New measure of inflation proposed to replace CPI

The Office for National Statistics has proposed a new inflation measure to replace the Consumer Prices Index (CPI) which would include housing costs in the calculation.

According to reports, the ONS wants to create a version of the Consumer Prices Index that includes costs such as rent, to be called CPIH. Currently inflation projections are made using CPI, which does not include the cost of mortgages and other housing costs, although these are contained in the Retail Prices Index (RPI) measure. The ONS is acting to counter criticisms that CPI is a poor reflection of the true price of inflation because it does not reflect many costs of being a home owner. Housing costs make up 10% of people's average spending. A consultation is underway until the e...