 | Inflation: No change to RPI calculation
10 January 2013
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There will be no change to the way the retail prices index is calculated, the Office for National Statistics (ONS) has decided.
After a three month consultation, the ONS has decided not to bring the RPI more into line with the slower rising consumer prices index (CPI).
Instead, a new additional index of inflation will be created.
However, the RPI will continue to be used for the uprating of private sector pensions and index-linked bonds.
The National Statistician, Jil Matheson, said: "There is significant value to users in maintaining the continuity of the existing RPI's long time series without major change, so that it may continue to be used for long-term indexation and for index-linked gilts and bonds."
Decision welcomed
The decision means that from March 2013 the ONS will publish a new version of the RPI alongside the existing one.
The main difference will be that the new index will use the same formula as the CPI for calculating average prices.
That will mean the new RPI measure will usually rise more slowly than the long established version.
Ros Altmann, the director general of the financial services company Saga, hailed the ONS decision as "brilliant".
"Consultation responses overwhelmingly favoured no change so would be hard to ignore," she tweeted.
"There's no right or wrong exact measure of inflation, each one has flaws."
The Treasury confirmed it would continue using the RPI measure for calculating the return on both old and new index-linked bonds.
"For gilt investors, future cash flows on existing index-linked gilts will continue to be calculated by reference to RPI," said the Economic Secretary, Sajid Javid.
"The government will continue to issue new index-linked gilts linked to the RPI." | | See Also in Political News
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