High inflation to boost rail fares

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Commuters face a 4.1% surge in regulated rail fares next year after official figures showed stubbornly high inflation in July.

Retail price index (RPI) inflation dipped to 3.1% in July from 3.3% in June - dooming train passengers to a sharp rise in ticket prices from January because regulated fares are pegged to the index.

BUSY A South West Trains commuter service

BUSY A South West Trains commuter service

Discounting by fashion retailers and lower air fares offset higher prices at the fuel pumps to help edge consumer price index (CPI) inflation down to 2.8% in July from 2.9% a month earlier, the Office for National Statistics said.

Train companies raise average regulated fares such as season tickets by one percentage point on top of July’s RPI inflation figure - with the price hike kicking in from January.

This year passengers were hit with a 4.2% average rise in regulated fares - although this was lower than initial plans for a 6.2% fares surge.

The Government retreated from plans to allow fares this year to rise by 3% on top of RPI in the face of vocal opposition from passengers.

CPI inflation dipped from June’s 14-month high and economists expect it to continue declining gradually in the coming months.

But the slight fall in inflation will do little to ease the squeeze on households, with the rise in the cost of goods and services continuing to outpace anaemic wage growth, which increased by just 1.7% in the year to May.

A Treasury spokeswoman said: ‘The economy is on the mend, but the Government understands that times are tough for families and that is why we have taken continued action to help with the cost of living.’

She said inflation is almost half of its recent peak of 5.2% in September 2011, adding the Government has increased the tax-free personal allowance which will take 2.7 million people out of tax, frozen fuel duty to keep petrol prices 13p per litre lower than they would have been, and frozen council tax in every year of this Parliament.