The Manx Utilities chairman has defended a claim recent water rates increases were ’in line with inflation’.

The 6.4 per cent increase is indeed in line with December’s retail price index (RPI) inflation figure and below the 6.9 per cent recorded in January, but it’s considerably above the consumer price index (CPI) figure of 1.6 per cent for January, or 1 per cent in December.

But Manx Utilities chairman Dr Alex Allinson MHK said RPI figures had been the measure used for water and sewage rates over the past five years and there was no attempt to fudge the figures.

’In the past there was not so much of a difference but over the last two years that difference (between RPI and CPI) has grown and now it’s quite marked. We do acknowledge there is a growing disparity,’ he said. ’There isn’t a lot of guidance given on this at the moment from government.

’The Cabinet Office favours CPI but does publish the RPI figures too. Where we have three figures there will always be a level of uncertainty.

’If more than one figure is used, across government we need an emphasis on what is the headline figure.’

The use of the RPI figure water rate increase is in contrast to the figures given in the Chief Minister’s budget speech referring to increases in welfare benefits.

In his 2017 budget speech, Mr Quayle announced an increase in the income support premiums for carers and the disabled of 2.5 per cent ’to ensure they are fully protected from prices inflation’.

He added: ’The rates of Employed Person’s Allowance, a benefit predominantly paid to families who work but are on low incomes, will be increased by 1 per cent, in line with inflation.’

In both instances ’inflation’ is measured using the CPI scale of 1.6 per cent in January. Measured against the RPI rate of 6.9 per cent in January, the benefit increases are less impressive.

Many firms also base pay rises on CPI rather than RPI.

In April last year, the government launched a public consultation to consider whether the Manx RPI should be abandoned as a measure and the CPI measure adopted, in line with the UK, where it has been used as the main measure of inflation since 2013. The consultation document explained how inflation is calculated using a hypothetical ’basket’ of goods and commodities, and calculating their average cost from a range of shops and suppliers.

The goods used in each measure are different, with the RPI measure including mortgage interest and other housing expenses (excluded from the CPI) and the CPI including university fees, excluded from the RPI.

In addition, a different formula is used in the calculations for RPI compared with CPI, with the result that RPI figures are generally significantly higher. A third measure of calculation, the RPI (Jevons) uses the RPI ’basket’ of items but uses the CPI formula (known as the Jevons formula) for its calculations. This is said to mitigate the uplift on the standard RPI figure.

The Cabinet Office recommendation based on the consultation responses was to retain the RPI measure alongside the CPI but also publish RPI(J) figures, starting last September, but no official policy has yet been adopted.

There was some better news from the MUA regarding electricity prices.

Electricity charges for domestic users and commercial users will be frozen at 16p per unit. The standing charge will remain unchanged at 19.5p per day for both domestic and commercial customers.

Tariffs for industrial customers will be frozen at the current rate for the next 12 months.

The emergency credit available for prepayment customers will increase from £3 to £6.

The 6.4 per cent increase in the water rate will take it to 341.8p in the pound. The MUA confirmed the increase of the sewerage rate at 98p in the pound.

February’s inflation figures were published today (Friday).

They show CPI running at 1.9 per cent and RPI at 7.1 per cent.

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