National Statistician proposes new Household Inflation Index

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The RSS welcomes proposals made by National Statistician John Pullinger yesterday (9 March 2016) to work on developing a ‘Household Inflation Index’ (HII).

This new consumer price index would include interest payments and the capital cost of houses – items usually excluded from such indices – and would complement a set of macro-economic indices such as the CPIH.

The RSS has long argued a household inflation measure would be critical for the public to maintain trust in official inflation measures. Mike Hughes, who chairs the RSS’s National Statistics Advisory Group said: ‘This is excellent news. The RSS has consistently argued the country needs an index which reflects how price changes affect households to complement other indices.’

A Household Inflation Index would aim to measure how inflation affects households as consumer; this was the original purpose of indices such as the RPI but in recent decades other macroeconomic factors have dominated the way consumer price indices such as the CPI and CPIH have been compiled.

Pullinger proposes that the CPIH should become the ONS’s ‘preferred measure’ of consumer inflation in due course, despite it being stripped of its national statistics status in August 2014 and failure last week to regain it. He confirmed that ONS would work to bring it up to scratch 'as swiftly and effectively as possible'.

Conversely, he 'strongly discourages' pursuing the use of RPI 'as there are far superior alternatives' and proposes scrapping the RPIJ, which was brought in last year after when the RPI lost its status as national statistics.

The UK would be the first country to work on developing the HII. The ideas behind it were developed by two RSS members, John Astin and Jill Leyland, and set out in their May 2015 paper Towards a Household Inflation Index (DOC).

Detailed proposals for the HII are to be published in July.



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

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