Following a three-month public consultation, the Office for National Statistics (ONS) has announced that it will continue to produce and publish the retail prices index (RPI) without changing the way it is calculated. The consultation had looked at whether the RPI should be brought in line with the consumer prices index (CPI).
Acknowledging that ‘the current formulation of the RPI fails to meet international standards’, National Statistician Jill Matheson conceded that there was a ‘continuing user need for the existing RPI in its current form, for example in the index-linked gilts market and in the indexation of private pension payments’.
From March 2013, a new inflation index known as the RPI-J will be introduced to address the issues caused by differences in the way RPI and CPI are measured. A change in formula underpinning the RPI could have had an adverse effect on future increases in private sector pensions as well as index-linked government bond and savings incomes.
HM Treasury issued a statement saying that it would ‘consider any implications of the National Statistician’s announcement on its approach to RPI indexation across different policy areas in due course’.