U.K. Chief Statistician Favors Inflation Gauge With Housingby
Wants CPIH to be preferred measure of consumer inflation
Retail-prices index is `not a good measure of inflation'
The U.K.’s chief statistician said he wants the country’s main inflation measure to include housing costs, backing an index that’s been stripped of its quality mark.
In a letter to the Statistics Authority, John Pullinger said CPIH -- consumer prices index including owner-occupiers housing costs -- should be the “preferred measure of consumer inflation.” He said it’s important that housing is included in any gauge of price changes for consumers.
The letter is the latest part of an long-running examination of the quality of U.K. statistics, including debates and consultations on the best measure of inflation. CPIH was stripped of its “national statistics” status after issues relating to the quality of some data sources. Pullinger said the Office for National Statistics will work on this and he expects to report back in September on standards.
The Bank of England uses the consumer prices index to set monetary policy, targeting an inflation rate of 2 percent. “CPIH does not currently meet the standards for a national statistic,” the Treasury said in a statement. “The inflation target remains unchanged.”
The latest data put CPI inflation at 0.3 percent in January, while annual price growth based on CPIH was 0.6 percent.
Pullinger also criticized the retail prices index, saying it’s “not a good measure of inflation and does not realistically have the potential to become one.”
As the index is required by law and used by the 381 billion-pound ($541 billion) linker market, the ONS will continue to publish it. However, from 2017, the statistics bureau will only publish the minimum RPI data “necessary to ensure the critical and essential needs of existing users are met.” This will include components such as food and clothing. RPI inflation was 1.3 percent in January.