Russell Lynch: On the wrong track?

Outlook Rail fares will be higher than they should be for millions of commuters next January because of the number produced by a flawed measure of the cost of living, the retail prices index, which stood at 2.5 per cent in July.

This number is now so discredited that it no longer has the status of a national statistic, despite being published by the Office for National Statistics every month. The ONS last year introduced a more statistically pure measure known as RPIJ (“J” because it is based on the methodology of the 19th century economist and mathematician William Jevons) which has no practical application at all. It was much lower than the RPI in July, at 1.8 per cent. So rail fares will increase by nearly a third more than they should have done if we used a more accurate measure of inflation.

It’s not just rail: the benchmark is used to price returns on some £350bn of inflation-linked Government debt, meaning we, as a country, are paying more in interest than we should. It’s a farcical situation which has endured since the unsatisfactory conclusion of an ONS review into RPI at the beginning of last year. It’s time to just scrap it.