Household water bills in England and Wales will fall by an average of 5% - not including inflation - by 2020, the regulator Ofwat has ruled. This would see average bills fall in real terms by about £20 from £396 to £376. However, consumers will still pay more, as the companies are allowed to add on inflation, as measured by RPI. RPI is typically higher than CPI inflation, and is currently running at 2.3% a year.