Taken for a ride by Gov­ern­ment’s in­fla­tion fix

The Daily Telegraph - - Letters To The Editor -

SIR – Sam Brod­beck (“How the Gov­ern­ment’s in­fla­tion link makes pen­sion­ers, com­muters and stu­dents poorer”, tele­graph.co.uk) is right: dif­fer­ent in­fla­tion in­dices are cur­rently be­ing used to, in ef­fect, fleece mil­lions of peo­ple.

All too of­ten, in­creases in in­comes are be­ing linked to the Con­sumer Prices In­dex (CPI), which is gen­er­ally lower. Their out­go­ings, how­ever, are of­ten pegged to the Re­tail Prices In­dex (RPI), which is usu­ally higher.

At the Royal Sta­tis­ti­cal So­ci­ety, we de­plore the long-run­ning mis­use of these in­dices. In our view, RPI’S con­tin­ued use for price- and taxset­ting pur­poses is par­tic­u­larly un­war­rantable, as its tech­ni­cal flaws have been es­tab­lished, ac­cepted and widely known for some time.

In­deed, it is now nearly five years since RPI was stripped of of­fi­cial “na­tional statis­tic” sta­tus. In such cir­cum­stances, we be­lieve that its con­tin­ued use – for set­ting train fares, for ex­am­ple – is noth­ing short of scan­dalous.

RPI should no longer be used for this pur­pose: peo­ple should nei­ther be taken for fools nor taken for a ride in this way. He­tan Shah

Ex­ec­u­tive Di­rec­tor Royal Sta­tis­ti­cal So­ci­ety London EC1

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