MPs and peers press Treasury to abandon 'absurd' inflation measure

Ministers urged to ditch RPI, which it is claimed penalises students and rail passengers

What are the different measures of inflation, and are we being conned?

The government is coming under intense pressure to either abandon or fix the "grossly unfair" retail prices index inflation measure, which MPs say is penalising students and rail passengers.

In a rare combined letter from parliamentarians in the House of Commons and the House of Lords, RPI was described as "absurd" and its continued use was labelled "a ridiculous merry-go-round".

RPI
In 2013, the retail prices index (RPI) lost its status as a national statistic, as the Office for National Statistics (ONS) said the way it calculated prices was likely to overstate the rate of inflation. The treatment of housing costs is also a problem, as RPI uses a combination of mortgage interest payments and house prices as a proxy for housing depreciation. In a period of rapidly rising house prices, inflation accelerates ahead of a basket of goods and services bought by most consumers.