Rail travellers and university graduates face more than a decade of misery after the Government announced it could take until 2030 for it to stop using a discredited measure of inflation.
In what has been dubbed “inflation shopping”, the Government uses the Retail Prices Index (RPI) to increase some costs and the normally lower Consumer Prices Index (CPI) to pay out benefits.
RPI, which does not meet international statistical standards, is used to determine the yearly revenue-generating increases in student loan interest rates and alcohol and tobacco duties. Rail fares are also linked to this measure, which is typically much higher than CPI.
At the same time, Government pegs NS&I rates to CPI, which limits the amount savers can earn on their cash each year.