In a stark warning to Westminster, a coalition of top UK economists has accused the government of failing its citizens and presenting a dangerously misleading picture of the nation's inflation crisis.
The experts argue that the official Consumer Prices Index (CPI), the government's preferred measure, is significantly underplaying the true financial pain being felt by ordinary households, particularly the most vulnerable.
The Inflation Deception: CPI vs. RPI
The core of the controversy lies in the choice of measurement. While the government champions CPI, many economists contend that the Retail Prices Index (RPI) offers a more accurate, albeit typically higher, reflection of the real-world cost increases hitting consumers.
The critical difference: RPI includes housing costs, such as mortgage interest payments and council tax, which are a major part of most household budgets. CPI notably excludes these. As interest rates have climbed sharply, so have mortgage repayments, a reality captured by RPI but completely absent from the CPI figure.
Who is Being Failed?
This isn't just an academic debate; it has real-world consequences. The group highlights several key areas where using CPI is actively failing the public:
- Benefit Payments: State pensions and benefits are uprated annually based on CPI, meaning payments are lower than if they were linked to the more comprehensive RPI.
- Student Loans: The interest on student loans is tied to RPI, often causing debt to soar at a rate far higher than general inflation.
- Regulated Rail Fares: These increases are also pegged to RPI, leading to steeper price hikes for commuters.
The result, according to the experts, is a "double whammy" for millions. Their incomes are suppressed by a lower inflation measure, while their essential outgoings are inflated by a higher one.
A Call for Transparency and Change
The economists are now demanding greater transparency and a honest conversation about the true cost of living. They urge the government and media to stop relying solely on CPI and to provide the public with a clearer, more complete set of data that includes measures accounting for housing costs.
Their conclusion is unequivocal: continuing with the current approach risks deepening the financial distress for those already struggling the most and undermines trust in official economic data at a critical time for the UK economy.
