Inflation index "has cheated us for years": Annual increase in bills has been linked to inaccurate figures


Inflation index 'has cheated us for years': Annual increase in bills has been linked to inaccurate figures
ONS admitted its Retail Prices Index measure was 'inadequate'RPI dictates how much Britons' household bills go up each yearThe measure has been swapped for the 'improved' RPIJ, said ONS

. This year, the same ticket costs 4,620. But it would have risen to only 4,562 under RPIJ, a saving of 58.

Stephen Joseph, chief executive of the Campaign for Better Transport, said: ‘There are two main problems with the way Government calculates rail fares.

‘One is the policy of above inflation hikes, which needs to end, the other is the use of RPI, which now looks untenable.

‘Many regular train users would find themselves paying hundreds of pounds less each year if the more accurate RPIJ measure were adopted.’

The impact on water bills is similar. Like train fares, they are increased by a complex formula each year based on RPI.

The average water bill increased by 13 this year to 388, but it would have risen by 11 if RPIJ had been used. This difference would be hugely significant if applied over a period of many years.

A spokesman for Ofwat, the water regulator, said: ‘We have committed to using RPI as the measure of inflation up until 2020.’

Meanwhile, consumer prices index inflation (CPI) – which, unlike RPIJ, does not take mortgage payments or council tax into account – rose to 2.8 per cent in February, its highest level since May 2012. The Government’s target is 2 per cent, which has not been met since November 2009.