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Rail firms to raise fares by 4.1%

Commuters face rail fare hikes of 4.1% next year despite official figures showing a dip in inflation in July.

Train passengers will be hit by a sharp rise in regulated fares such as season tickets from January even though retail price index (RPI) inflation slowed to 3.1% in July from 3.3% in June - because fares are set 1% above last month's RPI.

Fashion retailers' summer sales helped offset higher prices at the fuel pumps to nudge consumer price index (CPI) inflation down to 2.8% in July from 2.9% a month earlier, the Office for National Statistics (ONS) said.

Price rises are expected to continue easing gradually in coming months as CPI inflation dipped from June's 14-month high.

Economists said inflation is now looking weaker than the Bank of England's forecast, and has undershot previous central bank worries of a 3.5% summer peak in inflation.

But they warned that the slight fall in inflation offers little relief to squeezed households, with the rising cost of goods and services continuing to outpace anaemic growth in regular wages which increased by just 1% in the year to May.

Inflation also continues to outstrip savings rates which will remain at rock bottom for the next few years after the bank pegged interest rates to unemployment.

A Treasury spokeswoman said inflation has almost halved from its recent peak of 5.2% in September 2011, helped by the Government freezing fuel duty and council tax.

"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 has remained stubbornly above the Bank of England's 2% target since December 2009. The bank's Monetary Policy Committee (MPC) forecasts that CPI inflation will not rise above 3% this year but will drop to its 2% target in mid-2015. New bank governor Mark Carney recently pledged that interest rates will not rise until unemployment has fallen below 7%, adding a new threshold for economic stimulus on top of its price stability responsibility.


From Belfast Telegraph