I have been preparing to take the issue of the CPIH not being fit for purpose to the Ombudsman. However, it has now emerged that I need to complain to the Chair of the UKSA first.
The UKSA initial complaint panel claims that the UKSA relied on the Consumer Prices Advisory Committee to look at the quality issues around the CPIH. The only place I can see where this was addressed was in the ONS Response to the OOH Consulation. It was addressed as the first point raised. However, the responses were frankly inadequate, and I hope this can be seen in the following.
Along side the pasted ONS text I have pasted in a rebuttal. ( Hoping the formatting will survive).
Point Raised 1 ( page 9 of the Response Document )
Long term growth rates of OOH(RE) appear
to be significantly lower than other
measures of OOH and it does not appear to
capture either house price booms or
increases in mortgage interest payments.
Some users also requested ONS to
carefully monitor the OOH(RE) series over
ONS response My rebutal
ONS recognises that many users expect OOH to
reflect increases in house prices or mortgage
payments. However, OOH(RE) belongs to a
family of use-based methods which reflects only House price booms shows up in the US index, which is the best of its class, and the most appropriate comparison for the UK.
the consumption cost of owner occupiers'
housing. Increases in house prices will not
necessarily be captured in this approach. However they should show up in the 2000s because food energy and manufactured goods were often experiencing falling prices.
Although, this may be inconsistent with some
users' expectations of measures of OOH, the
inclusion of an asset price and therefore capital Housing/OOH is both a consumption of service and an investment good. Which other country uses this as a basis for under-weighting them in a CPI ?
gains makes the measure less suitable for a
measure of consumption.
It is also worth noting that the new private rental
data source derived from Valuation Office
Agency (VOA) data for England and comparable
data from the Welsh and Scottish governments
are available from 2007 onwards. Prior to this the
OOH(RE) estimates are based on existing CPI This is a trivial point if you have not weighted
OOH properly in the first place.
private rent data. As the OOH(RE) series using
the new data source is relatively short, it is
difficult to assess its true long term growth rate.
ONS will continue to monitor the OOH(RE) series
as set out in Practice 5 of Principle 4 of the Code
of Practice for Official Statistics:
The net acquisition series will be available to
users in line with the Eurostat regulation which
will come into force late 2014 requiring ONS to
provide a standalone OOH(NA) series
2 New data source for OOH(RE) could be
subject to change and discontinuity
OOH(RE) uses private rental data from the
Valuations Office Agency, the Scottish
Government and Welsh Government. ONS has
considered the risk of changes being made to the
data throughout the development process and
are currently finalising agreements with each of
the data providers to ensure that ONS is
consulted on any proposed changes to the rental
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