ESCoE-ONS Workshop: The Conceptual Foundations of the Household Costs Indices


ESCoE-ONS Workshop: The Conceptual Foundations of the Household Costs Indices


Thursday 25 April 2019, 10:00 — 14:00

Venue: Church House Westminster, Dean’s Yard, London, SW1P 3NZ

The Household Costs Indices (HCIs) are a new set of consumer price statistics currently being developed by the Office for National Statistics (ONS). They aim to capture changing prices and costs as experienced by different household groups. They can be thought of as reflecting the change in households’ monthly cash outgoings for a fixed basket of goods and services. The first HCIs results were published on an experimental basis in December 2017, with the second set of preliminary results due to follow in Spring 2019.  The indices are based on Astin & Leyland (2015) which proposed a number of departures from the current approach to measuring inflation used in CPIH and CPI, and follows the basic principle that price changes should be captured when the good or service is paid for rather than when it is acquired or used. This includes using a mortgage interest-based measure of owner occupiers’ housing costs. Another key proposal is the use of democratic expenditure weights, which reflect the expenditure of the average household rather than the total expenditure in the economy.

The HCIs can be contrasted with ONS’s current headline measures of inflation, which tend to reflect the change in ticket prices of goods and services acquired for the purposes of consumption in the UK economic territory. Other major points on which HCIs could potentially diverge from CPIH and CPI include repayments of student loans, some or all of the capital element of house purchase (and major renovations and extensions), contributions to pension funds, treatment of certain quality changes or even income tax and national insurance. These, and interest payments, are normally excluded from consumer price indices on the basis that they do not represent consumption expenditure. The suitability of including capital costs and interest payments in the HCIs has been widely debated by the National Statistician’s Technical and Stakeholder Advisory Panels for Consumer Prices, leading them to ask for more clarity on what the conceptual basis for HCIs is. This workshop will address that question.

This workshop was hosted by the Economic Statistics Centre of Excellence (ESCoE) and the Office for National Statistics (ONS) and was by invitation only.


09:30 Registration

Chair: Jonathan Athow (Office for National Statistics)

10:00 Introduction

10:05 Presentation 1: Measuring households’ experience of inflation by John Astin and Jill Leyland

10:35 Presentation 2: Household Costs Indices, latest results by Christopher Payne (Office for National Statistics)

10:45 Presentation 3: Stats New Zealand’s Household living-costs price indexes by Alan Bentley (Stats New Zealand)

11:05 Presentation 4: Household Costs and the Life Cycle by Martin Weale (King’s College London, ESCoE and Centre for Macroeconomics)

11:35 Discussion 1: What should the HCIs be measuring?

11:55 Discussion 2: Where should we measure payments rather than acquisition prices?

12:15 Lunch

12:45 Discussion 3: What other items should be in scope?

13:30 Discussion 4: What should be the development priorities going forward?

13:50 Summary

14:00 Close

John Astin

Jill Leyland

Christopher Payne

Alan Bentley