A family of multirate representation of a given signal is defined for data compression. This family of multirate signals is constructed by polynomial interpolation of these direct decimated versions of a given signal. Interpolated signal from decimated signal is used to predict the higher resolution signal. The prediction error is the difference between the interpolated signal from lower resolution and the higher resolution one. This kind of signal representation can be called as interpolation compensated signal prediction. A multiresolution interpolative DPCM is then proposed to represent the prediction errors with a hierarchial multirate structure. This structure possesses the advantages of both the pyramid structure and the DPCM structure.