Rail travellers face biggest fares hike for five years as inflation hits 3.6%
Rail commuters are to be hit with the biggest hike in season ticket prices for five years, heaping further pressure on households struggling with higher inflation.
The Retail Price Index (RPI) measure of inflation, which the Government uses to calculate the rise in regulated rail fares, rose to 3.6% last month, from 3.5% in June.
The outcome puts millions of passengers on course for the largest increase in fares since 2013 when price changes come into force in the new year.
Regulated rail fares make up around half of all tickets and include season tickets, standard and saver return fares.
Mick Cash, leader of the Rail, Maritime and Transport (RMT) union, said: "The huge hike in fares confirmed today is another kick in the teeth for passengers who already fork out colossal sums to travel on rammed-out, unreliable trains while the private operators are laughing all the way to the bank.
''With over three-quarters of Britain's railways now in the hands of foreign states, these huge sums of money aren't being invested in essential upgrades and modernisation here, they are being siphoned off to subsidise transport services over the Channel."
The Office for National Statistics (ONS) also confirmed that Consumer Price Index (CPI) inflation held steady at 2.6% in July, as a drop in fuel prices offset the rising cost of food, clothing and household goods.
The pause comes as CPI slipped back to 2.6% in June after soaring to a near four-year high at 2.9% in May.
Sterling, already under pressure amid political confusion over Brexit, dipped on the news. The pound was trading 0.3% lower against the dollar at 1.29 and 0.1% lower verses the euro at 1.09 euros.
Households have seen their spending power come under sustained pressure from lacklustre wage growth and higher inflation, triggering an increase in credit and a decline in savings.
The ONS said the main downward impact on the cost of living last month came from a drop in fuel prices, which sank by 1.3% between June and July after growing by 0.7% over the period in 2016.
Petrol fell by 1.4p month on month to 113.9p per litre, while diesel slipped by 1.7p to 115.6p per litre.
The decline was countered by food prices notching 0.1% higher on the month in July following a fall of 0.2% over the period last year.
It was largely driven by meat and other items such as sauces, which became more expensive, the ONS said.
Clothing and utility bills were also putting upward pressure on CPI , with electricity, gas and other fuels lifting 0.8% between June and July after flat growth over the period in 2016.
The jump was partly caused by energy giant EDF hiking electricity and gas prices towards the end of June.
The Consumer Price Index including owner-occupiers' housing costs (CPIH) also remained at 2.6% in July, in line with the rate for June.
CPIH is the ONS' preferred measure of inflation, which includes costs associated with living in, maintaining and owning a home.
The Bank of England expects CPI inflation to peak at 3% by the autumn of this year and has signalled it is no hurry to hike interest rates from record lows of 0.25%.
However, Ben Brettell, senior economist at Hargreaves Lansdown, said inflation may have already peaked and could fall back in the months ahead.
He said: "All this is good news for the consumer, as it helps alleviate the continuing squeeze on household finances, though pay is still shrinking in real terms for now.
"It's also good news for borrowers - moderating inflation means less pressure on the Bank of England to consider raising interest rates, and will allow the MPC to remove the sticking plaster of ultra-low interest rates very slowly indeed."