RTTNews - Tuesday, U.K.'s Department for Transport said regulated rail fares are set to fall by 0.4% from January 2010.

The announcement was in reaction to the inflation figures released by the Office for National Statistics, which showed that the retail price index dropped 1.4% year-on-year in July after falling at a record pace of 1.6% in June.

In the U.K., majority of train fares are regulated by the government. By law, regulated fares can only rise by 1% above the Retail Price Index inflation figure.

For the first time in a generation passengers across the country will see their fares fall. Drops in fares should encourage more people to travel by train, which is good for the economy and the environment, Transport Secretary Andrew Adonis said.

However, the impact of the reduction would be offset by an increase of 6% implemented this year.

In addition, the government has also taken away the flexibility for train operators to raise individual regulated fares by up to 5% above the national fare change. This would protect passengers from unduly steep rises in regulated fares next year.

U.K.'s national passenger watchdog, the Passenger Forum, welcomed the government's both decisions.

Passenger Focus director Ashwin Kumar said, Most season tickets will have to drop in January and this will be a welcome relief to passengers who are usually forced to fork out more for their tickets every New Year.

But, it warned that there are chances that train companies may try to claw back money through higher increases in other unregulated fares, car parking charges or by cutting services.

For comments and feedback: contact editorial@rttnews.com