HOUSEHOLD COSTS INDICES – WHERE NEXT? Jill Leyland 22nd February 2018

Where we are.. First HCIs published December 2017 Main features compared to CPI/CPIH Democratic (household) weighting – so no bias towards higher spending households Mortgage interest and other owner occupier costs included (similar to RPI) Credit card interest included Gross weighting for insurance premiums (as RPI)

Definite plans More interest payments as and when practical Student loan repayments But what else? In choosing must think about purpose

Original idea of purpose Inflation as experienced by households – include all payments “to satisfy needs and wants” As uprating index for eg guide in wage negotiations, pensions, tax thresholds, other items Are these two always compatible? Some argue interest rates, house capital costs should not be in an uprating index…..

Housing capital costs Major item of many household budgets. Which of the following should be included? First time buyer’s down payment First time buyer’s capital mortgage repayment Subsequent buyer’s down payment Subsequent buyer’s capital mortgage repayment What about interest only mortgages? Endowment mortgages?

Other issues Pension fund contributions? “Forced” quality change? What formulae to use? Lots to discuss……