HL Deb 16 November 2000 vol 619 cc45-6WA

Lord Jacobs asked Her Majesty's Government:

What would be the retail prices index excluding mortgage interest payments (RPIX) in September 2000 if the depreciation of owner-occupied houses, which has been a component of the index since 1995, had never been introduced; and how this compares with the RPIX for that month; and [HL4530]

Whether they will give an approximate calculation of the theoretical RPIX for September 2000 on the following basis: (a) that the depreciation component for owner-occupied houses was introduced in 1950, (b) that the rate of inflation since 1950 has been 2,000 per cent, and (c) that the increase in house prices since 1950 has been 4,750 per cent; and how this figure compares with the actual RPIX for September 2000. [HL4531]

Lord McIntosh of Haringey

The information requested falls within the responsibility of the National Statistician, who has been asked to reply.

Letter from the National Statistician, Len Cook, dated 15 November 2000.

As National Statistician I have been asked to reply to your recent questions on the Retail Price Index (RPI). Your first question asks what would be the RPI excluding mortgage payments (RPIX) in September 2000 if the depreciation of owner occupied houses, which has been a component of the index since 1995, had never been introduced; and how this compares with the RPIX for that month (HL4530). Your second question asks for an approximate calculation of the theoretical RPIX for September 2000 on the following basis: (a) that the depreciation component for owner occupied houses was introduced in 1950, (b) that the rate of inflation since 1950 has been 2000 per cent, and (c) that the increase in house prices since 1950 has been 4,750 per cent; and how this figure compares with the actual RPIX for September 2000 (HL4531).

In response to your first question, the Retail Price Index excluding both mortgage interest payments and depreciation stood at 167.4 in September 2000 compared to 168.9 for RPIX. The annual rate of change of the Retail Price Index excluding both mortgage interest payments and depreciation was 1.8 per cent compared to 2.2 per cent for RPIX in the same period.

These figures are published each month in table 2 of the Consumer Price Indices First Release and on the National Statistics website www.statistics.gov.uk.

In response to your second question, I am unable to provide an estimate both for reasons of disproportionate cost and because it would not be accurate enough to be of publishable quality. The Retail Prices Index is chainlinked annually and to calculate even an approximate estimate of a hypothetical RPI for September 2000 would require weightings for the depreciation component for each year as well as reworking all the other RPI component weights for each year. In addition it would be necessary to remove the "rental equivalent" of owner occupied housing that was included in the RPI between 1956 and 1974 to avoid double counting of housing costs (the rental equivalent includes an element of depreciation).

You might like to note that had the depreciation component been included in the RPI since 1950 the latest annual inflation rate would be unaffected as this only depends on price changes in the last year. The annual rate of change of RPIX for September 2000, had depreciation been included from 1950, would therefore be identical to the current published figure, 2.2 per cent, apart from rounding differences.