Chancellor Rachel Reeves has formally requested the Office for Budget Responsibility (OBR) to examine the methodology behind the Retail Price Index (RPI) calculations, in a move that could significantly impact future economic policy decisions.
The intervention comes as the government prepares its crucial Autumn Statement, with inflation metrics playing a pivotal role in fiscal planning. Critics argue the RPI, which typically runs higher than the Consumer Price Index (CPI), may be overstating true inflation levels.
Why This Matters Now
With the UK economy at a delicate juncture, the choice of inflation measure can affect:
- Interest rate decisions
- Benefit upratings
- Rail fare increases
- Student loan repayments
Economists estimate that switching from RPI to CPI for certain calculations could save the Treasury billions annually.
The Political Calculus
Reeves' move signals a potential shift in how Labour approaches economic measurement. Some observers suggest this could pave the way for:
- More accurate inflation reporting
- Reduced upward pressure on public spending
- Fairer calculations for consumers
The OBR has acknowledged receipt of the Chancellor's request but declined to comment on the timeline for its response.
