The Office for National Statistics is looking to introduce a new inflation measure – CPIH - which will include housing costs, to replace the Consumer Prices Index (CPI).
In a move set to counter long-standing criticisms that CPI does not include mortgage, rent or other housing costs – currently captured in the Retail Prices Index (RPI) measure – it has embarked on a consultation set to run until the end of August.
Should the plan get the thumbs up from the UK Statistics Authority (UKSA), the ONS look set to start publishing the results of the new formula from next February.
And if CPIH gets the go-ahead, it will be published with the RPI and the CPI, which has been the government's preferred measure of inflation since 2003.
The ONS's advisory committee has plumped for a calculation of how much it would costs a citizen to rent a home privately as an approximated equivalent of the costs an owner occupier would typically incur.
The Bank of England has used CPI in its bid set interest rates since 2003. It was created in 1996 to conform to a standardised measure of inflation to meet European monetary union criteria.
Following the financial crisis, the Bank has consistently missed its own 2% inflation target for the last two years with CPI at 3% and RPI at 3.5%.
More details are available from the ONS website.
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