The Office for National Statistics (ONS) has confirmed that it is set to change its preferred measure of inflation in an attempt to better reflect the costs of owning a home.
Currently, the Consumer Prices Index (CPI) is used as the main measure of inflation.
However, this is set to be replaced by the CPIH measure of inflation, which takes into account ‘costs of housing services associated with owning, maintaining and living in one’s own home’.
Whilst CPIH does not measure house prices or mortgage payments, it can estimate how much it would cost an individual to rent the property they live in and will also take council tax into account.
John Pullinger, Chief Executive of the ONS, commented: ‘Various users have indicated that they are open to recognising CPIH as the main measure of consumer price inflation and are comfortable with the methodology behind it.
‘I believe that CPIH has a number of desirable properties, most notably the inclusion of an element of owner occupiers’ housing costs.’
CPIH will be implemented as the UK’s main measure of inflation in March 2017. The CPI measure of inflation will continue to be published alongside the new preferred measure.