The rise is equivalent to July’s Retail Price Index figure of 3.2% plus 1% – lower than the RPI+2% increases set out in the Mayor’s published business plan.
The smaller increase has been made possible by a £96m Government grant.
A single Oyster Pay As you Go bus fare will go up 3.7% from £1.35 to £1.40 while cash fares will increase by 10p to £2.40.
On the Tube, Zone Oyster fares go up by 10p while cash fares will increase by 20p.
TfL says the daily Oyster pay as you go cap for Tube, DLR and rail travel will be frozen at 2012 levels.
City Hall documents say the higher fares will “increase TfL revenue by some £130m per annum.”
Users of the Mayor’s flagship cycle hire scheme will see fees double as TfL seeks to plug the black hole in the scheme’s finances.
The capital’s transport body recently confirmed it was unable to predict when the scheme would become self-funding and the Mayor has faced accusations of subsidising it from the pockets of bus and Tube users.
Despite the large amounts of publicity enjoyed by headline sponsors Barclays, TfL and City Hall figures show that the taxpayer remains the scheme’s largest funders.
In addition to TfL’s own funding, boroughs hosting cycle hire docking stations are required to pay TfL £2m while delivering spending cuts imposed by central Government.
The cost of 24 hour access will increase from £1 to £2, a weekly pass will rise from £5 to £10 and annuals memberships will increase from £45 to £90.
Mayor of London Boris Johnson, who also chairs Transport for London, said: Before the end of the year I will spell out further investment on the transport network that will help us to provide faster, more frequent and reliable journeys for Londoners; and is crucial to the economic development and growth that is so vital to our great city.
“This fares package is hugely important to our millions of passengers and I am very pleased to have secured nearly £100m that will help to keep fares as low as possible, and protect the important concessions that we offer the most vulnerable Londoners.”
David Leibling, Acting Chair of passenger watchdog London TravelWatch said: ‘While we are disappointed that fares have gone up at a time of increasing pressure on household budgets, we are pleased that the increase is less than originally planned.”
Mr Leibling added: “The decision not to increase the daily cap on Oyster fares and to limit Oyster pay as you go fare increases to 5p on London’s buses will provide a small but welcome relief for many passengers. It is also encouraging to see transparency in the fares setting process.”
Labour’s City Hall transport spokesperson, Val Shawcross said: “This is going to hit Londoners extremely hard at a time when Government cuts are taking full effect. The Annual London Survey shows that getting cheaper fares are Londoners top concern, so this announcement is received with great disappointment across the capital.
“Energy bills will be going up 11 per cent, rents in London have increased by 8 per cent and the Mayor has added to this endless burden by putting up travel costs yet again.”
Darren Johnson, a Green party member of the London Assembly, said: “The Mayor should be doing more to help hard pressed Londoners who want to travel by public transport or bike. Instead, he is going in the wrong direction on fares and cycle hire access fees.
“The Mayor could keep fares at or below inflation this year by taking a polluter pays more approach and raising the congestion charge. He should also start introducing pay as you go driving across the whole of London. It is in his Transport Strategy as a longer term option and is a far better way forward than constantly raising fares above inflation.”
Commenting on the Cycle Hire fees increase, Mr Johnson added: “I hoped that the long overdue expansion of cycle hire into new areas of London would encourage poorer Londoners to give it a go, but raising the access fee will put people off. Cycle hire needs to be more self financing as it expands and that means the Mayor must negotiate a far better deal over sponsorship.”
Liberal Democrat London Assembly budget spokesperson Stephen Knight accused the Mayor of “shamelessly trying to bury bad news on fares on a day when everyone’s attention is on the US President election result.”
He added: “These fare rises will especially hit hard the many Londoners who have seen their wages frozen in recent years. We now have the perverse situation when it will be cheaper to get on a bus than use the bike hire scheme. Such steep rises would not be necessary if the Mayor had secured a far better sponsorship deal.”