A consultation on the Reform to Retail Prices Index (RPI) Methodology

The government and UK Statistics Authority (UKSA) have published the response to their joint consultation on the timing of the reform to the Retail Prices Index (RPI). As announced in September 2019, UKSA intends to bring the methods and data sources of the Consumer Prices Index including owner occupiers’ housing costs (CPIH) into RPI. Owing to the use of RPI in two specific index-linked gilts, this proposal would require the consent of the Chancellor if it were to be implemented before 2030.

The Chancellor has announced that while he sees the statistical arguments of UKSA’s intended approach to reform, in order to minimise the impact of reform on the holders of index-linked gilts, he will be unable to offer his consent to the implementation of such a proposal before the maturity of the final specific index-linked gilt in 2030.

It is UKSA policy to address the shortcomings of RPI in full at the earliest practical time. The change proposed can legally and practically be made by UKSA in February 2030.

The government and UKSA published the response to the consultation alongside the Spending Review on 25 November 2020. See below for the consultation response document and an exchange of letters between the Chancellor, the UKSA Chair, the Governor of the Bank of England, and the Deputy Governor for Monetary Policy of the Bank of England, which details the outcome of the consultation.