PEERS are calling on the UK Statistics Authority and the government to abandon the retail prices index (RPI) as its measure of inflation because it results in benefit recipients, commuters and students losing out.

The House of Lords economic affairs committee warns in a report published today that the authority risks breaching its statutory duties by publishing the RPI index, which it admits is flawed.

A switch to the consumer price index (CPI) should be agreed and approved by Chancellor Philip Hammond for use by the government, the peers also say in the report Measuring Inflation.

This would help prevent what they call “index-shopping,” in which the government uses CPI inflation to calculate benefits but the higher RPI rate when setting university tuition fees and transport fares.

Committee chair Lord Forsyth of Drumlean branded this practice “simply not fair” as it created “winners and losers.”

The peers’ warning came after the Office of National Statistics said that inflation was at its lowest level in two years.

CPI fell to 2.1 per cent in December from 2.3 per cent the month before, while RPI was 2.7 per cent last month, down from 3.2 per cent in November.