After a three month consultation, the ONS unexpectedly announced its recommendation to keep the formula to calculate the RPI, rather than bringing it more in line with the typically lower consumer prices index (CPI).

However, it said a new additional inflation index, RPIJ, will start in March to meet international standards.

Despite being succeeded by the CPI, the RPI is the UK’s traditional measure of inflation and is still used to adjust a number of prices, such as train fares, water bills and the tax on beer.

It is also the measure of inflation used to calculate coupons on index-linked gilts, which are held in large quantities by pension funds.

Both RPI and CPI are measured using a basket of goods and services and calculating their prices over time. The crucial difference is RPI takes into consideration additional costs such as rent and mortgages.

Today’s decision was considered a win for savers and investors.

Had the ONS recommended a change in the way RPI is calculated, investors holding the popular index-linked savings certificates from the National Savings and Investments (NS&I), or those with pensions that invest in government debt, would have lost out.

Some final salary pension payments are also linked to the index.

Investors holding RPI-linked investments have already been feeling the heat.

Philip Bray of retirement and pension’s specialist, Investment Sense, says: “The announcement that the way RPI is calculated will not be changed is good news for some retirees who already have to contend with huge financial issues.

“It is widely recognised that pensioners suffer inflation at higher rates than either of the official CPI or RPI figures; in many respects, then, today was a missed opportunity to introduce a measure of inflation specific to older people.

“Any change to the way in which RPI was calculated would have reduced the annual rises for those retirees lucky enough to have index-linked pensions and annuities.

“It isn’t, however, just the NS&I accounts that would have been affected: last year a wave of inflation-linked savings accounts hit the market and the returns on these would also have been cut. Because most of them cannot be cashed in early, savers, many of whom are retired, would have been stuck with the accounts.”

However, there are concerns that by leaving the calculation of RPI as it is, pension schemes may start to switch indexation from RPI to CPI.

The coalition government changed the way annual public sector pension increases were calculated from using RPI to CPI soon after the election.

Nigel Green, the chief executive of the deVere Group says: “Those who are fortunate enough to be members of a strong final salary scheme will benefit from the higher index – we suspect that the decision not to effectively reduce RPI is now likely to accelerate the number of pension schemes which will switch indexation from RPI to CPI.

“Should this occur, it would mean that, despite the retention of the RPI calculation, many millions of pensioners will still suffer reductions to their retirement incomes.”

He adds: “The government set a dangerous precedent when it allowed companies to switch from RPI to CPI, as firms have been using such a changeover of indices as a way of reducing deficits and reducing contributions – which, of course, means members’ pension pots bear the brunt.

“BT, for example, managed to reduce its deficit by £2bn as result of switching from RPI to CPI. This might have been good for BT, but it was only achieved by paying pension members reduced benefits.”

Despite today’s good news, savers were dealt an expected blow today after the Bank of England held interest rates at of 0.5%.

Savers have faced this record low rate for almost four years, meaning they have had to deal with lower returns on their capital and lower incomes, as many use the interest they receive to supplement their pensions.

Bray says: “The Funding for Lending Scheme is also causing nothing but misery for savers, pushing interest rates on savings accounts off a cliff. Interest rates are being cut daily and accounts are being withdrawn, causing savers to see the value of their capital fall in real terms.

“The combination of low interest rates, the Funding for Lending Scheme and high inflation is a perfect storm for savers. Currently, there isn’t a single savings account available that will allow basic rate taxpayers to get a real, above inflation, return on their savings.”