to determine how much the ticket price will rise by the following January. This increase will affect both saver and season tickets.
The current formula for calculating the price increase is by taking the RPI and adding on an additional 3%. With the rate expected to be 5%, this will mean an actual increase in January of 8%. The amount added on used to only be 1% but the government have recently changed the amount. The CPI (Consumer Price Index) is expected to rise from 4.2% up to 4.4%. This rise caused a letter to be sent from the governor of the Bank of England to George Osborne.
Train companies can make the 8% increase an average across the nation; this means that in some parts of the country ticket prices will see a much greater increase. This fare rise has come after utility companies announced future gas and electricity prices. These are expected to cause a 5% rise to the CPI inflation rate by the end of 2011.
Saga has also released figures indicating that the standard of living for the elderly is continuing to fall as life becomes more expensive. The company compiles a quality of life survey for the elderly and it has fallen for the third consecutive quarter.
Victoria Cadman of Investec Securities has said that lower costs of petrol and food this month will limit the rise of inflation. The fall in oil prices has led to supermarket petrol stations lowering their prices. If the figures are as expected then July will be the 20th consecutive month that the CPI will have fallen short of the Bank of England’s 2% target.
Campaigners for the group ‘Fair Fares Now’ will be demonstrating against the price increase at Waterloo station before the rate is announced by the Office for National Statistics. This campaign is being supported by RMT, a transport union, which has recently published a report claiming that nearly £7bn has bled out of the rail system since 1997.
Maria Eagle, shadow transport secretary, has criticised the Conservative government claiming, “they are completely unaware of the sort of financial impact this is going to have on commuters. For many people, transport is their most expensive outgoing each month.”