UK’s Hammond: government not ready to drop RPI inflation measure

LONDON (Reuters) – British finance minister Philip Hammond said on Wednesday the government planned to move away from using the widely discredited Retail Price Index as its preferred measure of inflation, but the time was not right to make the shift now.

Hammond told lawmakers no decision had been taken on whether to move straight to the relatively new CPIH measure of inflation or to begin the shift by moving to the CPI measure on an interim basis.

“But we can’t somehow write out of the picture the fiscal consequences,” Hammond said. “They have to be paid for and the government’s view is that, at this stage in the fiscal consolidation, it is not the moment on a wholesale basis to switch from RPI to CPI.”

Hammond said it would be appropriate to move away from RPI as Britain moves towards completion of its push to improve the public finances.

RPI – a generally higher measure of inflation that Britain’s statistics agency says is no longer accurate – is used to index interest payments on inflation-linked government bonds and student loans.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.