1. 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”

2. 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

3. 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

4. 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

5. 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

6. 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?

7. 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?

8. SUMMARY Measure the general level of prices8
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