No change to retail price index inflation measure

Pensioners have been spared a potential decrease in their income after government statisticians decided not to change the method by which inflation is calculated by linking it to the increase in retail prices.

After a three-month consultation, the Office for National Statistics (ONS) has decided not to bring the RPI more into line with the slower-rising consumer prices index (CPI).

Instead, a new additional index of inflation will be created. However, the RPI will continue to be used for the calculating increases in private sector pensions and index-linked bonds.

BBC Money Box presenter Paul Lewis explained why the RPI had not been changed.