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# UK inflation rate in 2006: 3.20%

### Inflation in 2006 and Its Effect on Pound Value

Purchasing power decreased by 3.20% in 2006 compared to 2005. On average, you would have to spend 3.20% more money in 2006 than in 2005 for the same item.

In other words, £1 in 2005 is equivalent in purchasing power to about £1.03 in 2006.

The 2005 inflation rate was 2.82%. The inflation rate in 2006 was 3.20%. The 2006 inflation rate is higher compared to the average inflation rate of 2.82% per year between 2006 and 2019.

Inflation rate is calculated by change in the composite price index (CPI). The CPI in 2006 was 781.50. It was 757.30 in the previous year, 2005. The difference in CPI between the years is used by the Office for National Statistics to officially determine inflation.

 Average inflation rate 3.20% Converted amount (£1 base) £1.03 Price difference (£1 base) £0.03 CPI in 2005 757.300 CPI in 2006 781.500 Inflation in 2005 2.82% Inflation in 2006 3.20%

### How to Calculate Inflation Rate for £1, 2005 to 2006

This inflation calculator uses the following inflation rate formula:

CPI in 2006CPI in 2005
×
2005 GBP value
=
2006 GBP value

Then plug in historical CPI values. The UK CPI was 757.3 in the year 2005 and 781.5 in 2006:

781.5757.3
×
£1
=
£1.03

£1 in 2005 has the same "purchasing power" or "buying power" as £1.03 in 2006.

To get the total inflation rate for the 1 years between 2005 and 2006, we use the following formula:

CPI in 2006 - CPI in 2005CPI in 2005
×
100
=
Cumulative inflation rate (1 years)

Plugging in the values to this equation, we get:

781.5 - 757.3757.3
×
100
=
3%

Politics and news often influence economic performance. Here's what was happening at the time:

• Egyptian President Hosni Mubarak asks Parliament to amend Article 76 and orders constitutional changes in order to allow multi-candidate presidential elections.
• Syria's 29-year-long military domination of Lebanon ends, after it withdraws the last of its 14,000 troops under international pressure.
• A coordinated bomb attack hits London's public transport system, during the morning rush hour, killing 52 and injuring a further 700 people.
• Angela Merkel becomes first female Chancellor of Germany.

### Data Source & Citation

Raw data for these calculations comes from the composite price index published by the UK Office for National Statistics (ONS). A composite index is created by combining price data from several different published sources, both official and unofficial. The Consumer Price Index, normally used to compute inflation, has only been tracked since 1988. All inflation calculations after 1988 use the Office for National Statistics' Consumer Price Index, except for 2017, which is based on The Bank of England's forecast.

You may use the following MLA citation for this page: “Inflation Rate in 2006 | UK Inflation Calculator.” U.S. Official Inflation Data, Alioth Finance, 16 Sep. 2019, https://www.officialdata.org/UK-inflation-rate-in-2006.