UK rail fares to rise 2.2% in January

<p>The increase in rail fares is the lowest in five years.</p>

Average UK rail fares are set to rise again in the new year.

The Rail Delivery Group, which represents rail operators and Network Rail, announced that a 2.2 per cent increase in fares is set to be imposed from January 2nd, which would represent the lowest rise for five years. The government stated in September that regulated rail fare rises would be in line with July's measure of Retail Price (RPI) inflation rather than being capped at RPI plus one per cent.

Officials confirmed that the industry figure will cover all fares including season tickets and other regulated fares. It was a different story in Scotland and Northern Ireland where there has been a price freeze implemented since 2013. However, in England, peak fares will be going up by 2.5 per cent, the same as the July inflation rate.

Michael Roberts, director general of the Rail Delivery Group, explained that it would be investing heavily in improving the nation's railways.

"For every pound spent on fares, 97p goes on track, train, staff and other costs, while 3p goes in profits earned by train companies for running services on Europe's fastest-growing railway.

"The industry is continuing to work together to get more for every pound we invest to enable government to make fares decisions which work best for passengers."

The hike in rail fares comes after a consortium including Stagecoach and Virgin was awarded a contract for the East Coast main line. The Inter City Railways group paid £3.3 billion for the right to operate the route and has pledged £140 million to upgrade services over its eight-year franchise.

The decision to hand the running of the East Coast main line back to the private sector drew fierce criticism from railway unions. Mick Cash, general secretary of the union, described the decision as "an act of utter betrayal". Others argued that there was no pressing need to sell off the route as it had been running fine under the stewardship of the state-owned firm East Coast.

Find up to date information on the FTSE 100 and spread betting strategies at City Index

Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.