RegulationMay 17 2013

Statistics regulator launches review into inflation measure

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The UK Statistics Authority has launched fundamental review of the broad measurement of inflation, following an earlier assessment in January that the retail prices index does not meet required standards of accuracy.

Paul Johnson, director of the Institute for Fiscal Studies, will be leading the review to evaluate how the Office for National Statistics should measure inflation and whether it should be changed.

The review was triggered by the Office for National Statistics’ decision to retain the retail price index measure despite acknowledgments from some officials that it is flawed, following the UK Statistics Authority’s announcement of the RPI review on 10 January 2013.

According to FTAdviser sister title the Financial Times, officials now publish more than 10 measures of inflation. This could be confusing for commentators and consumers as their can be significant disparity in the statistics in each case.

Mr Johnson will report to the the board of the UK Statistics Authority and deliver a final report for publication by summer 2014.

The second review launched by the authority will look at governance arrangements and structures that support the production of consumer price statistics by the ONS.

The review will be led by Sir Adrian Smith, the authority’s deputy chair with responsibility for Ons. The review will report to the board of the Authority and deliver a final report for publication by October 2013.

Andrew Dilnot (pictured), chair of the UK Statistics Authority, said: “Sir Adrian’s review will tackle the vitally important question for the governance arrangements supporting the production of price statistics to underpin the quality, integrity and independence of price statistics for the public good, as well as considering the role of the producer and the provision of the best advice to the producer, and relevant international practice and context.

“The authority also wants to recommend a framework for consumer prices statistics that understands and best meets the needs of users, and is accountable, flexible, and transparent.

“Modern economics are complex and the measurement of price change is challenging. The review led by Paul Johnson is an opportunity to think carefully about these difficult but very important questions.”