Inflation
The question
To ask the Chancellor of the Exchequer, with reference to her Department's policy paper entitled Spring Statement 2025: Policy Costings, updated on 2 April 2025, for what reason that document uses both (a) RPI and (b) CPI inflation.
Answered by James Murray
The Government confirms tax rates and thresholds annually. In some cases, to make sure that they reflect the current economy, they are uprated to account for inflation. The policy paper entitled Spring Statement 2025: Policy Costings sets out the indexation assumed in the public finances forecast baseline, which underpin the costings set out in the document.
The Office for National Statistics (ONS), regulated by the UK Statistics Authority (UKSA), produces a range of inflation statistics. The most widely used estimates of inflation, both by Government and the private sector, are the Consumer Prices Index (CPI) and the Retail Prices Index (RPI)
The Government agrees with UKSA that RPI is a flawed measure of inflation, which at times overstates and at times understates changes in prices. RPI’s shortcomings are well-documented. In 2013, as a result of flaws in the way it is measured, RPI lost its status as a National Statistic. Since 2010 the Government has been reducing its use of RPI and has committed to not introduce any new uses of RPI.
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