RPI ripoff, as commuters face largest hike in a decade

Laura Suter
18 August 2021

•           Commuters to face largest rail fare hike in a decade
•           The RPI premium is its highest for 14 years
•           Tunbridge Wells to London commute leaps over £6,000

Laura Suter, head of personal finance at AJ Bell, comments: 

“Once again we’re seeing an RPI ripoff, as commuters are set to see rail fares rise by almost double what they would if the lower measure of inflation, CPI, was used. RPI in July, which is used to set rail fare increases next year, stands at 3.8% while CPI in the same month is 2%. 

“This year also sees the highest RPI figure in July since 2011, when it clocked in at 5%, meaning commuters will face the largest rail fare hike for a decade. What’s more, the RPI premium that commuters are facing is the largest for 14 years, with a difference of 1.8 percentage points between the CPI and RPI measures – a difference not seen since 2007. 

“Commuters already paying high costs on popular routes will face further hikes, for example the commute from Oxford to London, including a London travelcard, will now clock in at almost £6,700, rising by £245, while the commute from Macclesfield to Manchester will rise by £84 to £2,284. The annual commute from Tunbridge Wells to London, including travel card, will leap over the £6,000 mark, rising by more than £220 to £6,033.

“However, commuters may face an even larger hike next year if the Government decides to raise rail fares above inflation. This year it increased fares by 1% above inflation to help cover Government money spent as a result of lost revenues in the rail industry during the pandemic. As commuting hasn’t returned to normal and rail passenger numbers are still depressed, the same logic could be used to roll out another above-inflation hike this year –although it would take a bold Government to do so when the increase is already so high.

“Many commuters have had a year or more away from the daily commute and its eye-watering cost and will already be reluctant to return to paying to stand on an overcrowded train for an hour or more each day – and that’s before another hike in fares. 

“Considering the RPI measure of inflation has been branded ‘flawed’ and with ‘serious shortcomings’ by the Office for National Statistics it remains baffling as to why the Government continues to clobber everyone with price hikes based on an inaccurate measure.” 

Laura Suter
Head of Personal Finance

Laura Suter is head of personal finance at AJ Bell. She is a multi-award winning former financial journalist, having specialised in investments. Laura joined AJ Bell from the Daily Telegraph, where she was investment editor. She has previously worked for adviser publications Money Marketing and Money Management, and has worked for an investment publication in New York. She has a degree in Journalism Studies from University of Sheffield.

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