Retail Prices Index (RPI) Consultation

Friday, November 9, 2012

The Office for National Statistics is consulting on amending the formula used to calculate RPI-based inflation.

Four formulae are under consideration, the most radical being a full formula change to bring the RPI calculation method in line with the Consumer Prices Index (“CPI”) calculation method. The likely result of this would be to bring RPI inflation closer to CPI inflation.

The consultation will close on 30 November 2012 with recommendations in January 2013 with a view to them taking effect in March 2013. If the “formula gap” between RPI and CPI is reduced, the advantages for schemes switching to CPI may not be as significant as they are currently. Such a change could also result in lower incomes for investors in British index-linked gilts, whose returns are calculated using RPI.

Your talk did a lot to help our firm’s reputation in this sector. – head of a leading team of solicitors specialising in further and higher education

Head of Team - Specialist Solicitors in Further and Higher Education

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