The fall from 2.5% in March was partly due to the timing of Easter, which meant a seasonal rise in air fares was not included in April this year."Actually it was a complete defeat for the message from our official statisticians as whilst CPIH was not mentioned this was."Inflation on the Retail Prices Index (RPI) measure rose to 3.4%, from 3.3% in March."Surely the Financial Times must be on the case as after all its economics editor Chris Giles voted for CPIH in its current Imputed Rent form back in his days on CPAC."Pound weakens after unexpected UK inflation fall
Price growth drops to 2.4% in March, with air fares driving decline"Or perhaps not.RegardsShaun Richards
Just to remind everyone of a conversation we had a year ago about the rental equivalence index (IPHRP) used in CPIH – link below.
The IPHRP would appear to be centred about 9 months or so in arrears so some twenty to twenty five percent of the current CPIH would relate to summer 2017.
The last time I asked there was no up to date comprehensive ONS article on the methodology of IPHRP which would hopefully answer the questions about its lags.
Perhaps ONS could confirm whether or not such an article has been published.
All the best.
The BBC article "Renters would get longer tenancies under government plans" https://www.bbc.co.uk/news/uk-44671094 reports that ministers have announced a consultation on extending minimum rental leases to 3 years.
The VOA data that ONS uses for the rental equivalence index (IPHRP) used in CPIH already appears to be centred 9 months or so in arrears. The new policy proposals would appear to have the potential of doubling that lag.
Could ONS keep the user group informed on how the new policy proposals are expected to affect the IPHRP?
There would at least appear to be the prospect of a break in series.
Also to repeat my earlier question – could ONS confirm whether on not a definitive article been published on the IPHRP methodology? This would seem more urgent now given the potential change in government policy.
IPHRP methodology details are currently across two articles. Links to these can be found in the methodology section of the IPHRP release each month
We are currently working on combining these into one article which will replace our Quality and Methodology report. This should be available by the end of 2018.As regards the new policy proposals, it depends on how they're implemented and if rents can be increased within the contract term. Until there's more detail available on the implementation - if they're implemented at all - we're not in a position to speculate on the impact. We'll keep you informed as we know more.
If you want to know more you can email email@example.com
Links to the government consultation on longer tenancies are below.
Interestingly the consultation document makes reference to the CPI or "other measure" but it makes no direct reference to the CPIH.
There are a number of possible reasons not to include a reference to CPIH but to speculate the lack of a reference may simply reflect the lag in the rental equivalence index (IPHRP). The likely 9 month or so lag in that index might be considered by government to be unfair on landlords.
Although the RPI inflation rate rose from 3.3% in March to 3.4% in April, the RPIJ inflation rate would have been 2.6% in April, unchanged from March, as the formula effect went from -0.7 percentage points in March to -0.8 percentage points in April. You didn't mention the CPIH inflation rate: it went from 2.3% in March to 2.2% in April. The exclusion of house prices from the CPI and the CPIH would be one reason why there was no drop in the RPIJ: the depreciation component of the RPI rose by 3.9% in April, up from 3.6% in March, largely due to a 0.6% monthly decline in April 2017 exiting the inflation rate. For the moment, the RPIJ, which can still be calculated even if it is no longer published, is the only UK consumer price series that incorporates house prices and eliminates the formula effect. The HCIs aren't published monthly, and they don't conform to the HII concept for measuring owner-occupied housing anyway. In making the CPIH the deflator for nominal wages, the ONS signalled that this was their preferred measure of cost-of-living changes, but it looks badly understated. The 0.4 percentage point gap between the RPIJ and RPI inflation rate for April is substantial. People may be willing to accept that most of the divergence between RPI and CPIH inflation rates is due to formula error. The ONs will never convince them that the divergence between RPIJ and CPIH inflation rates isn't problematic. Mortgage interest expense, dwelling insurance premiums, even depreciation, are all things a homeowner can relate to. Imputed rent isn't.
As you wrote, the corporate media continue to shun the CPIH, and rightly so. No other national statistical institute has ever published a composite index of a national HICP and an imputed rent series, or even contemplated it.