Rail fares set to soar as inflation gathers pace

Commuters hit as tickets go up at fastest rate in six years

RAIL fares are set to soar at their fastest rate for six years in the latest blow to consumers who are being squeezed by Brexit inflation.

The cost of train tickets will leap by 3.7 per cent next year – the biggest jump since 2011 and more than twice the average pay rise.

The rise could add almost £500 million to travel costs. Regulated rail fares including season tickets are set automatically each year to match the level of the Retail Prices Index in July.

Inflation has risen sharply in response to the slump in sterling and the associated rise in the cost of imported goods and materials.

The impact of inflation is hurting many households because wage increases are failing to keep pace. In the year to April, the latest figures available, average pay before bonuses increased by 1.7 per cent.

Lianna Etkind, at the Campaign for Better Transport, said: ‘We have some of the most expensive train fares in Europe. As people all over the country struggle to afford the cost of their commutes, those who rely on the trains for work or leisure are lookingfor action to end the price hikes and get fares down.’

Frances O’Grady, general secretary of the TUC, said: ‘Commuters can’t afford another wage-busting fare increase. Season tickets cost six times what they do on the Continent. Meanwhile, the train companies pay out millions in dividends to their shareholders.’

Passengers spent £13 billion on train fares last year, according to the ONS. The rise, to be introduced in January, will add £481 million to the total cost of tickets.

Rail fares soared by 56 per cent between 2006 and 2016 while wages rose by a much more sluggish 24 per cent.

Other bills that are automatically raised in line with official statistics include business rates, where hard-pressed companies are facing a bigger than expected jump as inflation continues to climb.

Business rates rises are to be determined in September, by which point RPI inflation is forecast to hit 4 per cent, according to research group Capital Economics. That will

add £1.2 billion to business costs next year.

The Conservative manifesto had pledged to change the rules so business rates rise in line with the typically lower measure of inflation known as the Consumer Prices Index. But the reform was missing from last week’s Queen’s Speech.

Business rates adviser CVS said £301 million of the rise would be levied on the beleaguered retail sector, where sales volumes dropped 1.2 per cent last month, according to the Office for National Statistics.

Mark Rigby, chief executive at CVS, said: ‘It does beg the question, how much more are businesses expected to take?’