CPIH still not up to scratch, says UK Statistics Authority

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The UK Statistics Authority has concluded that the price index that includes housing costs to measure inflation - the CPIH - still fails to meet the standards required for it to be rubber-stamped as a national statistic.

In its independent Assessment of statistics on Consumer Price Inflation including Owner Occupiers’ Housing Costs, the Authority said that the Office for National Statistics (ONS) needs to do more to establish credibility in the price index measure.

The CPIH’s status as a national statistic was discontinued in August 2014 after issues emerged relating to the data sources used to estimate owner occupiers’ housing costs. However, the Johnson Review of consumer price indices, conducted last year, recommended that CPIH should become the sole headline index for consumer price inflation once these problems had been solved.

The UKSA's assessment, in addition to finding that these particular issues have not yet been fully solved, also raises more fundamental questions about the series. It says that CPIH has 'exhibited trends in its short history that are not always easily explained'. It also notes that there is a degree of 'user scepticism and disagreement' about the concepts and methods used that it describes as 'unusual for an official statistic' in the UKSA's experience. Noting that the underlying reason for this is that there are a range of different ways of estimating owner occupier housing costs, the report says that ONS needs to do more to engage with users and explain and articulate its own judgement about the concepts and methods it uses in addition to strengthening quality assurance of its private rents data sources.

Ed Humpherson, the Authority’s director general for regulation said: ‘I will be looking for ONS to set a clear direction for the future of the CPIH. In particular, ONS should strengthen its quality assurance; monitor trends over time; and do more to engage effectively with a wide range of users.’

Mike Hughes, who chairs the RSS National Statistics Advisory Group, said: ‘The RSS welcomes this assessment as it has fully reflected users' concerns. Also to be welcomed is the fact that the assessment looks at broader issues than many assessments have in the past, including examining the underlying credibility of the series.’

ONS is expected to report to the UKSA by September 2016 on the actions that it has taken to improve CPIH, after which ONS will monitor CPIH closely so as to fully understand the trends in the index over time compared to other sources. Only then, it says, will it be able to present ‘robust assurance to users about its credibility as a measure of inflation’.

Official Statistics UK Statistics Authority Office for National Statistics (ONS)

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