UK inflation gauge for housing costs loses 'official statistic' status

LONDON Thu Aug 14, 2014 11:50am EDT

LONDON Aug 14 (Reuters) - A measure of British inflation launched last year to better reflect housing costs will no longer be treated as an official national statistic while it is being improved, the statistics authority said on Thursday.

The CPIH index was introduced in March 2013 and had been touted as a future price stability benchmark for the Bank of England. The bank currently uses the consumer price index (CPI) and has an inflation target of 2 percent.

The new measure was designed to address the fact that CPI does not include most housing costs faced by people who own their homes, including mortgage payments and maintenance.

In November the UK Statistics Authority upgraded CPIH from an experimental statistic - defined as being in the testing phase and not yet fully developed - to an official national statistic.

But on Thursday it said statisticians had found ways to improve CPIH and that the measure will revert to experimental status, suggesting its use as a benchmark for the BoE could be a long way off.

In April, Andy Haldane - now the Bank of England's chief economist - said he wanted to monitor CPIH for another 18 months before making a recommendation on whether it should replace CPI as the BoE's inflation benchmark.

The Office for National Statistics said the improvements to CPIH could push it 0.2 percentage points higher than currently estimated. The latest data shows CPIH rose 1.8 percent in July. (Reporting by Andy Bruce; Editing by Susan Fenton)

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