Septembers Retail Price Index (RPI) threatens a business rates shock for many retailers next year unless the Government takes action, according to the British Retail Consortium (BRC)

Under the current system, Septembers RPI is used to calculate the annual increase in commercial property taxes for England and Wales that will be introduced the following April.

The September 2010 figure is 4.6%. Unless the Government intervenes, that will produce a business rates increase much higher than expected and higher than most retailers budgeted for in their 2011 plans.

At a time when the public sector is facing substantial cuts, these extra costs will undermine retailers ability to maintain and create jobs.

BRC Director General Stephen Robertson has written to the Secretary of State for Communities and Local Government urging the Government to use alternative ways of calculating the next increase.

Robertson said: "No one seriously expected inflation to fall so stubbornly slowly from the highs of January and February. As recently as this spring most forecasters expected RPI to be significantly lower by now.

"Few retailers have budgeted for the scale of business rates rises that may now result. Paying more tax will likely mean trimming costs elsewhere.

"With the Government set to announce big public spending cuts this business rates battering can only undermine retailers proven ability to maintain and create alternative jobs.

"Basing a whole years rates bills on one, almost random, months RPI makes no sense. The Government must switch to another way for next April and beyond. Using the Consumer Price Index (CPI), as it does for pensions is one option. Or using the 12-month average RPI rate from October 2009 to September 2010, which would iron out inflation rate volatility."