Hammond - government not ready to drop RPI inflation measure

LONDON (Reuters) - British finance minister Philip Hammond said on Wednesday the government planned to move away from using the widely discredited Retail Price Index as its preferred measure of inflation, but the time was not right to make the shift now.

Hammond told lawmakers no decision had been taken on whether to move straight to the relatively new CPIH measure of inflation or to begin the shift by moving to the CPI measure on an interim basis.

"But we can't somehow write out of the picture the fiscal consequences," Hammond said. "They have to be paid for and the government's view is that, at this stage in the fiscal consolidation, it is not the moment on a wholesale basis to switch from RPI to CPI."

Hammond said it would be appropriate to move away from RPI as Britain moves towards completion of its push to improve the public finances.

RPI - a generally higher measure of inflation that Britain's statistics agency says is no longer accurate - is used to index interest payments on inflation-linked government bonds and student loans.

(Reporting by David Milliken; Writing by William Schomberg)