The government in the UK will consider proposals to align the retail prices index (RPI) with the consumer prices index (CPI) in the UK.

The Office for National Statistics' (ONS) Consumer Price Advisory Committee has recommended three proposals aimed at aligning the two indicators. The move will allow the Treasury to save as much as £ 3 billion a year in debt interest payments.

However, experts have said that the move could be disadvantageous to some of the pensioners as well as investors in British index-linked gilts. They pointed out that the RPI is used to determine the rise in the returns of some of the gilts and also to calculate the increase in some private pensions in the UK.

RPI has been around 0.5% and 1% higher than CPI mainly due to the difference in the calculating methods of the two indices. Following public consultations, the ONS is aiming to present the recommendations in January. If the recommendations are approved, the new measures might be implemented by the month of March.

The data released by the ONS has shown that the consumer price index (CPI) rate of inflation has moderated to 2.5 per cent in the month of August compared to 2.6 per cent in July.