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

2. 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)

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

4. 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…..

5. 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?

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