In 2015, at the request of the Royal Statistical Society (RSS), we published a paper “Towards a Household Inflation Index”. The proposed index was intended as a measure of inflation “as perceived and experienced by households in their role as consumers” – a phrase taken from the Preface to the 2004 International Manual on Consumer Prices1. In part, our paper was also a response to the Review of Consumer Prices2 carried out in 2013-15 by Paul Johnson which saw a possible role, but more limited, for household indices.
In 2017 the then National Statistician decided that the Office for National Statistics (ONS) would develop household indices – now named Household Costs Indices (HCIs) – to sit alongside the macroeconomic indices of CPI and CPIH (with RPI, by then no longer a national statistic, as a “legacy” index). Our paper was used as a starting point. Both of us have been, and one still is, members of the National Statistician’s Advisory Panels on Consumer Prices and we have also at times been consulted directly by ONS. Thus we have followed developments closely.
The initial stage of development as envisaged by ONS is nearing completion. At some point in 2023 quarterly publication will start. However, while Stage 1 is nearing completion, there remain arguments and debates over certain issues. Good statistics are always “under development” with improvements in view or under consideration.
The current paper has been written (also with the support and encouragement of the RSS) to update the 2015 paper, in the light of developments, experience and what we have learnt in the last seven years. It also looks for and discusses the “next steps” in HCI development, outstanding issues and what the indices might be used for and/or replace. As we are approaching the end of the “first phase” of HCI development we believe the time is right to take stock of where we are and to consider, or re-consider, future plans. It is also a good time to start thinking more seriously about the indices’ future use. The current “cost of living” crisis increases the rationale for a review.