Economy

Economic statistics are central to understanding and managing the economy, at both national and regional levels. The Office of Statistics Regulation’s economy domain seeks to support statistics producers in maintaining confidence in statistics relating to public funding and spending for the whole UK and for devolved nations and regions.

The UK economy is facing some tough challenges ahead, amidst the COVID-19 pandemic and among our priorities for 2020/21 are providing, where appropriate, endorsements (but not NS designation) of any completely new statistics that are produced in response to the COVID-19 outbreak In addition our priorities are to focus on productivity, regional and sub-regional economies; and public funding and spending. Quality and of value statistics in this area will prove vital in the months and year to come.

One of the UK Government’s priorities is levelling up the opportunities for the nations and regions, and the range and quality of economic statistics at regional and sub-regional levels is pivotal in meeting this priority.

Contact Office for Statistics Regulation Economy Regulators Iain Russell, Ben Bohane and Isabel Ralphs for more information.

Current issues in this domain

Early in 2013 the UK Statistics Authority removed the National Statistics designation of the Retail Prices Index (RPI) because the methods used to produce the RPI were not consistent with internationally recognised best practices and because ONS had decided to freeze the methods used to produce the RPI. For a mix of reasons, including considerable evidence of ongoing needs of users to continue using RPI, carried on publishing RPI statistics as legacy statistics.

In 2013, ONS introduced a Consumer Prices Index including owner occupiers’ housing costs (CPIH) which ONS describe as its most comprehensive measure of consumer price inflation. After introducing CPIH as its preferred inflation index in 2017, ONS encouraged users to adopt alternative indices to the RPI, but many years on RPI remains widely used. RPI is still used to make changes to tax allowances, wages, state benefits, pensions, contracts, rail fare increases, student loan repayments and many other payments. OSR, alongside for example the House of Lords Economic Affairs Committee, discourages ‘index-shopping’ where users, including the UK Government, favour the use of one price index over another, by exploiting the differences in the indices, without a strong rationale for the choices made.

OSR is clear that one of ONS’s key roles is to support all users to further understand the characteristics and behaviour of CPIH and continue to build up the credibility of CPIH. As ONS’s preferred inflation index, users should be confident to use CPIH as a comprehensive measure of movement in consumer prices in the UK economy.

OSR has supported ONS in its setting out of use-cases for each of three indices (some refer to this as a ‘three-family approach’). We regard this as presenting a clear and coherent picture about how each inflation index meets the range of user needs and a guide to choosing an appropriate index to meeting their needs. These use-cases are:

  • A comprehensive measure of inflation, based on movements in the general price levels in the economy: CPIH
  • A set of measures to reflect the change in costs as experienced by households: the Household Costs Indices (HCIs)
  • A legacy measure that is required to meet existing user needs: the RPI

OSR has encouraged ONS to keep its narrative about the use-cases current. ONS and HM Treasury are jointly running a consultation on proposals to bring the methods of CPIH into the RPI and when such changes should be introduced. The outcomes of this consultation could affect the current three-family use-cases. ONS should reflect on how any changes in bringing the methods of the CPIH into the RPI affect the descriptions of the distinct uses of each inflation index. We encourage ONS to consider how the descriptions of the use-cases can assist in promoting the appropriate adoption of CPIH as the preferred comprehensive measure of inflation.

Throughout the changes ONS are consulting on, OSR has expressed the expectation that ONS continues to focus attention on user engagement, and work closely and positively with interested users.

Planned Work

ProjectGeographyProject TypeTimescale
Quality of Survey of Personal Incomes (HM Revenue and Customs)United KingdomCompliance CheckContinuing from 2019/20
Foreign Direct Investment (Office for National Statistics)United KingdomCompliance CheckOctober 2020 - March 2021
Regional Household Expenditure (Office for National Statistics)United KingdomCompliance CheckOctober 2020 - March 2021
Productivity statistics (Office for National Statistics)United KingdomAssessmentOctober 2020 - March 2021

Published Correspondence – Economy domain

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