Inflation could push up rail season tickets by 8%

• Fares allowed to rise by inflation plus 3% • RPI expected to touch 5% for July • Bank of England governor to write to chancellor Hard-hit rail commuters face more misery as inflation figures on Tuesday reveal how much more they will have to pay for their season tickets in the new year. The July retail prices index rate is used to determine the following January’s annual rise for regulated rail fares, which include season and saver tickets. The formula used to calculate the new fares is RPI plus 3%. The rate is expected to come in at 5%, meaning fares will increase by 8%. Elsewhere, the wider consumer prices index (CPI) rate of inflation is expected to increase to 4.4% from 4.2% in June, underlying the pressure on household budgets and triggering an explanation letter from Bank of England governor Sir Mervyn King to George Osborne. And a quarterly survey from Saga revealed a sharp fall in the standard of living for older generations. For the third quarter in a row, Saga’s Quality of Life Index has fallen, as soaring price levels continue to erode living standards for over 50s. The government changed the fare-rise formula for 2012, with the formula previously being RPI plus 1%. As train companies are allowed to make the increase an average figure, some season tickets could go up by much more than that. The rise in rail fares comes as utility groups announce future electricity and gas bills, all of which are expected to push the CPI rate of inflation to 5% by the end of the year. But with the UK facing a period of continued sluggish growth, the Bank expects inflation to fall below the 2% target to 1.8% in two years’ time, particularly as the impact of this year’s VAT increase falls out. Victoria Cadman, an economist at Investec Securities, said lower food and petrol prices will limit the rise this month, with recent data from the British Retail Consortium showing prices fell by 0.6% in July from June. Oil prices have also fallen, with some of the main supermarkets cutting their forecourt prices , while motoring organisation the AA indicated prices of both petrol and diesel had eased a little. If the figures come in as expected, July will be the 20th month running that CPI will have missed the Bank of England’s target of 2%. Sir Mervyn is required to write to the chancellor when the rate of inflation has been above target for more than three months – this will be his seventh successive letter and his 12th in total. Fair Fares Now campaigners, led by the Campaign for Better Transport, will be at London’s Waterloo station to demonstrate against the hike before the RPI rate is revealed by the Office for National Statistics. The campaign is also supported by the RMT transport union which on Tuesday published a report saying rail privatisation had “bled £6.6bn out of the rail industry since 1997″. The RMT-commissioned report by research company Just Economics also said that the future “bleed” would amount to around £6.7bn over the next 10 years. RMT general secretary Bob Crow said the government was “forcing through inflation-busting fare increases and savage cuts to maximise private train company profits”. Campaign for Better Transport’s public transport campaigner Alexandra Woodsworth said: “Affordable rail travel is vital for passengers, for the environment and for our workforce. These massive fare rises will be a disaster for people already struggling with rising costs, and risk pricing those on lower incomes out of jobs in our major cities. “Our demonstration is sending a clear message to government that the country simply can’t afford fare rises on such a punitive scale. It’s time to burst the bubble on inflation-busting fare hikes.” Shadow transport secretary Maria Eagle will meet commuters at Waterloo and call on the government to rethink the rail fare increases planned for each of the next three years. She said: “The Tory-led government is totally out of touch with the cost of living crisis facing commuters and fails to understand how these eye-watering rail fare rises will add to the burden on families. The cost of getting to work is for many people the biggest single item in the monthly budget, bigger than mortgage payments and bigger than rent.” Inflation Rail transport Transport Economics Travel & leisure guardian.co.uk

Posted by on August 16, 2011. Filed under News, Politics, World News. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.