2011-08-16guardian.co.uk

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.

Does anyone else find it suspect that businesses might need to increase prices at a margin (3% in this case) ABOVE the pertinent consumer price index? I mean, isn't that basically an admission that actual cost INFLATION is running higher than some artificial index "inflation"? It's like how the price of first-class postage in the US has increased at almost twice the rate of the CPI...


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