UK statisticians unexpectedly reject inflation change
Last edited Thu Jan 10, 2013, 06:39 AM - Edit history (1)
(Reuters) - Britain's top statistician unexpectedly decided against major changes to the country's longest-running inflation index on Thursday, rejecting a move that could have significantly cut government borrowing costs.
Jil Matheson, the government's top statistical adviser, concluded that the existing Retail Price Index did not meet current international standards. But she said it would be better to create a new index rather than fundamentally change RPI, which is written into many existing contracts.
The news is a major boost to the many Britons with company pensions legally linked to RPI, and to holders of Britain's inflation-linked government debt, as some of the proposed changes would have led to much lower future increases in payments.
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Some economists had estimated Britain's finance ministry would have saved up to 3 billion pounds a year in interest payments if the change to RPI had gone ahead, out of annual debt servicing costs of 47 billion.
http://uk.reuters.com/article/2013/01/10/uk-britain-inflation-idUKBRE90908P20130110
Earlier reference to the subject :
Private sector pensioners, and some savers and investors, could be hit by changes to the way an inflation measure is calculated, experts say.
The Office for National Statistics (ONS) has started a consultation on changes to the calculation of the retail prices index (RPI).
These would make the RPI move more slowly, in step with the consumer prices index (CPI).
Pension experts have warned that any changes would cut pensioners' incomes.
http://www.bbc.co.uk/news/business-19826770
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