On the go: A consultation on changes to the retail price index will be published alongside the UK Budget on March 11, the chancellor of the exchequer has announced.
In a letter to Lord Forsyth of Drumlean, chair of the House of Lords Economic Affairs Committee published on Monday, Sajid Javid noted that the joint consultation with the UK Statistics Authority was scheduled to launch in January.
However, following the general election and the confirmation of the Budget date, Mr Javid has agreed with the UKSA that the consultation will now launch on March 11.
The consultation will be open for responses for a period of six weeks, closing on April 22. The government and the UKSA will respond to the consultation before the parliamentary summer recess, the letter stated.
In September, Mr Javid announced the RPI reform consultation, with the goal to align it with the consumer price index, including housing costs.
Mr Javid was responding to a proposal from the UKSA, which stated that the RPI is not a good measure for inflation, as it was intended to be a legacy index and was dropped as the official measure in 2010.
The RPI generally runs at about 1 percentage point higher than the CPI, and is currently 2.2 per cent compared with the CPI of 1.5 per cent.
The change could adversely affect millions of pensioners whose pensions rise every year in line with the RPI, and conversely save defined benefit pension schemes millions of pounds.
Another factor in the equation is that reduced pension increases could be offset by the lower return on index-linked gilts, which are currently linked to the RPI.
