Retail price inflation under Lords’ scrutiny
The House of Lords Economic Affairs Committee has launched a short inquiry into the use of the RPI as an inflation measure. Witnesses will be asked if the RPI should be dropped as a measure of inflation, what reasons are there for keeping it, and what impact would changing RPI have on the people and organisations who use it.
Earlier this year, Mark Carney, governor of the Bank of England, called for a “deliberate and carefully timed” abolition of the RPI for use in government contracts, especially the £400 billion index-linked gilts market.
Union negotiators who the use the Retail Price Index (RPI) as their preferred measure of inflation may have a fight on their hands.
Witnesses giving evidence to the committee include Paul Johnson, director of the Institute for Fiscal Studies, who is on the record in his opposition to the RPI.