2. Measuring prices across the economy

3. Measuring prices across the economy
CPI is ONS’s current main measure of inflation, uses include:
Inflation target
European comparisons
Deflator in the UK’s National Accounts
Uprating pensions and benefits
Johnson highlighted the benefits of maintaining a main measure of inflation
Review recommendations:
to move towards CPIH becoming the main measure
consider making the case for legislation governing the production of CPIH

4. Consultation questions
1. Should ONS identify a main measure of price change across the economy?
i. Yes.
ii. No.
1a. Why? Please provide comments.
If yes:
2. What should this measure be?
i. the CPIH, as recommended in the Johnson review. The CPIH includes owner-occupiers' housing costs. It does not currently hold the National Statistics designation (although its re-assessment is due to commence shortly). The index is a UK measure, designed by ONS to meet UK needs.
ii. the CPI, ONS's current headline measure. The CPI is an EU measure, designed by Eurostat to ensure comparable consumer prices statistics across the EU.
iii. Other (please provide details).
2a. Why? Please provide comments.
3. Should its production be governed by legislation?
3a. Why? Please provide comments.

5. Measuring consumer price inflation for different household types

6. Measuring consumer price inflation for different household types
The existing measures seek to understand how prices are changing across the economy
Review Recommendations:
Publish complementary indices that seek to understand the impact of changes in prices on household groups
Make it clear to users the measures of income with which these should be compared
Indices could be constructed on the basis of an existing measure (eg CPI) or by using a payments approach
Insurance costs
Higher education fees
Housing costs

7. Consultation questions
4. Should ONS seek to measure changes in prices as experienced by different households?
i. Yes.
ii. No.
4a. Why? How often? Please provide comments.
5. If yes, how should ONS seek to do so?
i. Using a payments-based approach.
ii. On the same basis as existing measures such as CPI.
iii. Via another means (please provide details)
5a. Why? Please provide comments.

8. The RPI

9. The RPI
Authority position – “the methods used to produce the RPI are not consistent with international best practice and, consequently, that the series is not deserving of National Statistics accreditation”
Review Recommendations:
Re-state that the RPI is flawed
Work towards ending the use of RPI as soon as practicable
Consult users on discontinuing the sub-indices and analytical series based on the RPI
Only changes that are necessary to ensure the continuation of the RPI should be made

10. Consultation questions
6. Do you use the following indices?
i. RPIJ Yes/No
ii. Tax and price Index Yes/No
iii. RPIY Yes/No
iv. RPI pensioner indices Yes/No
v. Component indices of the RPI Yes/No
vi. Any other RPI analytical- or sub-index Yes/No
6a. If yes, for what purposes? Please provide comments
7. Do you agree that the following indices should be discontinued?
Any other RPI analytical- or sub-index Yes/No
7a. Why? Please provide comments.
8. Do you have any views on what ‘freezing’ changes to the RPI should mean in practice? Please provide comments.

11. Evolving consumer price statistics

12. Evolving consumer price statistics
Importance of responding to evolving statistical needs, using innovative, efficient and effective methods
Rapid changes in society and technology
Big data has already been used by some organisations to develop daily consumer price indices
Johnson review recommendation were wide ranging but included:
Developing the use of scanner data and web scraping
Treatment of discounts
Outlet substitution
Quality change
Inclusion of Council Tax in CPIH

13. Consumer Price Statistics Workplan
Short term
Ensuring compliance with European regulations
Producing CPI and CPIH to best possible standard
Updating the sample frame for consumer price indices
Developing indices for inflation as experienced by different households
Developing experimental superlative indices
Improving transparency and process

14. Consumer Price Statistics Workplan
Long term
Developing innovative, new, data sources
Improving measurement of discounts
Relative regional consumer price levels

15. Consultation questions
9. Are the priorities identified by ONS in its forward work plan appropriate?
i. Yes.
ii. No.
9a. Why? Please provide comments.
10. Should ONS include council tax in the CPIH?
10a. Why? Please provide comments.

16. Questions