A consultation has been launched this week in Northern Ireland on whether there should be any changes to the way inflation is to be allowed for by GAD when setting the personal injury discount rate for Northern Ireland. The consultation closes on 23 January 2026.
Historically RPI has been considered to be the best proxy measure for damages inflation, as it tended to lie somewhere between CPI and earnings inflation. The Department of Justice in NI determined ahead of the 2024 review of the discount rate that RPI was no longer the best measure of inflation.
The 1996 Act provides an alternative to RPI being ‘some published information relating to costs, earnings or other monetary factors as is… prescribed in regulations by the Department of Justice’. However, this requires for a single, unadjusted index and does not allow the Department to prescribe an adjustment to an index (unlike in England and Wales). This rules out an adjustment to CPI for example.
In the absence of adjusting a set index the Department has to choose either an existing prices-related index or an existing earnings-related index. It might use Average Weekly Earnings (AWE) or Annual Survey of Hours and Earnings (ASHE) by way of earnings-based indices and used AWE for the most recent review as it was considered most reliable.
In publishing its conclusions to the most recent review, the Department committed before the end of the next Assembly to review how the legislation makes provision for the impact of inflation.
This consultation seeks views on whether it should continue to take into account inflation in connection with future discount rate reviews in Northern Ireland based on:
If an adjusted index is decided on, there must also be an assessment on which is most appropriate (CPI, CPIH or other).
Keoghs will be responding to the consultation and will provide our draft response in early January.
For more information please contact:
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