The UK is to introduce a new measure of inflation to help reflect price changes better – to include the cost of owning a home.
The existing measure, the Consumer Price Index (CPI) is to become the CPIH and will include the cost of owning a home and other related costs and is expected to become the preferred measure of inflation from March 2017. It is said the change will probably show inflation higher than it is currently.
Unlike the CPI the Treasury has no plans to use the new CPIH to modify benefits, taxes and other payments.
The CPI presently does include the cost of running and renting a home but does not include the other costs paid by property owners. The new CPIH will include the costs relating to owning, maintaining and living in a home along with an element for what is paid in council tax.
At the moment the CPI is used to set the levels of benefits, tax thresholds and the state pension each year. However, a Treasury spokesperson told BBC News that the government had no plans to change the way upratings were done.
The new measure has had a rocky start and was dropped when the reliability of the housing market was in doubt.
Improvements have been made to CPIH earlier this year and it is now ready to be rolled out for the beginning of the next financial year.
Posted: 20/11/2016
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