The following are brief notes from today's meeting of the House of
Lords Economic Affairs Committee's session on the use of RPI, at
which Dr Ben Broadbent, Deputy Governor of the Bank of
England, gave evidence. The full transcript of the proceedings will
be sent as soon as it is available.
The first part of the session was largely consumed with a
discussion about definitions in particular of ‘household
experiences.’ Committee chairman 


 asked to what
extent CPI was a good measure of household inflation. Dr
Broadbent thought it was definitely superior to the RPI.
Lord Starkie asked if there was seen to be a technical flaw in
the RPI, or was there some greater merit in the CPI? It was a bit
of both, said Dr Broadbent.
quoted the Governor the
Bank of England who had said it would be some time before the
inflation target could be changed to CPIH because it did not have
the ‘track record.’ Dr Broadbent said this was a matter for the
government. He could not give an exact date that would be
suitable but as time went on it was less and less likely that
problems would be found.
Lord Kerr said it was strange to be stuck with RPI and its known
increasing defects. Dr Broadbent said the decision was difficult
and repeated that it could only be taken by the government. But
it was not a new problem which had suddenly emerged. In fact, the
discussion dated back many decades.
suggested the first step
might be to stop using the RPI going forward. Dr Broadbent
agreed, but government debt would need to be measured by another
index.
