"CPIH has a number of desirable properties, most notably the inclusion of an element of owner occupiers’ housing costs. It also addresses several flaws and limitations present in alternative measures."
CPIH was introduced in 2013 and includes a measure of owner occupiers’ housing costs using a rental equivalence method.
Last year, IFS director Paul Johnson called for an alternative measure of inflation which includes homeowners' housing costs, stating that "the inflation rates experienced by different households – by rich and poor, by pensioners and those of working age – are likely to be markedly different".
According to Johnson, CPIH more effectively takes into account the fact that households might choose to substitute goods and services whose price rises slowly in the place of goods and services which become more expensive more quickly.
In a statement John Pullinger, Chief Executive of the ONS, said: "CPIH has a number of desirable properties, most notably the inclusion of an element of owner occupiers’ housing costs. It also addresses several flaws and limitations present in alternative measures.
"We intend to make CPIH the preferred measure from March 2017, by which time all the planned improvements will have been implemented.”
