ONS downgrades the Retail Price Index
Since the Budget we’ve been agitating about the Coalition’s decision to use the Consumer Price Index instead of the Retail Price Index when calculating how much benefits need to rise to inflation-proof them.
As Nigel, Bryn Davies and I have been reporting, uprating benefits and tax credits by CPI will reduce their value and public sector pensions will be cut steadily over time by the switch to using the CPI for uprating; now we know that people with private pensions will also be affected, because the government will use CPI for price indexing.
So it is strikingly convenient for the government that today’s inflation figures from the Office for National Statistics hide the Retail Price Index figures on page 16.
Compare today’s Bulletin with last month’s, where the RPI is front page news. The justification, on page 10 of the Bulletin is that the decision to “refocus on one measure of inflation” has picked on the CPI because it “receives the most attention by users.”
Now, I know that the Treasury would like us to pay most attention to the CPI; they have been trying to persuade wage negotiators to do so for years – with very little success. Now that the switch to CPI for pensions, tax credits and benefits has been introduced as a “stealth cut” unions, anti-poverty campaigners and academics will be much more likely to demand easy access to RPI data so we can point out the difference between the uprating that takes place and the amount that should have been offered.
I don’t buy the justification for this change and I don’t think it has been thought through properly.