RSS official statistics meeting 15 August 2012 ONS consultation on Owner Occupiers' Housing Costs in the CPI Presentation by Tony Cox “A User Group View”

OOH in the CPI Derek Bird has explained the background Martin Wheale has given the case for rental equivalence Philip Turnbull has argued that Net Acquisitions is a better approach I am going to provide a flavour of the User Group view

A User Group View Why the group was formed Aims of the group Philip Turnbuull 3 3 15/08/2012 A User Group View Why the group was formed Aims of the group Housing and CPI credibility Strategy for consumer price indices Summary

User Group Concerns Change from RPI to CPI Philip Turnbuull 4 4 15/08/2012 User Group Concerns Change from RPI to CPI Omission of owner occupiers' housing costs from the CPI Size of the omission and credibility of the CPI Continuing use of the CPI

What a Credible Index Would Look Like Philip Turnbuull 5 5 15/08/2012 What a Credible Index Would Look Like Costs should be measured directly - not via a proxy measure The OOH market is not the rental market The OOH component should respond to major moves in house prices

Other Concerns Capital costs Mortgage costs Philip Turnbuull 6 6 15/08/2012 Other Concerns Capital costs Mortgage costs Consistency with the national accounts Satisfying UK user needs vs EU harmonisation Net Acquisition approach Payments Approach Different uses of consumer price indices Weights for housing Geometric mean?

ONS Strategy for Consumer Price Indices Philip Turnbuull 7 7 15/08/2012 ONS Strategy for Consumer Price Indices Support the concept of a family of indices But must be accompanied by guidance on suitability for particular purposes Index suitable for inflation targeting unlikely to be ideal for uprating What is this new (CPIH) index being designed for?

SUMMARY Measure the general level of prices 8 Philip Turnbuull 8 15/08/2012 SUMMARY Measure the general level of prices 'Proxy' measure is not acceptable to represent OOH costs Payments Approach should be revisted Recommend Net Acquisitions approach is adopted in the immediate future - accompanied by further consideration of the weight that should be applied to OOH costs longer term, a fundamental review should be carried out