The Treasury Committee and the House of Lords’ Economic Affairs Committee have both been urging the UKSA to get the Chancellor to approve the overhaul of RPI, after two inquiries were highly critical of how the UK’s oldest measure of inflation is calculated.

A report from the Economic Affairs Committee published a year ago revealed a statistical error in RPI which caused it to artificially increase by 0.3 percentage points in 2010, leading to a £1bn yearly windfall for index-linked gilt holders at the expense of consumers such as students and rail passengers.

Both committees said it appeared ‘grossly unfair’ that government formulae affecting people’s incomes, such as pensions and benefits, often use the consumer prices index (CPI), whereas formulae affecting outgoings, including student loans, often use RPI, which typically gives a higher rate of inflation.

The previous Chancellor, Sajid Javid, agreed to a consultation earlier this year, but this was then postponed with the promise it would be considered at the Budget.

The government has now launched a six-week consultation which will cover, among other things, the issue of timing, including whether the UKSA’s proposal might be implemented at a date other than 2030, and if so, when between 2025 and 2030.

It also looks at issues on technical matters concerning the implementation of its proposal. UKSA has a proposed approach that they intend to take to transition between the current and new methods and data sources of RPI, and is seeking feedback on this.

In addition, the consultation wants responses on the potential impact of the proposal on the holders of index-linked gilts and potential broader impacts on the index-linked gilt market.

The consultation closes on 22 April. The government and UKSA have said they will respond to the consultation before the parliamentary summer recess.

A Consultation on the Reform to Retail Prices Index Methodology