ONS : Consultation on CPI (inclusion of housing costs)

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12 July 2012

The Office for National Statistics is consulting on the method for including owner occupier housing costs (OOHC) in a new and additional measure of consumer price inflation. This is important because the current statutory CPI does not capture this (whereas RPI does) and OOHC account for approximately 10% of household expenditure (UK National Accounts).

There are a number of possible methods to capture OOHC; ONS propose to accomplish this by converting relevant expenditure into an equivalent rental cost for incorporation into the calculation.

Inclusion of OOHC is not currently consistent with the general European Statistics framework and so the existing CPI would likely be retained as the default statutory measure, with the new CPIH index being constructed and published from Spring 2013.

The ONS does propose that CPIH will become the main focus of the UK statistical bulletins but we do not believe that this would automatically result in a change to the Government’s statutory basis for inflation calculation : however it is logical that the Government would at least consider this as a possibility which would then have an impact on revaluation of DB benefits fairly similar in qualitative impact to the 2010 CPI/RPI event.

The consultation closes on 31 August 2012.

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