figure is an estimate in the same sense as forwards: the basket looked different, and the further back you go the less alike the things you could buy.

Comparisons across a century or more should be read as an order of magnitude, not as a sum. Things that did not exist cannot be priced, and things that did have often changed meaning. A journey from London to Edinburgh cost a certain amount in 1920, but it took a day then and takes four and a half hours now.

Wages rarely follow a prices index. To compare a wage or a pension over time, an earnings index is the right measure, because it tracks something else: what work is paid, not what goods cost.

Sources

• Office for National Statistics – Consumer Prices Index (CPI)
• Office for National Statistics – Retail Prices Index (RPI)

How the tools are checked