The Government has announced January's annual fare rise in England will not be as high as planned.

It had intended to allow train companies to raise the average price of regulated fares – which include season tickets – by the retail prices index (RPI) rate of inflation plus 3% in the new year, and again in January 2014.

Key Points

  • Fare rises not as high as planned
  • Calculated using RPI+1, not RPI+3%
  • Rises come into force in January

But Prime Minister David Cameron has said the rise for the next two years will be RPI plus 1%.

This means in January 2013 commuters will have to fork out for average rises of 4.2% rather than the planned 6.2%. As these are averages, some will still pay more.

The percentages are based on a 3.2% RPI, as the previous July's figure, which was 3.2%, is used.

The RPI plus 1% formula will also be used for London's Tube and buses for the next two years.

Regulated rail fares include season tickets and some off-peak fares. Unregulated fares include cheap advance tickets and peak time tickets.

Highest fares in Europe

The DfT says the reduction in the rise, which is expected to benefit more than a quarter of a million annual season ticket holders, has been funded from savings identified in the department's budget.

But UK train travellers will still be paying some of the highest fares in Europe.

Also, the RPI plus 1% formula only applies to regulated fares, which form only around 40% of total fares. Train companies can raise the price of unregulated fares by as much as they like.

There will also be fears that with train companies now deprived of some of their annual revenue by the reduction in the planned increase, they will raise the cost of car parking at stations.

Regulated rail fares in Scotland are already calculated using July's RPI figure +1%.

Translink, which runs Northern Ireland's rail network, does not increase fares annually.

The Welsh Government says a decision on prices has yet to be made, although it's expected this autumn.