ONS decides to continue with inaccurate RPI calculation

Statistics agency chooses consistency over accuracy.

Against expectations and the recommendations of a number of influential economists, as well as its own consumer prices advisory committee, the ONS has decided not to change how the RPI – one of the two key indices measuring the rate of price inflation – is calculated.

The pressure to examine the index comes from the longstanding difference between the RPI and CPI measures of inflation. Except for the brief period in the midst of the recession, when both indices were recording deflation, RPI has consistently shown levels of inflation higher than CPI. Here's the chart for the last three years, for instance:


Some of that difference is due to the fact that the two indices measure subtly different things – RPI includes a broader measure of housing costs, for instance, and it ignores very high and low income households. But the ONS has known for a while that there is also a discrepancy caused by the different formulae used to calculate them.

The ONS began a consultation into whether and how it should eliminate this "formula effect", and has concluded that:

Use of the arithmetic formulation (known as the ‘Carli’ index formula) in the RPI is the primary source of the formula effect difference between the RPI and the CPI… This formulation does not meet current international standards.

So what's it going to do about it? Well, nothing:

The National Statistician also noted that there is significant value to users in maintaining the continuity of the existing RPI’s long time series without major change, so that it may continue to be used for long-term indexation and for index-linked gilts and bonds in accordance with user expectations.

Therefore, while the arithmetic formulation would not be chosen were ONS constructing a new price index, the National Statistician recommended that the formulae used at the elementary aggregate level in the RPI should remain unchanged.

The ONS will, however, develop a new measure of inflation, called RPIJ, which will use a different, better, mathematical formula.

The consumer prices advisory committee, a body which meets around five times a year to advise the ONS on measures of inflation, accepted that the ONS has a responsibility to make sure that there is a level of continuity in the RPI calculations which would be destroyed if there were a change to the formula. But, given the ONS also has a responsibility to compile those statistics "in line with best practice", CPAC concluded that not changing RPI would be "unsuitable".

On the other side, arguing for no change, were 332 of the 406 replies to the public consultation. The ONS said:

The large majority of responses did not address methodological issues but identified the impact that the changes implied… would have for them.

The competing requirements present a tricky path for the ONS to follow, but it does feel like it has picked the wrong option at this point. The job of the statistics agency is surely to produce accurate statistics, rather than statistics which are continually inaccurate in known ways. The fact that RPI is used to decide the value of, amongst other things, index-linked bonds is a reason for it to be correct, not for it to be artificially inflated.

As it stands, the ONS has decided to continue publishing a "measure" of inflation which has an accepted and understood upward bias of 1 per cent a year. It has done this, not because of any real statistical reasoning, but because greater accuracy would be bad for a majority of stakeholders. That seems like a bizarre abdication of its duty.

Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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It's Gary Lineker 1, the Sun 0

The football hero has found himself at the heart of a Twitter storm over the refugee children debate.

The Mole wonders what sort of topsy-turvy universe we now live in where Gary Lineker is suddenly being called a “political activist” by a Conservative MP? Our favourite big-eared football pundit has found himself in a war of words with the Sun newspaper after wading into the controversy over the age of the refugee children granted entry into Britain from Calais.

Pictures published earlier this week in the right-wing press prompted speculation over the migrants' “true age”, and a Tory MP even went as far as suggesting that these children should have their age verified by dental X-rays. All of which leaves your poor Mole with a deeply furrowed brow. But luckily the British Dental Association was on hand to condemn the idea as unethical, inaccurate and inappropriate. Phew. Thank God for dentists.

Back to old Big Ears, sorry, Saint Gary, who on Wednesday tweeted his outrage over the Murdoch-owned newspaper’s scaremongering coverage of the story. He smacked down the ex-English Defence League leader, Tommy Robinson, in a single tweet, calling him a “racist idiot”, and went on to defend his right to express his opinions freely on his feed.

The Sun hit back in traditional form, calling for Lineker to be ousted from his job as host of the BBC’s Match of the Day. The headline they chose? “Out on his ears”, of course, referring to the sporting hero’s most notable assets. In the article, the tabloid lays into Lineker, branding him a “leftie luvvie” and “jug-eared”. The article attacked him for describing those querying the age of the young migrants as “hideously racist” and suggested he had breached BBC guidelines on impartiality.

All of which has prompted calls for a boycott of the Sun and an outpouring of support for Lineker on Twitter. His fellow football hero Stan Collymore waded in, tweeting that he was on “Team Lineker”. Leading the charge against the Murdoch-owned title was the close ally of Labour leader Jeremy Corbyn and former Channel 4 News economics editor, Paul Mason, who tweeted:

Lineker, who is not accustomed to finding himself at the centre of such highly politicised arguments on social media, responded with typical good humour, saying he had received a bit of a “spanking”.

All of which leaves the Mole with renewed respect for Lineker and an uncharacteristic desire to watch this weekend’s Match of the Day to see if any trace of his new activist persona might surface.


I'm a mole, innit.