New Inflation Rates - August 2016
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Head Office Circular No. NP/201/16
To the Secretary, all Branches and Regional Councils
Tuesday 16 August 2016
INFLATION: FOOD AND FUEL PRICES UP (following Sterling fall & more money printing)
WITH PRICES OF OTHER IMPORTED GOODS SET TO RISE TOO (c10% by mid-2017)
The Retail Prices Index (RPI) was 1.9% for the year to July 2016, up from 1.6% for the year to June 2016. This figure will be used to set next year’s regulated rail fares.
Some employers/ government agencies are attempting to sideline RPI and are instead pushing other measures of inflation – such as CPI (0.6% for the year to July 2016) or CPIH (0.9% for the year to July 2016). Both CPI and CPIH are inappropriate for use in settling pay claims. This is because they are designed for comparing different countries’ economic performances, rather than average workers’ costs. Furthermore, CPI and CPIH tend to understate changes in the cost of living:
Attempts by an employer to link pay awards to CPI or CPIH must be resisted and logged with the Policy Department.
Further information will follow in the Pay Bulletin presently.