Once bitten, twice shy: UK traders wary of inflation reform

Proposals to fix RPI methodology flaws are back on the agenda, but traders have been caught out before

inflation

UK inflation traders have heard this story before. With reforms to the leading measure of inflation on the agenda for the second time in a decade, traders are cautiously pricing in only a one-third chance that the proposed fixes will come to fruition.

Their caution is understandable: any change to the retail prices index, or RPI, could leave investors and pensioners out of pocket. A fix for RPI would, in all likelihood, entail lowering the index, which would affect the value of £700 billion (

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