Misery for commuters with 1.9 per cent fare rise as inflation jumps after Brexit vote

Jake Cordell
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News of the latest fare rise will not please commuters amid ongoing strikes and falling customer satisfaction
News of the latest fare rise will not please commuters amid ongoing strikes and falling customer satisfaction (Source: Getty)

Rail fares will rise by an average of 1.9 per cent next year as inflation has jumped in the first full month after the EU referendum.

The consumer prices index (CPI) came in at 0.6 per cent for July, according to the Office for National Statistics (ONS). This was up on the 0.5 per cent recorded in June, ahead of expectations and marks the fastest rate of rising prices since November 2014.

The crucial retail price index (RPI) for July - which determines how much regulated rail fares, which includes season tickets, can increase by next January - was also significantly higher than expected, rising from 1.6 per cent to 1.9 per cent.

John Hawksworth, chief economist at PwC said the "anachronistic system" of setting rail fares by RPI will "be bad news for hard-pressed rail commuters, unless the government steps in the impose a lower cap on rail fares."

The inflation bounce was driven by the fastest rise in import prices - of 6.5 per cent - in five years off the back of a 14 per cent slump in the value of the pound following the referendum.

The pound surged on the news, reversing a week of losses to hit $1.2992, up 0.9 per cent for the day. It also climbed up from three-year lows against the euro to reverse early morning losses and stand at €1.1525.

The figures mean regulated rail fares, which account for around 45 per cent of all tickets, can rise by an average of 1.9 per cent next January. Train operating companies can increase the price of season tickets by anywhere up to 6.9 per cent, although the average price rise cannot exceed the rate of RPI.

Read more: Southern discomfort on beleaguered rail franchise

Trade unions staged their annual protests at the fare rises today, with the union-led Action for Rail campaign, arguing fares have risen by 25 per cent over the last six years, while wages have only grown by 12 per cent. Frances O'Grady, secretary general of the TUC said the failure of train operating companies to deliver a good service while price rises continue to hit commuters highlighted the need to nationalise the service.

Ahead of the figures being published, a spokesperson for the Department for Transport said: "We are providing record investment in our railways as part of our broader commitment to improving journeys.

"We are capping regulated rail fares and keeping them in line with RPI inflation over this parliament which will save the average season ticket holder £425 in this period, and it means earnings are outstripping fare increases for first time in 10 years".