RPI/CPI User Group

last person joined: 2 months ago 

To foster co-operation and the exchange of information between the ONS, its advisory bodies and other users. Please see 'Aims of the RPI/CPI User Group' in the library for further details.

1.  Changes to CPIH and CPI for 2018

Posted 8 days ago

Dear users,

From March 2018 we will be implementing improvements to the way we collect prices for fruit and vegetable items, which are considered to be particularly volatile. The change involves using additional price quotes for fruit and vegetable items collected on the Friday preceding index day (the second or third Tuesday of the month). We have today published a paper which sets out the estimated impact of this change, based on a parallel run conducted in 2016 and 2017. Over this period, the impact on headline CPIH annual growth rates is no greater than 0.01 percentage points.

If you would like to read more about this please refer to the following article:

https://www.ons.gov.uk/economy/inflationandpriceindices/articles/impactofinclusionofadditionalpricequotesonconsumerpricesindices/2017-11-13

Kind regards,

Chris



2.  RE: Changes to CPIH and CPI for 2018

Posted 7 days ago

Chris,

 

I see that the paper says that the change to fruit and vegetable collection will not apply to the RPI but no explanation is given for this decision.

 

Could ONS provide an explanation for that decision?

 

The National Statistician has said that "The RPI would continue to be maintained through routine changes."  This would appear to be a routine change.

 

All the best.

 

Arthur




3.  RE: Changes to CPIH and CPI for 2018

Posted 6 days ago
Chris

I had the same thought as Arthur. It seems to me odd that it would not be applied to RPI as well and it is hardly the sort of change that the Bank would consider "fundamental".

Jill


4.  RE: Changes to CPIH and CPI for 2018

Posted 6 days ago

Both,

Thanks for your queries.

Page 30 of the Consumer Prices Technical Manual states that "The CPI and CPIH are intended to reflect prices over at least one working week at or near the middle of the calendar month of the reference month, whilst the RPI and RPIJ is intended to reflect prices on a particular Tuesday of each month (Index Day)". Therefore, this change is conceptually appropriate for CPIH and CPI, but not for the RPI, which aims to reflect price changes at a particular point in the month. In a similar way we already use a temporal collection for petrol and fuel in the CPIH and CPI, but not in the RPI.

Best wishes,

Chris




5.  RE: Changes to CPIH and CPI for 2018

Posted 8 minutes ago

Chris,

 

Apologies for taking so long to respond – we have been away.

 

I certainly agree that the convention for RPI is a single index day but that convention is not always followed – for example, depreciation is collected based on a smoothed version of the DCLG house price index.  By its nature I wouldn't have thought that this can be described as being based on a single index day.

 

The depreciation methodology may be contentious but it shows that the RPI single day convention can be relaxed if necessary to provide a better quality price series. 

 

There is an operational argument for using the new fruit and vegetable collection for all the price indices.  The two series for fruit and vegetables are collected in a similar way with both including the prices collected on the index day unlike petrol.  In the latter case the manual says that the RPI series is collected on index day whereas the CPI series prices are collected on Mondays.  Hence for fruit and vegetables there would appear to be a greater potential for confusion and error. 

 

Arguably two similar series are best avoided given that the no revision convention now appears to apply to both the RPI and CPI family of indices with the consequent potential for error and ONS embarrassment.

 

All the best.

 

Arthur