RPIJ

Professional Pensions looks at the impact of falling inflation over the last year

A new measure of inflation developed by the Office of National Statistics has had its official status downgraded a little over a year after it was first proposed.

If all the FTSE100 companies still using the RPI inflation measure in their pension schemes were to move to using RPIJ, the combined pension deficit could fall by up to £20bn, LCP says.

The UK's headline inflation rate dropped to 1.7% in February, its lowest level since late 2009.

The consumer (CPI) and retail prices index (RPI) measures of inflation have hit their lowest levels since September 2012, according to the Office for National Statistics (ONS).

The consumer prices index (CPI) fell from 2.8% to 2.7% in August, in line with economists' expectations, as falling transport costs pushed the headline figure down.

The consumer prices index (CPI) was unchanged at 2.8% in March, while the retail prices index (RPI) rose slightly to 3.3%, according to the Office for National Statistics (ONS).

The Office for National Statistics' decision to downgrade the status of the retail prices index and publish two additional inflation measures could lead to the index being dropped, warn consultants.

The vast majority of respondents to the National Statistician's consultation on the retail prices index called for no change because of fears over the impact of any alteration on savings.

Jack Jones rounds up reactions to the ONS's inflation decision.