Rail fares to be hiked by 3.6% as inflation rises

15 August 2017
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Rail travellers will be hit by price hikes of up to 3.6% in 2018 as figures reveal today that inflation has risen.

Regulated rail fares – such as most commuter fares, season tickets and off-peak rail fares – are set by the devolved UK governments.

In England, each January’s increases are capped in line with the previous July’s Retail Prices Index (RPI) rate of inflation. It’s today been revealed by the Office for National Statistics (ONS) that RPI has risen from 3.5% to 3.6%.

This means rail users will be hit by a large increase to prices, although the government typically waits until later in the year to confirm exact fares. A 3.6% increase is a hefty rise compared to 2017 prices, which were capped at 1.9%.

Unregulated tickets – such as peak travel fares and advance tickets – are set by the rail companies. Information on price changes for these fares is typically announced in December.

What about rail fares elsewhere in the UK?

Here's what's happening elsewhere in the UK:

  • Northern Ireland. Fares in Northern Ireland are not pegged to RPI. A spokesperson for Translink – Northern Ireland's rail operator – says: “We introduced a fares revision in March 2017, our first in two years. No decision has been taken on a fares revision for 2018 at this time.” Fares rose by an average of 1.6% in March 2017.
  • Scotland. Off-peak regulated fares are capped at July's rate of RPI inflation minus 1%, meaning an increase of 2.6%. Peak regulated fares are capped at July's RPI rate, meaning a 3.6% increase in 2018. Regulated fares account for 85% of train tickets in Scotland. Unregulated fares are set by ScotRail.
  • Wales: Regulated fares are capped at July's rate of RPI inflation meaning prices will rise by up to 3.6% in 2018. Unregulated fares are set by the rail companies.

CPI inflation unchanged

While RPI inflation has risen, the Consumer Prices Index (CPI) measure of inflation – which is more widely used – remained unchanged in July at 2.6%.

The Consumer Prices Index including owner occupier’s housing costs (CPIH), which was reinstated as a national statistic on 31 July 2017, also remained unchanged at 2.6%.

Falling petrol and diesel prices provided the largest downward contribution between June 2017 and July 2017.

This was, however, offset by smaller upward increases to a range of goods and services, including clothing, household goods, gas and electricity, and food and non-alcoholic drinks. 

Calum Bennie, Scottish Friendly’s savings specialist, comments: “One of the few winners from the increase in the retail price index to 3.6% is the rail companies. Long suffering commuters will see their costs increase by as much as the inflation rate at a time when their average wage rise is only around 1%. And such a fare hike will only add to inflation. 

"The outlook for consumers in general is difficult and any call for an increase in interest rates should be resisted as it would only tighten the squeeze. Amid the economic gloom, we mustn't lose sight of the need to put money aside for the future and people need to search out the best home for their money given the poor savings rates from deposit accounts.”

Comments

In reply to by anonymous_stub (not verified)

Hi Hesperus,

The government says the use of RPI is consistent with the general approach adopted across the rail industry. It says franchise payments, network grants, and franchise financial models are all based on RPI.

As you mention, RPI is also used by the government for the rating of pensions and index linked bonds, vehicle exercise duty, and alcohol and tobacco duties.

According to the government, Ofgem also uses it in regulating energy markets and OFWAT uses it in water rate regulation.

Best wishes,

Moneywise Helen

In reply to by anonymous_stub (not verified)

And why is it linked to RPI? The Government tell us that CPI is a better reflection of inflation (it isn't!) but it governs pension and wage increases. So why use RPI for this?

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