RPI inflation runs at 3.2% while wages have fallen 10%, not back to pre-crash levels until 2020, according to the Resolution Foundation.
The need for spending cuts may change the way the railways are funded for good.The RPI figure released on August 17th was bad enough: at 4.8%, it implied a rise in rail fares of almost 6%, at a time when wage increases are averaging just 1.3%.
This means that, next year, benefits will be increased by 3.1%, the rate for the CPI published this week, rather than the 4.6% shown by the RPI.
Eventually they accepted 10% over two years, to be followed in October 2008 by the higher of 2.5% or retail-price inflation.Now vice-chancellors are bracing themselves to stuff around 5% more into pay packets, if the RPI figures released on October 14th are as expected.
One is that while the price of what the statisticians call "outerwear" has barely risen for men and has fallen for women, the price of "other clothing"—underwear, socks and so forth has almost matched the RPI.
The rejection of traditional baggy Y-fronts in favour of Calvin Klein boxer shorts has, so to speak, kept underwear up.The other curiosity is that the prices of many goods that have provoked so much fury over "rip-off Britain" have in fact risen by less than the RPI.
Normally all the specific fares would have been known much earlier in December, but the Chancellor's autumn statement announced that the "July's RPI-plus-1 RPI-plus-1 RPI-plus-1uced to the RPI formulaalong, would was 3.1 per cent.
In October ministers announced it would instead be limited to RPI plus 1%, a 4.2% rise.
Outlining a £37.5bn upgrade plan for 2014-19, NetwoRailail said it would provide an extra 170,000 commuter seats at peak times by the end of the decade, but assumed annual fare rises would stay at 1% above the retail prices index (RPI) measure of inflation throughout the period.
The government had intended to allow train companies to raise the average price of regulated fares, which include season tickets, by RPI plus 3% this and next January.
Gordon Brown did it with his pension changes, while George Osborne shaved £11bn off the annual welfare bill by changing the uprating from RPI to CPI in 2011.
