Resisting attempts to sideline the Retail Prices Index (RPI) measure of inflation
The Retail Prices Index (RPI) measure of inflation, which has been consistently higher than the Consumer Price Indices (CPI), has been downgraded by the Office for National Statistics (ONS) and is no longer categorised as a “national statistic”.
However, it will be published - albeit less prominently - for the foreseeable future. (This is partly because it will, following lobbying from City institutions, still be used for the recipients of private pensions as well as holders of financial instruments such as government bonds).
Instead two new “experimental statistics” are being trialled by the ONS. They are:
- CPIH – essentially CPI but also incorporates housing costs, and
- RPIJ – essentially RPI but instead of using the Carli mathematical formula, uses the Jevons one (which is less sensitive to price swings).
(The different formulae rather than the different basket of goods the indices use, chiefly account for the often large difference that has been seen between RPI and CPI figures).
By design, CPI and these new statistics will run at lower levels to RPI. Given that the ONS indices already understate the high level at which inflation is running (taking into account RMT members’ spending commitments) the ONS move is an outrage. Where employers try to exploit this development by switching away from using RPI – we will prevent them from doing so. Specifically, the RMT will continue to use RPI in negotiations with employers.
We will also press for the immediate re-instatement of the RPI as a national statistic and will use the forthcoming ONS review of how their two new experimental measures are operating to argue for this. We will also lobby for the introduction of a new measure of inflation which reflects members’ spending habits even better than RPI.