Skip to main content

United Kingdom of Great Britain and Northern Ireland

Retaining participants in UK’s COVID-19 Infection Survey (CIS) - Kathryn Littleboy (Office for National Statistics, United Kingdom)

Languages and translations
English

Retaining participants in the UK COVID-19 Infection Survey (CIS)

Kathryn Littleboy CIS Research and Development lead

Office for National Statistics

12 June 2023

Background – The COVID-19 Infection Survey

What is the COVID-19 Infection Survey (CIS)?

• The CIS was considered the Gold standard COVID-19 surveillance survey, stood up at pace in April 2020.

• 448k active participants by October 2021 – a nationally representative sample of UK households

• 3,000 study workers travelling door to door to take swab samples, blood samples and complete a questionnaire

on the doorstep, with each household member every month.

Why was participant retention important?

• The longitudinal sample has been valuable in understanding the impact of vaccines over time and infection rates

of symptomatic and asymptomatic individuals.

• The CIS is the only longitudinal COVID-19 study so is an extremely valuable asset

• It costs significantly more to recruit new participants to replenish sample (extra print and postage costs)

The problem statement: Needed to significantly reduce budget due to reduced funding:

• Needed to reduce sample size but maintain representativity,

• Reducing compensation from 21st March (from £25 to £20)

• Move to a more cost-effective remote approach but would require participants to ‘opt in’

How did we identify problems for our participants?

Gathering feedback from participants through:

• Feedback from study workers about pain points (15 qualitative interviews and general feedback)

• Learning from key participant complaints/queries to the call centre

• Findings from the quantitative user feedback survey about general experience >30k responses

• Findings from 13 in-depth qualitative participant interviews

We found:

Lack of flexibility in when they take part was reducing

response rates – especially since return to work

Study workers were paraphrasing the

questionnaire reducing consistency Awareness of the huge costs and environmental

impact of study workers travelling

Feeling rushed to take samples whilst

someone waits on their doorstep

How did we improve the experience to retain participants?

Removal of study workers and F2F design to a digital-first design:

• Be more flexible around when participants take part (14 day window)

• Reduce C02 emissions (from 10k tonnes per year)

• Be more cost-efficient, by removing the travel time and costs of (circa 3,000) SWs going door to door

• Reduce risk of infection for both participants and SWs through remote data collection

• Reduce interviewer bias by questionnaires being completed primarily online

• Removing time pressure to conduct their biosample tests quickly whilst someone waits

Conducted vast amounts of user research to shape the new design to user needs, make it

accessible, and to gather ongoing feedback to iterate and improve:

• 75 qualitative interviews – feedback about questionnaire wording, design, and materials

• 2,356 responses to quantitative feedback surveys to test favourability of different concepts

• Over 20,000 free text responses from the main CIS questionnaire to explain specific issues

How did we ensure success during the transition? • Used behavioural insights to improve participant

materials

Used a more personal tone, emphasising individual

contribution and importance and relevance.

• Demonstrated commitment to improvements

By allowing participants to report issues/feedback at the

bottom of each page of the questionnaire on an ongoing basis

• Implemented reminder emails

To increase initial opt-in and monthly response rates.

• Highlighted the value of their participation

By sharing latest study findings with participants in quarterly

newsletter

• Continued to collect feedback through a

quantitative survey in a quarterly newsletter To measure and compare satisfaction pre and post transition

and on an ongoing basis(>162k responses).

How did we measure success?

• Retained approximately 90% of our sample

- February 2022 before voucher reduction = 441,266 active participants

- July 2022 post transition = 397,354 active participants

• Measuring changes in representativity of our sample:

Participants providing samples through remote data collection and study worker home visits share generally very similar profiles,

both when unadjusted and when adjusted, with the majority of differences between these population samples being below 1

percentage point.

Age

2 to 7

years

8 to 11

years

12 to 15

years

16 to 24

years

25 to 34

years

35 to 49

years

50 to 59

years

60 to 64

years

65 to 69

years

70 to 74

years

75 to 79

years

80 years

and above

Absolute

difference

in percentage

points

Unadjusted 0.0 0.3 0.4 0.1 -0.8 -0.4 0.0 0.5 0.4 0.2 -0.1 -0.8

Adjusted -0.3 0.1 0.3 0.0 -0.1 0.0 -0.3 0.2 0.0 0.4 0.1 -0.4

Sex Male Female

Absolute

difference

in percentage

points

Unadjusted 0.2 -0.2

Adjusted 0.0 0.0

Ethnicity White Asian Black Other Mixed

Absolute

difference

in percentage

points

Unadjusted 0.3 0.0 -0.1 0.0 -0.1

Adjusted 0.9 -0.4 -0.3 -0.1 -0.2

The latest challenge for retention

• The CIS has been paused whilst UKHSA review their approach to

surveillance, and consider future funding.

• Any further surveillance would need to further reduce costs:

– smaller sample size (but still needs to be representative)

– removal of compensation – concerning impact on representativity

• If we stop collecting data from this valuable longitudinal cohort:

– likely disengagement of the sample

– a data gap, reducing the overall value of the dataset in future

How are we retaining participants right now?

• The ONS have funded a temporary questionnaire-only study called the COVID-19 and Respiratory

Infections (CRIS), from April-June 2023 whilst decisions around the future of the CIS are ongoing.

• The problems CRIS is trying to solve:

• Setting up a separate questionnaire-only study meant that we could proceed at pace through the

National Statistician’s Data Ethics Advisory Committee (NSDEC) , without the need to secure a new

Chief Investigator and resubmit a new medical ethics protocol.

Prevent a

large data gap

Maintain participant engagement

from the valuable longitudinal cohort

Make the questionnaire more relevant

to participants and analytically Continue to monitor symptoms, understand the impact of

all respiratory infections on daily life, absence from work

and use of medical services, and understand the

prevalence of long-COVID

To test, iterate and improve the new

questionnaire, in new in-house

technology

Move from household to individual

sampling to maintain representativity

despite a smaller sample

What next?

• CRIS survey has been running since 11 April. Most participants have

completed their first questionnaire, some are onto their second.

• Collecting feedback and implementing improvements or adding to a backlog.

• First analysis, including results about representativity and sample size will be

published in July 2023.

• Awaiting decisions on continuation or closedown of the study at end of June.

Any Questions? Contact name: Kathryn Littleboy

Email: kathryn.littleboy:@ons.gov.uk

Retaining participants in UK’s COVID-19 Infection Survey (CIS) - Kathryn Littleboy (Office for National Statistics, United Kingdom)

Languages and translations
English

Retaining participants in the UK COVID-19 Infection Survey (CIS)

Kathryn Littleboy CIS Research and Development lead

Office for National Statistics

12 June 2023

Background – The COVID-19 Infection Survey

What is the COVID-19 Infection Survey (CIS)?

• The CIS was considered the Gold standard COVID-19 surveillance survey, stood up at pace in April 2020.

• 448k active participants by October 2021 – a nationally representative sample of UK households

• 3,000 study workers travelling door to door to take swab samples, blood samples and complete a questionnaire

on the doorstep, with each household member every month.

Why was participant retention important?

• The longitudinal sample has been valuable in understanding the impact of vaccines over time and infection rates

of symptomatic and asymptomatic individuals.

• The CIS is the only longitudinal COVID-19 study so is an extremely valuable asset

• It costs significantly more to recruit new participants to replenish sample (extra print and postage costs)

The problem statement: Needed to significantly reduce budget due to reduced funding:

• Needed to reduce sample size but maintain representativity,

• Reducing compensation from 21st March (from £25 to £20)

• Move to a more cost-effective remote approach but would require participants to ‘opt in’

How did we identify problems for our participants?

Gathering feedback from participants through:

• Feedback from study workers about pain points (15 qualitative interviews and general feedback)

• Learning from key participant complaints/queries to the call centre

• Findings from the quantitative user feedback survey about general experience >30k responses

• Findings from 13 in-depth qualitative participant interviews

We found:

Lack of flexibility in when they take part was reducing

response rates – especially since return to work

Study workers were paraphrasing the

questionnaire reducing consistency Awareness of the huge costs and environmental

impact of study workers travelling

Feeling rushed to take samples whilst

someone waits on their doorstep

How did we improve the experience to retain participants?

Removal of study workers and F2F design to a digital-first design:

• Be more flexible around when participants take part (14 day window)

• Reduce C02 emissions (from 10k tonnes per year)

• Be more cost-efficient, by removing the travel time and costs of (circa 3,000) SWs going door to door

• Reduce risk of infection for both participants and SWs through remote data collection

• Reduce interviewer bias by questionnaires being completed primarily online

• Removing time pressure to conduct their biosample tests quickly whilst someone waits

Conducted vast amounts of user research to shape the new design to user needs, make it

accessible, and to gather ongoing feedback to iterate and improve:

• 75 qualitative interviews – feedback about questionnaire wording, design, and materials

• 2,356 responses to quantitative feedback surveys to test favourability of different concepts

• Over 20,000 free text responses from the main CIS questionnaire to explain specific issues

How did we ensure success during the transition? • Used behavioural insights to improve participant

materials

Used a more personal tone, emphasising individual

contribution and importance and relevance.

• Demonstrated commitment to improvements

By allowing participants to report issues/feedback at the

bottom of each page of the questionnaire on an ongoing basis

• Implemented reminder emails

To increase initial opt-in and monthly response rates.

• Highlighted the value of their participation

By sharing latest study findings with participants in quarterly

newsletter

• Continued to collect feedback through a

quantitative survey in a quarterly newsletter To measure and compare satisfaction pre and post transition

and on an ongoing basis(>162k responses).

How did we measure success?

• Retained approximately 90% of our sample

- February 2022 before voucher reduction = 441,266 active participants

- July 2022 post transition = 397,354 active participants

• Measuring changes in representativity of our sample:

Participants providing samples through remote data collection and study worker home visits share generally very similar profiles,

both when unadjusted and when adjusted, with the majority of differences between these population samples being below 1

percentage point.

Age

2 to 7

years

8 to 11

years

12 to 15

years

16 to 24

years

25 to 34

years

35 to 49

years

50 to 59

years

60 to 64

years

65 to 69

years

70 to 74

years

75 to 79

years

80 years

and above

Absolute

difference

in percentage

points

Unadjusted 0.0 0.3 0.4 0.1 -0.8 -0.4 0.0 0.5 0.4 0.2 -0.1 -0.8

Adjusted -0.3 0.1 0.3 0.0 -0.1 0.0 -0.3 0.2 0.0 0.4 0.1 -0.4

Sex Male Female

Absolute

difference

in percentage

points

Unadjusted 0.2 -0.2

Adjusted 0.0 0.0

Ethnicity White Asian Black Other Mixed

Absolute

difference

in percentage

points

Unadjusted 0.3 0.0 -0.1 0.0 -0.1

Adjusted 0.9 -0.4 -0.3 -0.1 -0.2

The latest challenge for retention

• The CIS has been paused whilst UKHSA review their approach to

surveillance, and consider future funding.

• Any further surveillance would need to further reduce costs:

– smaller sample size (but still needs to be representative)

– removal of compensation – concerning impact on representativity

• If we stop collecting data from this valuable longitudinal cohort:

– likely disengagement of the sample

– a data gap, reducing the overall value of the dataset in future

How are we retaining participants right now?

• The ONS have funded a temporary questionnaire-only study called the COVID-19 and Respiratory

Infections (CRIS), from April-June 2023 whilst decisions around the future of the CIS are ongoing.

• The problems CRIS is trying to solve:

• Setting up a separate questionnaire-only study meant that we could proceed at pace through the

National Statistician’s Data Ethics Advisory Committee (NSDEC) , without the need to secure a new

Chief Investigator and resubmit a new medical ethics protocol.

Prevent a

large data gap

Maintain participant engagement

from the valuable longitudinal cohort

Make the questionnaire more relevant

to participants and analytically Continue to monitor symptoms, understand the impact of

all respiratory infections on daily life, absence from work

and use of medical services, and understand the

prevalence of long-COVID

To test, iterate and improve the new

questionnaire, in new in-house

technology

Move from household to individual

sampling to maintain representativity

despite a smaller sample

What next?

• CRIS survey has been running since 11 April. Most participants have

completed their first questionnaire, some are onto their second.

• Collecting feedback and implementing improvements or adding to a backlog.

• First analysis, including results about representativity and sample size will be

published in July 2023.

• Awaiting decisions on continuation or closedown of the study at end of June.

Any Questions? Contact name: Kathryn Littleboy

Email: kathryn.littleboy:@ons.gov.uk

Imputing indices, United Kingdom

Languages and translations
English

Imputing indices

The situation

Using 25-month, GEKS-T, mean splice on

published

Problem: how to impute elementary

aggregates (EAs) when lack-of-matches?

We examine aggregate-level imputation

May be preferred to imputing prices by

ensuring “neutral” impact on aggregates

The plan

Simulate effect of imputation on scanner

data

Drop 10% of EAs at random (different

seeds: different sets of dropped EAs)

Impute EA using CS monthly rate

Calculate residuals = (COICOP5 index with

10% imputed values – original COICOP5

index)

The results

Eleven different seeds, each giving a residual

boxplot

Means are generally close to 0

Slight downward bias in the imputed indices

Boxplot of residuals

Different seeds R

e s id

u a l (b

a s e i n d e

x =

1 0

0 )

Developing reproducible analytical pipelines for the transformation of consumer price statistics: rail fares, UK

At the Office for National Statistics, we are transforming our consumer price statistics by introducing alternative data sources such as scanner data. This paper discusses the process of developing a new production system that can integrate these data as part of our consumer price index production. Firstly, we will discuss the choices made for the infrastructure of the project, including choice of platform and language, and how this has been designed to aid research as well as ensuring an efficient and user-friendly production system.

Languages and translations
English

Developing reproducible analytical pipelines for the transformation of consumer price statistics: rail fares

Authors: Matthew Price and Diogo Marques, Office for National Statistics

Paper submitted to the Meeting of the Group of Experts on Consumer Price Indices, June 2023

Abstract At the Office for National Statistics, we are transforming our consumer price statistics by introducing alternative data

sources such as scanner data. This paper discusses the process of developing a new production system that can

integrate these data as part of our consumer price index production.

Firstly, we will discuss the choices made for the infrastructure of the project, including choice of platform and

language, and how this has been designed to aid research as well as ensuring an efficient and user-friendly

production system.

We then discuss how best practice guidance for reproducible analytical pipelines (for example, code structure,

testing, version control and code deployment) have been implemented in the project.

Finally, we focus on more specific areas within the end-to-end system. This includes the steps taken for data

engineering, including the standardisation of data. We will also cover the choices we have made to implement these

within our existing production round, including the steps needed on an annual basis to reset the basket and allow for

the introduction of new consumption segments.

1 Overview At the Office for National Statistics (ONS), we are currently undertaking an ambitious programme of

transformation across our consumer price statistics, including identifying new data sources, improving methods,

developing systems and establishing new processes. These new data sources allow us to measure inflation from an

improved coverage of price quotes, introduce weights at a lower level of aggregation than before, and allow for

automated data acquisition.

This year, the Consumer price inflation, UK: February 2023 release was the first time our headline measure of

inflation included these new data sources, using expanded data on rail fares. Over the next couple of years, we are

looking to develop the use of these new data sources to include additional categories such as used cars and

groceries, as well as expanding our new system to include the processing of the existing data collection. These

existing data will continue to be used when they cannot be replaced by scanner or web-scraped data, such as for

small independent shops and service providers who do not have a website.

In designing our production systems, we needed to ensure that they were flexible enough so that future categories

of data could be incorporated into the design with minimal additional development. In this paper, we will focus on

how the system works for rail fares but still with an eye to future development. In particular, this includes:

• The team structure and skills required for the transformation project

• The key considerations for the project’s infrastructure and how the platform is designed to facilitate all

aspects of development, research, and production

• The steps taken in engineering supplier data to produce standardised datasets

• A technical summary of how the pipelines used to produce indices are structured

• The end-to-end processes for producing rail fares indices in production

• How coding best practice is implemented into the project to ensure quality systems

2 Team structure for the Consumer Prices Transformation project This Consumer Prices Transformation project is a multidisciplinary project within ONS, comprising of distinct teams

who are experts in their areas.

The owners of this project are the Prices Division within ONS, who oversee the production of the UK’s consumer,

business, and house price statistics. The main project management hub sits within Prices as well as several teams

dedicated to the transformation project. The Data Transformation team is responsible for acquiring and managing

the new alternative data sources. This team is also leading on building in-house web scraping capability. The

Methods Transformation team is responsible for all aspects of methods research in the transformation project,

including the publication of our research updates. The teams are largely resourced by statisticians/methodologists,

with some additional specialism in data science. The Business Change team then works with the CPI Production

teams to implement the agreed systems into the current ongoing monthly production of the consumer price

inflation measures.

Outside of the Prices division, there are other teams working on delivering the technical side of the project. Some of

the key roles are:

• Business analysts who spec out the various requirements from Prices for both the underlying infrastructure

and more general functionality

• Methodologists who specialise in index number theory and support the Prices Methods team in their

research

• IT architects who design the overall system based on the Prices use case and ensure it fits in with the wider

ONS technology base

• Data engineers who manage and build data processing pipelines to ingest and standardise data for

downstream production processes and wider research, build data validation tools and manage part of the

data strategy of the project

• A data acquisitions team who, along with the Data Transformation team in Prices, manage the relationship

with the data supplier and engage with new ones

• Data science/software engineers who are responsible for building the data processing pipelines based on the

requirements specified by Prices

• Testers who ensure that the final development meets the specified requirements

Together, these teams ensure that the final system meets Prices requirements and is developed in line with other

ONS infrastructure to enable sustainable delivery in future.

3 Technical decisions for the project

3.1 Identifying key requirements for the platform ONS’ cloud strategy follows the Government Digital Service (GDS) Cloud Strategy. The GDS Cloud Strategy promotes

a “Cloud First” policy, whereby public sector organisations should consider and fully evaluate potential cloud

solutions before considering any other options. This strategy strongly advocates the use of infrastructure as a service

(IaaS) and platform as a service (PaaS) offerings from cloud providers.

For the UK ONS Consumer Prices Transformation project, there were several key factors that needed to be

considered when determining the most appropriate cloud platform to host the project on. Alternative data sources

are inherently large data sources and therefore the project needed access to a scalable data storage solution that

allows resilient and efficient storage and tools to query big data. To enable big data processing using Apache Spark,

we also needed to have a distributed computing system that allows the use of more complex data transformations

(such as applying complex methodologies to data) to enrich and aggregate data in a reproducible manner (i.e.

through code that follows the RAP principles).

For the production teams, there is also a need to have dashboards in place to cover processes such as validating the

data being delivered to ONS and visualising the calculated indices. Additionally, it was identified that interactive web

applications would be required to enable accessible user input on enriching and validating certain data sources (such

as in manually labelling, flagging, and amending observations in various data sources).

The final requirement was to have the functionality for researchers to perform ad-hoc analysis and data

manipulations to enable ongoing transformation activity for future data categories alongside live production.

3.2 Use of environments to separate workstreams To allow the stable processing of the production indices while allowing continued development, the project makes

use of several environments to separate the different stages of work. The configuration for each environment is

managed through code. This means that it is trivial to ensure that each environment has the exact same

configuration of resources with the only difference being the access permission groups being tailored to the

sensitivity of data present.

There are four types of environments within the project as outlined in Table 1.

1) Develop, where the users have complete freedom over all aspects of their individual sandboxes which can be created and destroyed at will. Because of this, this environment is unique in that it is not managed by the infrastructure code. This space is where the development of pipelines occurs, and all data used is synthetic.

2) Test, the first environment where all the separately developed systems should always work together. Here the test team will perform their tests to ensure that the systems and platform meet the agreed business requirements. Again, all data used in this space is synthetic.

3) Pre-Production, the first environment that contains live data and is identical to Production. This is to allow further end-to-end testing like in the Test environment, but now with the real data.

4) Production, the environment where all delivered data (whether it is being used in production or research) is

ingested into the platform and the data processing pipelines run automatically to produce the production

price indices. As this environment contains the up-to-date classifications and mappers, it is also where the

research team do their work exploring the data and investigating new methodology. Permission groups in

this environment are configured so that the researchers are not able to see the current month’s data for

production data sources, nor be able to interact with any of the outputs from the various production data

processing pipelines.

Table 1 Summary of the different environments used.

Environment Description Main users Data used Stability

Develop Sandbox where teams have full access to explore, test, and do their work.

• Software engineers

• Data engineers

• Infrastructure engineers

Synthetic Not stable

Test Test environment where all systems can work together allowing testing of individual and multiple systems.

• Testers Synthetic Stable

Pre-production Where testing on live data can occur to ensure changes will be stable before moving into production.

• Business change team

Production (data duplicated from the prod environment)

Very stable

Production Where production occurs via automated scheduling of pipelines. Also, where research on data and methods can occur.

• Production team

• Research team

Production (where all new data is ingested, permissions set to prevent researchers from seeing “current month” data for production datasets)

Most stable

This structure for the environments creates an intuitive development cycle for new methodologies and pipelines

(Figure 1). First researchers do an initial investigation on a given data source in their enclave within the production

environment. From their analysis and recommendations, they work with the business architects to write out new

requirements to pass to the various development teams. These are then actioned and implemented by the relevant

team in the developer sandboxes. Once that has undergone the appropriate review, new or updated pipelines are

released into the test environment, where they are end-to-end tested. Success here results in runs in the pre-

production environment, and if successful the new pipelines will be promoted into the production environment as

part of the annual process (see Section 6).

Figure 1 Development workflow across environments

4 Data Engineering To prepare the data sources for use in producing indices they undergo several data engineering stages; data

ingestion, validation, standardisation, and engineering for general use. The data ingestion stage brings the data into

the cloud project, performs virus checks and decryption where applicable, and moves the data into an output bucket

in both Production and Pre-production environments. Once the data enters the environment, the workflow

orchestration tool AirFlow will start and trigger the data validation pipeline. If none of the validation fails, the data

engineering pipeline is initiated and it standardises and appends the latest data to a table. The end result of the data

engineering work is to create staged data ready for the data processing pipelines (section 5). All engineering steps

have extensive logging and will also send appropriate notifications to external communication tools so that users can

action any alerts.

4.1 Ingestion The ingest process uses Apache NiFi, a tool for automating the movement of data between disparate systems, for

ingestion into both our cloud and on-prem systems. Following that, an in-house IT solution is used that does data

integrity checks with supplied manifests, decryption, de-compression and virus scan.

4.2 Data quality – validation pipeline We have built an in-house data validation package using Python and Spark to replace what were previously weekly

manual data checks. This package has been built off the back of the need to automate manual data checks and

standardise them using tested and scrutinised methods.

The validation checks can either be set to warning or error level. If a validation check raises an error the pipeline

stops the process and notifies the data team instantly of the issue, minimising delays in requesting a redelivery from

the supplier. A warning can be used instead of an error to keep an eye on trends or notify the production team of a

change in the data that may require an action, e.g. with rail fares, a new value in the station column could mean the

station mapper that links stations to regions may need revising. However, warnings do not stop the process from

completing.

We considered a range of different tools when building this and used PySpark because it allows us to create one

method that can scale to work on any data size, in our case both on the smaller regular deliveries but also can be

used on datasets of over 10TB, without the need to build and test separate methods. The validation checks include

schema, min/max row count and expenditure and other more nuanced checks.

4.3 Standardisation The main data engineering pipelines read and standardise the data from the raw files creating a continuous time

series in the most accessible format as a table, which has both the data and column names in the format expected

by downstream systems. The pipeline also performs some secondary engineering when the raw data doesn’t contain

all the variables needed to produce the indices. It creates new columns that are either derived by applying rules to

existing columns or mapping data from other sources, for example, an external mapper to assign train stations to

Government Office Regions (GORs). Finally, the pipeline also adds junk columns, which are Boolean columns used to

filter out observations. While this can be seen as a data cleaning step, it doesn’t actively remove data but allows the

user to choose to remove these columns as part of the downstream processes (see data processing pipelines). The

junk columns each apply a separate rule so filtering rules can easily be added/removed, for example, whether to

keep transactions that pertain to "business only" travel (that are out of scope for CPI).

Further reading around some of the data engineering rules applied can be found in our previous article on using

transaction-level rail fares data to transform consumer price statistics.

4.4 Data quality – insights dashboard To ensure data users always have the best understanding of the data that they're using, we have built a dashboard

with visualisations that provide an up-to-date overview of key metrics and more niche insights that could aid

research, for example, expenditure trends (nationally and by region) and null rates in the data. Providing these

visualisations upfront has many benefits, it provides powerful insights achieved through complex SQL queries to

users that don’t have advanced SQL knowledge. It also saves multiple data users running similar queries on terabytes

of data, saving time and computing resources. Powering the visualisations we have a set of materialised views that

contain the SQL queries needed for the visualisations, either in full or to pre-aggregate the data from the terabytes

large tables to a size that's more manageable for the visualisation tool. Both the views and dashboard are refreshed

within a few minutes of new data being engineered and appended onto the main table.

4.5 Resilient and efficient storage To ensure downstream processes use their resources and data most efficiently, all tables are partitioned, and we

apply other methods such as clustering where needed. ONS back up all raw data in a separate service and all tables

have a type of version control that allows any table to be rolled back to a previous snapshot, or a deleted table to be

reinstated within an agreed window of time.

5 Data processing pipelines The data processing pipelines are the pipelines that transform the staged data sources (or one of the derived tables

detailed in Table 2) to further enrich, clean and aggregate the data to produce a full set of indices from the

elementary aggregate level to the overall headline inflation rate. More information about this process can be found

in Section 6: Producing indices for production.

5.1 Pipeline code structure The data processing pipelines serve dual purposes of being used by the researchers to inform decisions on what

methodologies to implement in production, as well as the pipelines used in production. To allow this flexibility each

pipeline is controlled by a configuration file which contains settings for all options in each pipeline. For example, in

the data cleaning pipeline, the configuration file allows the turning on of several different outlier methods and

associated parameters. In the elementary indices pipeline, over 20 permutations of index methods can be applied to

the data. Researchers can explore a wide parameter space at will to make the most informed decisions by changing

the values in this file at run time. In production, the configuration files are locked down to only the chosen methods

for publication with no option to change the values.

Each data processing pipeline is designed to the same template. Following this template allows us to quickly setup

new systems when required for new methodologies or data sources. Furthermore, it means developers and end

users can familiarise themselves with a new pipeline based on their knowledge of other pipelines in the project.

The general structure of a pipeline is to have a “main” script that operates as follows:

1. Take a minimum amount of command line inputs (file paths for a “user” and “backend” configuration file,

the name of the user running the code [for audit purposes], and the desired level of logging [as code

contains substantial debug logs that can be used to diagnose issues]).

2. Read in and validate the “user” configuration file which contains options such as what date source to use,

the date range of the data to use, which methods to apply etc.

3. Read in and validate the “backend” configuration file which contains information that would not need

changing between pipeline runs such as the table paths for inputs and outputs or the stratification for a data

source.

4. Read in all the data needed for the pipeline (using the information from the various configuration files).

5. Pass all relevant configuration parameters as well as the data through to the “core” pipeline code that will

perform all the data transformations of the pipeline (e.g. any pre-processing, applying any methodologies,

performing any aggregations).

6. Add a unique run identification to the output from the previous step.

7. Append the output to the appropriate table (where the unique run ids will allow distinguishing data between

runs).

8. Append key information (e.g. the version of the pipeline, the user and timestamp for the submitted run and

the configuration files used) about the run to a separate pipeline run log table to allow auditing of pipeline

runs.

Developing the pipeline code in such a manner also has the added benefit of separating all the methodological parts

of the code from the input and output code. This is of importance, as given all the code is written in open-source

languages, the only parts of the code that would not be immediately portable to a different cloud platform are the

parts that perform the input and output functions. By placing these at the very start and end of the code only, the

systems can be readily ported to another platform without having to disentangle these I/O processes from deep

within the code base. It also means that retesting a pipeline in such a situation could be performed with ease as the

underlying methods’ code will not need altering to account for any code changes required for the different cloud

platform.

5.2 Pipeline tables To have a clear audit trail for all the data generated by the pipelines, several tables are generated during the

production of the indices (as discussed in section 6). A summary of these tables and where they are created can be

found in Table 2.

Table 2 Overview of main data tables produced by systems

Table Description Produced by

Staged The standardised form of the data delivered by suppliers.

Staging of raw data files delivered to ONS by the data engineering pipelines

Cleaned The data after applying any pre-processing, with additional columns denoting whether a row is identified as being an outlier or not based on the chosen data cleaning methods.

Data cleaning pipeline

Invalid strata A mapper that denotes whether for each elementary strata if an index is calculable at the start of the annual round

Invalid strata pipeline

Processed The aggregated monthly price and quantity observation for each unique product. This is the data used to calculate the elementary aggregate indices.

Elementary indices pipeline

Elementary aggregate indices

The monthly price indices for each elementary aggregate.

Elementary indices pipeline

Aggregated indices The full set of indices from elementary aggregate, aggregated all the way up to COICOP1. Includes additional information on growth rates and contributions.

Index aggregation pipeline

Storing the data like this allows deeper interrogation by researchers or production users if anything is identified in

the final output. As an example, if there was a sudden drop in a particular strata’s index, all the data that fed into

that value can be explored from the initial data as provided by the supplier, to the outcome of the data cleaning

methods on the data, through to the final monthly price and quantity observations for each product in the strata.

6 Producing indices for publication Given we will restrict the number of consumption segments to only include those that have representative items in

the traditional collection, we will also need to continue the process of annually updating our basket of goods and

services to include new consumption segments to reflect changing consumption patterns. The production system

has been designed to be run in an annual round, which initialises the data for subsequent monthly rounds, which are

used to produce the monthly outputs.

The workflow outlined in Figure 2 primarily relates to the processing of the rail fares alternative data sources but

forms the standard workflow that will be applied to future data categories (e.g. used cars or groceries), and allows us

to integrate alternative data sources more readily with traditional data sources. More detail on our hierarchies and

how we are integrating new and traditional data sources is discussed in Integration of alternative data into consumer

price statistics: the UK approach.

Figure 2 Overview of pipeline workflow for the annual and monthly rounds.

6.1 Annual processing We will only introduce new consumption segments (or new alternative data sources retailers) where we already

have a 25-month period of data so we can consistently use a 25-month window for all alternative data based

elementary aggregate indices. This means that every year the consumption segments will essentially be reset, the

data re-classified to the new consumption segments over a historic 25-month period, and then the new index for the

following 13 months would splice onto this recalculated historic index.

The annual round therefore initialises a 25-month historic series based on the classification system in the current

year. For example, given a January 2024 base, the system would initialise the data from January 2022 through to

January 2024. This is important if any classifications have changed or any new consumption segments have been

added to, or removed from, the CPI basket of goods and services.

A 25-month period of data are first cleaned (data cleaning pipeline – see “Outlier detection for rail fares and second-

hand cars dynamic price data” for details on our chosen data cleaning methodology for rail fares) before it is decided

whether a stratum index can be appropriately calculated based on the presence of bilateral pairs of price relatives

(invalid strata pipeline). If no bilateral pair exists in the January of the current year, this is considered an invalid

stratum as it’s unlikely that an index will be calculable in the following months. This is output as a mapper file that

can be reviewed, monitored, and amended if necessary.

The data cleaning pipeline is then run again, removing any data within the 25-month historic series that pertain to an

invalid stratum. Now our data should only contain products from which we would want to calculate an index.

The cleaned data are then used to produce elementary aggregate indices (elementary indices pipeline) for the initial

25-month window that will be used to splice onto during the monthly round. For rail fares we use the GEKS- Törnqvist index method (see “Introducing multilateral index methods into consumer price statistics” for a technical

explainer).

The processed data (output from the elementary indices pipeline) are then used in the annual outputs pipeline to

calculate the stratum-level weights for the year (when created from the data directly – some stratum-level weights

are derived offline using existing methods and ingested to be used alongside the other weights).

The aggregation pipeline can then use the output from the elementary indices pipeline and the annual outputs

pipeline, along with weights, to aggregate the indices and impute any remaining missing indices in the 25-month

historic window.

Now we have initialised our historic back series for all the data and produced the required weights, we can use this

information in the monthly round.

6.2 Monthly processing The first step in the monthly round process is where the data cleaning pipeline cleans the latest month of staged

data using the new staged data and the cleaned back series. Next, the elementary indices pipeline uses the cleaned

data to produce a new index based on the most recent month of data along with 24 historic months of data from the

‘processed’ data output in the previous month. This produces new elementary indices with a 25-month window i.e.

the monthly round in February 2024 would initially produce an index from February 2022 to February 2024. These

are then spliced onto the series’ produced in the index aggregation pipeline from the annual round (in February) or

the index aggregation module from the monthly round (in the remaining months for that year), to ensure no

revisions occur.

These elementary indices are then passed on to the aggregation pipeline to aggregate to higher levels, using the

previously constructed weights. Indices are all re-referenced to Jan=100 to align with, and allow aggregation with,

traditional data sources. Any missing index values are imputed. For the UK, missing stratum indices are imputed

based on the consumption segment level index. Missing consumption segment level indices are imputed based on

the COICOP 4 level index. Missing COICOP indices are imputed based on their nearest parent. More detail on our

aggregation and imputation methods can be found in: Introducing alternative data into consumer price statistics:

aggregation and weights.

6.3 Research capabilities Alongside the processes for creating the publication indices, researchers need the ability to mimic the production

cycle in order to perform analysis on the impact of proposed changes to the output inflation numbers. Reasons to

perform such analysis include; to see the effect if different methodologies are used, to investigate the incorporation

of a new alternative data source or category, or to check the effects of reclassifying data. The split permissions set in

the production environment mean that researchers can access all the data they need to perform this analysis

without interfering with the production tables in a space where they have full control over what additional data and

methods they utilise.

7 Implementing best practices to quality assure systems The data engineering and data processing pipelines built for this project have been done in line with the

Reproducible Analytical Pipelines (RAP) strategy defined by the UK Government Analysis Function (GAF). This

strategy outlines the software engineering and infrastructure best practices to ensure that pipelines are

reproducible, auditable, efficient, and high quality. The following sections details how the UK ONS Consumer Prices

Transformation project meets and exceeds the minimum standard for a RAP.

7.1 Implementing RAP for the code

7.1.1 Minimise manual steps Due to the size of the data being used there is naturally little opportunity for tools like spreadsheets, which would

involve manual steps, to be present in the workflows. The only area where manual steps are involved is in the

creation of mapper files that modify behaviour within the pipeline. For example, we may use a mapper to define the

link between lower-level ONS-specific aggregates (described as consumption segments) to COICOP5. This is a manual

process as these mappings can be revised on an annual basis as part of the annual basket refresh (see section 6). To

minimise any unintended consequences, the processes for creating these files are documented and these inputs are

validated when loaded into the platform to ensure any issues are caught. Using mappers also allows us to avoid

annually updating hard-coded references, reducing the risk of errors by having to update the code directly.

7.1.2 Built using open-source software All the systems are written using the Python language. Due to the size of the data being processed, the pipelines are

also built to leverage distributed computing using Apache Spark and its Python API, PySpark.

7.1.3 Quality assurance processes with peer review Business analysts work with the Prices methods and business change teams to define new functionality as

requirements with clear acceptance criteria, captured via Jira tickets. Each requirement is then coded by the relevant

data or software engineer, and the code is then peer reviewed by other developers within the teams. Doing this

allows both quality assurance and dissemination of technical knowledge across teams.

7.1.4 Use of version control software All code is kept in git repositories on the GitHub platform.

The transformation work requires research and impact analysis to be carried out using a breadth of methods before

selecting the final publication method. Because of this, during development new methods are added via "Research"

releases of the pipeline. Once the methods have been determined and accepted by stakeholders, those methods will

be formally tested via "Release candidate" releases, which after passing will be promoted to "Production" releases.

This workflow is managed via the use of Jira tickets to ensure traceability in what functionality is available in each

release.

Table 3 Overview of releases used by for the Consumer Prices Transformation project

Release Frequency Description

Production Annual These are versions of the pipeline that have been fully tested for all methods required to produce publication outputs. These can only be changed in exceptional circumstances due to the annual production round of producing the indices.

Release candidate

Annual These pipeline versions are created prior to the release of a new production version of a pipeline, as the pipeline must undergo formal testing before it can be signed off as ready to enter production. To enable this, these release candidates of the code are produced for use by the testing team.

Research Monthly These are versions of the pipeline that have undergone testing by the developers, but not the formal test process that the production releases undergo as the methods introduced may not be used in production. These versions are produced every month between annual rounds for a pipeline that is in active development.

Bug patch Ad-hoc These are versions that are created only when required due to bugs being identified in a Production or Research version of a pipeline. For Production bug patches, the code must undergo another round of formal testing by the test team. Research bug patches only undergo standard developer testing.

This development of code is managed through a GitFlow workflow. Using the GitFlow branching strategy aids the

development of "Production" and "Research" releases simultaneously (see Figure 3) and creates a dedicated space

for functional testing to be conducted. Using git tags to "tag" pipeline releases across these branches, new versions

can be released to the processing platform via CI/CD (see section 7.1.9).

Figure 3 Example of the GitFlow workflow.

7.1.5 Open source of code and data used Currently, the code is not publicly available due to the confidential information that must be present in some of the

code. There is however the intention to release code packages of the various methodologies in the future. The UK

data used in calculating our consumer price inflation statistics are commercially sensitive and cannot be shared.

7.1.6 Follow existing good practice guidance set by department The Consumer Prices Transformation project builds on the best practice guidance set within ONS, but as the first

transformation project of its kind in the organisation, it is also setting best practices. To ensure the quality of the

choices being made on the project we have engaged with the GAF team to provide external assurance.

7.1.7 Fully documented code All the project code is documented within the pipelines, with this supplemented by documentation covering a range

of aspects of the project from platform design, data dictionaries to code release patterns kept in a central project

wiki hosted on the ONS intranet.

7.1.8 Testing The pipelines and systems are all thoroughly tested in several ways. For each pipeline, all the code undergoes:

• Unit testing – ensuring that each individual function behaves as expected. These tests are typically

constructed by the developer.

• Component testing – ensuring that each “module” of code behaves as expected. A module can be thought of

as an entire method which is made up of several functions. In the instance where a method is a single

function the component and unit test would be the same thing. The data used for these tests is provided by

the appropriate methodologist.

• Module integration testing – this ensures that the sequence of modules interact with each other as

expected. An example would be seeing that a pipeline can run end to end (but not confirming if the results

are valid).

• Functionally testing – this confirms that each pipeline and its output meets the defined requirements as

written. These tests confirm for example, that for a given input data source and input parameters the

pipeline produces the correct expected output (including negative testing).

• Integration testing – confirming that a sequence of pipelines all run together. For this project, as the output

of one pipeline feeds directly into another, these tests would confirm the entire end-to-end process from

new data being received through to the production of indices.

• Acceptance testing – the final checks to ensure that the entire processes meet the needs of every defined

business scenario. For example, “new data are delivered, are new indices produced and alerts sent” or “bad

data are delivered, are the systems stopped and alerts sent”.

Several of these test stages are automated using the continuous integration tools.

7.1.9 Continuous Integration and Continuous Deployment (CI/CD) Using CI tools we automate the checking of unit, component and integration tests for every change made to each

codebase prior to being incorporated into the pipeline. These checks also cover ensuring consistent code style and

code documentation. The CD tools for the project ensure that the packaging and deployment of code to the

production platform is automated in a reproducible manner. The deployment of code is triggered by the presence of

tagged releases of the code base.

7.1.10 System logging All pipelines utilise a range of logging across the range of severities (i.e. debug, info, warning, error) to allow robust

traceability of processes occurring. Information logging includes information such as how many rows are removed by

a filtering command to allow quick diagnosis of data issues if more rows are dropped than expected, or the schemas

of data being read or written to tables. Debug statements are switched off in systems by default but can be turned

on in the case of runs that error to allow better diagnosis of issues. Warnings are used to alert for behaviour which

while not terminal is not expected behaviour, whilst errors are reported when issues occur that prevent a pipeline

from proceeding further. These logs are captured both within the cloud platform, but also relevant alerts are sent to

the production team to inform them of successes and failures of the systems.

7.2 Implementing RAP for the platform

7.2.1 Automated pipelines The project makes use of Apache Airflow to manage workflow orchestration in several ways speed to minimise user

input and error, for the normal production of monthly indices. Event driven workflows are in place to handle the

staging into tables of new data when new data files are ingested onto the cloud platform. Time based workflows are

used to handle the automated scheduling of the production of indices by passing the staged data through the several

data processing pipelines required for producing indices.

7.2.2 Reproducible infrastructure The entire cloud platform infrastructure is prescribed using Terraform. By doing this all aspects of the cloud platform

from the tools and datasets to user permissions are prescribed in code and can be easily audited, reproduced or

expanded.

8 Future developments The roadmap for the transformation of UK consumer price statistics has several data categories in active

development. These data categories will reuse the workflow as outlined in this paper for producing rail fare indices

for producing their own indices. Due to the modular nature of the approach we have taken in our systems design, it

will be trivial to add extra pipelines if needed for a data category at any point in the data journey. For instance,

research has already identified the need for pipelines to perform automated classification for the clothing data

category, or for identifying potential relaunched products in the grocery data category.

Developing reproducible analytical pipelines for the transformation of consumer price statistics: rail fares, UK

Languages and translations
English

Developing reproducible analytical pipelines for the transformation of consumer price statistics: rail fares

Matthew Price Technical Lead

8 June 2023

Continuous programme of improvements for consumer

price statistics over several years beginning with rail fares

Aims:

• Obtaining robust sources of alternative data

(scanner/web-scraped data)

• Researching methodologies to most effectively

incorporate the data

• Developing statistical systems for existing and new

data and methods

• Embedding new systems and processes

Primarily, new data will help us to inform the narrative

around what is driving inflation for our users

Transforming UK consumer price statistics

2

0 5 10 15 20 25 30 35

Communication

Education

Clothing and footwear

Furniture, household equipment and maintenance

Miscellaneous goods and services

Restaurants and hotels

Recreation and culture

Transport

Alcoholic beverages and tobacco

Food and non-alcoholic beverages

Housing, water, electricity, gas and other fuels

Rental prices

(~24% CPIH) Grocery

scanner data

(13% CPIH)

Rail Delivery Group

(transaction) and Auto

Trader (web provided)

data (2.3% CPIH)

ONS and UK Government platform strategy

• UK Government Cloud Strategy is “Cloud First” and

“Cloud Agnostic”

• Aim to use “Infrastructure as a Service” and “Platform as

a Service”

• ONS utilise a range of in-house and cloud platforms

Key requirements for platform

• Secure

• Scalable data storage

• Distributed, scalable compute system

• Dashboard capabilities

• Ability to host web applications

• Interactive research space

Environment Description Main users Data used Stability

Develop Sandbox environments where teams have full

access to explore, test, and do their work.

•Software engineers

•Data engineers

•Infrastructure engineers

Synthetic Not stable

Test Test environment where all systems can work

together allowing testing of individual and

multiple systems.

•Testers Synthetic Stable

Pre-

production

Environment where testing on live data can occur

to ensure changes will be stable before moving

into production.

•Business change team Production (data duplicated from prod

environment)

Very stable

Production Environment where production occurs via

automated scheduling of pipelines. Also, where

research on data and methods can occur.

•Production team

•Research team

Production (where all new data is ingested,

permissions set to prevent researchers

seeing “current month” data for production

datasets)

Most stable

Platform environment strategy

Platform environment strategy

Also aids the development of

new data sources, methods

and pipelines

Data engineering

• Data sources are delivered as files in specific style for

each supplier

• Data engineering stages data prior to processing by:

• Virus scanning and ingesting data

• Validating data against known metrics

• Enrich data by applying appropriate mappers

• Applying standardisation to each source

Data processing pipelines

• Several distinct pipelines make up the full system

• E.g. railfares: data cleaning > elementary indices > aggregation

• Each pipeline follows the same code structure

• Controlled by a user and backend configuration file

• Each pipeline produces output for straightforward audit

of data journey

Producing indices for production

• Production works with an “annual

update”

• Annual round in February initialises data

back series and calculates weights for

next 12 months

• Monthly round (Feb – Jan) updates back

series and produces the new indices

RAP – Reproducible analytical pipelines

• UK Government developed best practice principles

for analytical systems

• Guidelines aim to:

• improve the quality of the analysis

• increase trust in the analysis by producers, their

managers and users

• create a more efficient process

• improve business continuity and knowledge management

RAP for code

• Minimise manual steps

• Use open source software

• Peer reviewed

• Uses version control

• Open sourced code and data

• Follows department good

practice

• Well documented

• Tested

• Uses CI/CD

• Appropriate logging

RAP for platform

• Automated pipelines

• Restricted access to production

• Reproducible infrastructure

Future developments timeline

• Multiyear transformation project

• Systems design template will allow

scaling out of systems easily

• Rolling out new categories every year

Thank you

Developing reproducible analytical pipelines for the transformation of consumer price statistics: rail fares

Languages and translations
English

Developing reproducible analytical pipelines for the transformation of consumer price statistics: rail fares

Matthew Price Technical Lead

8 June 2023

Continuous programme of improvements for consumer

price statistics over several years beginning with rail fares

Aims:

• Obtaining robust sources of alternative data

(scanner/web-scraped data)

• Researching methodologies to most effectively

incorporate the data

• Developing statistical systems for existing and new

data and methods

• Embedding new systems and processes

Primarily, new data will help us to inform the narrative

around what is driving inflation for our users

Transforming UK consumer price statistics

2

0 5 10 15 20 25 30 35

Communication

Education

Clothing and footwear

Furniture, household equipment and maintenance

Miscellaneous goods and services

Restaurants and hotels

Recreation and culture

Transport

Alcoholic beverages and tobacco

Food and non-alcoholic beverages

Housing, water, electricity, gas and other fuels

Rental prices

(~24% CPIH) Grocery

scanner data

(13% CPIH)

Rail Delivery Group

(transaction) and Auto

Trader (web provided)

data (2.3% CPIH)

ONS and UK Government platform strategy

• UK Government Cloud Strategy is “Cloud First” and

“Cloud Agnostic”

• Aim to use “Infrastructure as a Service” and “Platform as

a Service”

• ONS utilise a range of in-house and cloud platforms

Key requirements for platform

• Secure

• Scalable data storage

• Distributed, scalable compute system

• Dashboard capabilities

• Ability to host web applications

• Interactive research space

Environment Description Main users Data used Stability

Develop Sandbox environments where teams have full

access to explore, test, and do their work.

•Software engineers

•Data engineers

•Infrastructure engineers

Synthetic Not stable

Test Test environment where all systems can work

together allowing testing of individual and

multiple systems.

•Testers Synthetic Stable

Pre-

production

Environment where testing on live data can occur

to ensure changes will be stable before moving

into production.

•Business change team Production (data duplicated from prod

environment)

Very stable

Production Environment where production occurs via

automated scheduling of pipelines. Also, where

research on data and methods can occur.

•Production team

•Research team

Production (where all new data is ingested,

permissions set to prevent researchers

seeing “current month” data for production

datasets)

Most stable

Platform environment strategy

Platform environment strategy

Also aids the development of

new data sources, methods

and pipelines

Data engineering

• Data sources are delivered as files in specific style for

each supplier

• Data engineering stages data prior to processing by:

• Virus scanning and ingesting data

• Validating data against known metrics

• Enrich data by applying appropriate mappers

• Applying standardisation to each source

Data processing pipelines

• Several distinct pipelines make up the full system

• E.g. railfares: data cleaning > elementary indices > aggregation

• Each pipeline follows the same code structure

• Controlled by a user and backend configuration file

• Each pipeline produces output for straightforward audit

of data journey

Producing indices for production

• Production works with an “annual

update”

• Annual round in February initialises data

back series and calculates weights for

next 12 months

• Monthly round (Feb – Jan) updates back

series and produces the new indices

RAP – Reproducible analytical pipelines

• UK Government developed best practice principles

for analytical systems

• Guidelines aim to:

• improve the quality of the analysis

• increase trust in the analysis by producers, their

managers and users

• create a more efficient process

• improve business continuity and knowledge management

RAP for code

• Minimise manual steps

• Use open source software

• Peer reviewed

• Uses version control

• Open sourced code and data

• Follows department good

practice

• Well documented

• Tested

• Uses CI/CD

• Appropriate logging

RAP for platform

• Automated pipelines

• Restricted access to production

• Reproducible infrastructure

Future developments timeline

• Multiyear transformation project

• Systems design template will allow

scaling out of systems easily

• Rolling out new categories every year

Thank you

Outlier detection for alternative data sources, United Kindom

Languages and translations
English

Outlier detection for

alternative data sources

Mario Spina

Meeting of the Group of Experts on Consumer Price Indices, 7-9 June 2023, Geneva, Switzerland

Introduction

• Background to data cleaning • Junk filters vs outlier detection • Main application & methods

• Results: • Second-hand cars • Rail fares • Discussion

• Future developments and conclusions

Meeting of the Group of Experts on Consumer Price Indices, 7-9 June 2023, Geneva, Switzerland

2

Background to data cleaning

• Introducing new, bigger data sources in CPI, bi-annual research

• Transforming rail fares and second-hand cars first

• New methods and techniques to ensure high-quality

• Adapting existing strategies to big data

• Data cleaning selects transactions used for index calculation

Meeting of the Group of Experts on Consumer Price Indices, 7-9 June 2023, Geneva, Switzerland

3

Junk filters vs outlier detection

Data cleaning consists of two underlying components:

Junk filter

Determines observations out of scope by removing as example: - ‘minibus’ from cars - ‘underground’ fares from rail fares

More information on junk filters is available at this publication

Outlier detection

Identifies products with extreme and potentially erroneous prices or price movements

Meeting of the Group of Experts on Consumer Price Indices, 7-9 June 2023, Geneva, Switzerland

4

Main applications & methods

We investigated three applications of outlier detection:

• Global (transaction-level, global distribution)

• Observation-level (transaction-level, product distribution)

• Relative-based (unit value-level, global distribution)

Meeting of the Group of Experts on Consumer Price Indices, 7-9 June 2023, Geneva, Switzerland

5

Main applications & methods

Methods explored in the publication:

Method Fences

User-defined fence LF, UF: Manually selected

Tukey (interquartile) LF: Q1 – k*(Q3-Q1) UF: Q3 + k*(Q3-Q1)

Kimber LF: Q1 - k*(Q2-Q1) UF: Q3 + k*(Q3-Q2)

k-sigma LF: mean – k*sd UF: mean + k*sd

Benchmark No fences

• Note: Q1, Q2, Q3 are the first, second or third interquartile respectively • mean and sd are mean value and standard deviation of a gaussian distribution

Meeting of the Group of Experts on Consumer Price Indices, 7-9 June 2023, Geneva, Switzerland

6

Case studies

• Explored a combination of applications and methods

• Second-hand petrol cars • Diesel cars in backup

• Rail fares

Meeting of the Group of Experts on Consumer Price Indices, 7-9 June 2023, Geneva, Switzerland

7

Results: second-hand cars

Methods of outlier detection explored with second-had cars

Approach Method Parameters Flagged, petrol (%) Flagged, diesel (%)

Benchmark No outlier detection

removal N/A 0 0%

Global User-defined LF = 400,

UF = 60000 0.91% 0.29%

Observation Tukey

(interquartile) k = 3 0.15% 0.10%

Observation Kimber k = 3 1.18% 0.89%

Observation k-sigma k = 3 0.21% 0.16%

Relative User-defined LF= 1/3,

UF = 3 0.03% 0.04%

Relative Tukey

(interquartile) k = 3 1.56% 0.96%

Relative Kimber k = 3 5.04% 3.41%

Relative k-sigma k = 3 0.90% 0.67%

Meeting of the Group of Experts on Consumer Price Indices, 7-9 June 2023, Geneva, Switzerland

8

Results: second-hand petrol cars

Global and observation-based methods

Meeting of the Group of Experts on Consumer Price Indices, 7-9 June 2023, Geneva, Switzerland

• Observation-based methods biased

9

Results: second-hand petrol cars

Relative-based methods

Meeting of the Group of Experts on Consumer Price Indices, 7-9 June 2023, Geneva, Switzerland

• Methods behave similarly

10

Results: rail fares

Methods of outlier detection explored with rail fares • Negligible impact of global outlier detection • Observation-base strategy not applicable due to bimodal distributions

Type Method Parameters Flagged Percent

Benchmark No outlier detection N/A 0 0%

Relative User-defined LF = 1/3,

UF = 3 132,796 0.02%

Relative Kimber k = 3 182,006,519 29.91%

Relative k-sigma k = 3 5,751,068 0.95%

Relative Tukey (interquartile) k = 3 145,194,524 23.85%

Meeting of the Group of Experts on Consumer Price Indices, 7-9 June 2023, Geneva, Switzerland

11

Results: rail fares

Meeting of the Group of Experts on Consumer Price Indices, 7-9 June 2023, Geneva, Switzerland

Relative-based methods

• Difference affected by narrow distribution of relatives

12

Results: discussion

We prefer relative-based outlier detection with a user-defined lower fence of one third and upper fence of 3

• Corrects potentially erroneous spikes • Very mild change otherwise • Removes minimal data

• Reduces risk no-price-change bias • Reduces outdated fences risk • Avoids risk of poor fit • Consistent across categories

• Bespoke k parameter

Meeting of the Group of Experts on Consumer Price Indices, 7-9 June 2023, Geneva, Switzerland

13

Future developments & Conclusions

• Monitoring outliers and indices to avoid bias

• Account for genuine large relatives

• Exploring outlier detection on grocery scanner data • Investigating other methodologies

Meeting of the Group of Experts on Consumer Price Indices, 7-9 June 2023, Geneva, Switzerland

14

Future developments & Conclusions

• Presented Outlier detection for rail fares and second-hand cars dynamic price data

• Discussed potential strategies

• Relative-based outlier detection • Mild impact on indices • 0.25 and 0.03 index points for used cars and rail fares

• Future application to new data sources

Meeting of the Group of Experts on Consumer Price Indices, 7-9 June 2023, Geneva, Switzerland

15

Thanks for your attention!

Meeting of the Group of Experts on Consumer Price Indices, 7-9 June 2023, Geneva, Switzerland

Results: second-hand diesel cars

Global and observation-based methods

Meeting of the Group of Experts on Consumer Price Indices, 7-9 June 2023, Geneva, Switzerland

• Observation-based methods biased

Results: second-hand diesel cars

Relative-based methods

Meeting of the Group of Experts on Consumer Price Indices, 7-9 June 2023, Geneva, Switzerland

• Methods behave similarly

Measuring inflation as households experience it, United Kingdom

Languages and translations
English

Measuring inflation as households experience it

John Astin and Jill Leyland

Presentation to UNECE Meeting of the Group of Experts on Consumer Price Indices Geneva, 7-9 June 2023

Outline of talk • Background

• “Household” vs “macroeconomic” indices

• Australia, New Zealand, UK

• Why we need household indices

The opinions expressed in this talk are our own and it should not be assumed that the Office for National Statistics will agree with all of them.

HCIs vs CPI/HICP HCIs CPI/HICP

Timing Payment (in principle) Acquisition

Weighting Democratic (household) Plutocratic (expenditure)

Interest payments All included Excluded

Student loan repayments Included All tuition fees included when due

Insurance premiums Fully weighted Net weight only

Owner occupied housing All housing related payments (we believe this should include at least some capital payments)

Minor repairs only (net acquisition method to be added to HICPs)

National or domestic National basis (in principle) Domestic basis

Similarity of UK, Australian and NZ household indices

*Current plan is to include capital costs in a secondary index.

UK Australia New Zealand Household Costs Indices (HCIs)

Selected Living Costs Indexes (SLCIs)

Household living-costs price indexes (HLPIs)

Household groups d

19 groups plus total 4/5 groups only 13 groups and total

Timing basis Payment Payment Payment

Weighting Democratic Plutocratic Democratic

Interest payments Mostly included (all in principle)

All included All included

Insurance weights Gross Gross Gross

Owner occupier costs Mortgage interest, all payments other than capital costs*

Mortgage interest Mortgage interest payments indexed by house prices

Taxes related to properties

Included Included Included

One reason we need HCIs (Indices, 2005 = 100)

90

100

110

120

130

140

150

160

Jan-05 Jan-07 Jan-09 Jan-11 Jan-13 Jan-15 Jan-17 Jan-19 Jan-21

Richer households have greater weight in CPI

HCI low income households (Decile 2)

HCI high income households (Decile 9)

CPI

so it is closer to the HCI for richer households

Source: ONS

And if we add in CPI subgroups ...(indices 2005=100)

90

100

110

120

130

140

150

160

Jan-05 Jan-07 Jan-09 Jan-11 Jan-13 Jan-15 Jan-17 Jan-19 Jan-21

HCI low income (decile 2) HCI high income (decile 9)

CPI low income (decile 2) CPI high income (decile 9)

The HCI high income and CPI high income series have been very close over the past decade. But there is a clear gap between the HCI low income and CPI low income series.

Source: ONS

And to conclude… • Originally One consumer price index - primary use often for wage negotiations • From 1990s Macroeconomic uses such as inflation targeting became more dominant • But crucial to understand household experience Measuring inflation as it affects the household budget

  • Measuring inflation as households experience it
  • Outline of talk
  • HCIs vs CPI/HICP
  • Similarity of UK, Australian and NZ household indices
  • One reason we need HCIs (Indices, 2005 = 100)
  • And if we add in CPI subgroups ...(indices 2005=100)
  • And to conclude…

Measuring Inflation as Households Experience it, United Kingdom

Languages and translations
English

1

Measuring Inflation as Households Experience it

John Astin and Jill Leyland1

What is inflation? The famous economist Roy Harrod (1900-1978) defined it as

“the name of that state of affairs in which all or most prices are continually

rising”.

But that doesn’t tell us how to measure it. Any expert knows that there are

many ways to measure it.

As some readers will know, in the 1990s John Astin – one of the authors of this

paper - was in charge of the Eurostat team which was responsible for

developing the EU Harmonised Indices of Consumer Prices (HICP). This was

intended initially to facilitate the inflation test for countries that were

candidates for the euro, so that when two countries’ inflation rate was, say,

4.5%, it was clear that they were facing the same degree of inflation; they were

measuring it in more or less identical ways. Later it was to become a tool for

the management of the euro zone by the ECB (European Central Bank).

The UK government decided in 2003 that the HICP (now known in the UK as

the CPI) should be the target inflation measure for the Bank of England - fine!

At that time, the main index used for purposes such as uprating pensions,

wages, and so on was the RPI (Retail Prices Index) which had originally been

designed for these types of uses (as had consumer price indices in most

countries). However, in 2010 the UK government decided the RPI should be

replaced as the main inflation index for public sector use by the CPI (HICP). Of

course John was pleased that his “baby” had achieved adulthood - but it was

obviously not the best index to be used for most indexation purposes. Then,

changes made to the way clothing prices were collected reacted badly with the

formulae used in the RPI, which began clearly to overestimate inflation,

resulting in it eventually being deprived of “national statistic” status and its use

discouraged – although its use was, and is still, widely embedded in contracts.

In 2030 the RPI will effectively turn into a derivative of CPI.

All of this led to both authors separately (we did not know each other at the

time) working from 2014 on proposals for a new household-oriented index.

1 [email protected] [email protected] This paper contains our own opinions. It should not be assumed that the UK Office for National Statistics will necessarily agree with all of them.

2

We both felt there was a clear need for an index that measured inflation as

households actually experienced it – or at least as close as possible. We

realised we were both thinking along the same lines and in 2015 we joined

forces to develop the ideas for what we eventually called the HII (Household

Inflation Index).

It took a while for our ideas to be accepted in official circles, but the ONS

decided it was useful and important, and started gradually to publish the new

index (re-named HCI - Household Costs Index) on an annual experimental

basis. Importantly HCIs for different household groupings – for example by

income deciles or working age vs retired – were also published.

With the recent public interest in inflation measures, the ONS have

announced that from around September this year they will be publishing the

HCIs quarterly. Our hope and expectation is that this will become monthly, and

that the HCI can eventually replace the RPI. The HCIs – and not the HICP/CPI -

could – and should - be used for such things as updating pensions, wages etc.

as well as being the standard national measure of inflation regarding food,

clothing and all the goods and services that households buy.

So, what are the differences between the HCI and the CPI/HICP? Bear in mind

that the aim of HCIs is to measure inflation as closely as possible to what

households actually experience:

The HCIs :

(a) are notionally on a payments basis- although acquisition is used in practice

where the two are not very different;

(b) are weighted on a household (democratic) basis, as opposed to a

“plutocratic” basis – a household index should give equal weight to every

household regardless of the level of income or expenditure;

(c) include interest payments (including mortgage interest);

(d) include student loan repayments (in the UK);

(e) use gross insurance premiums - rather than net premiums which exclude

the value of claims paid;

(f) include all housing-related payments made by owner occupiers, including,

we believe, at least some elements of capital payments;

3

(g) are on a “national” basis, excluding payments by foreign visitors and

including, as far as possible, payments by residents when abroad.

(Macroeconomic indices like the HICP are calculated on a “domestic” basis,

including expenditure by foreign visitors and excluding spending by residents

when abroad.)

Table 1 summarises these differences

Table 1: Differences between HCIs and CPI/HICP

We now turn to two other countries, who also publish household indices –

Australia and New Zealand. As far as we are aware these are the only two

other countries who explicitly publish household indices of the type we

describe but please do let us know if there are others.

Table 2 compares the household indices of the three countries.

HCIs CPI/HICP

Timing Payment (in principle) Acquisition

Weighting Democratic (household) Plutocratic (expenditure)

Interest payments All included Excluded

Student loan repayments Included All tuition fees included

when due

Insurance premiums Fully weighted Net weight only

Owner occupied housing All housing related payments (we

believe this should include at

least some capital payments)

Minor repairs only (net

acquisition method to be

added to HICPs)

National or domestic National basis (in principle) Domestic basis

4

Table 2: Household indices of UK, Australia and New Zealand

* The current plan is to include these in a separate derivative index

All three countries use a payments approach, at least in principle. Two use

democratic (that is household) weighting.

All three countries include interest payments made by households while

insurance premiums have full weight. Importantly we all develop these indices

for different groups of households since the experience of different household

types is a key reason for developing household indices.

So while we all developed these indices separately, there is a lot of consensus

between us on how a household index differs from a standard consumer price

index. The fact that we ended up with so much similarity of approaches is

telling.

One area we do not – or not yet – have an agreed approach on is the vexed

issue of owner occupied housing. Although we all include mortgage interest

payments, the authors believe that at least some part of capital payments

needs to be included. The arguments for this are set out fully in our recent

paper listed in the references.

But now let’s turn to the question of why we need household indices. These

charts (which currently only go up to the end of 2021) give one answer.

UK Australia New Zealand

Household Costs

Indices (HCIs)

Selected Living Costs

Indexes (SLCIs)

Household living-costs

price indexes (HLPIs)

Household groups

covered

19 groups plus total 4/5 groups only 13 groups and total

Timing basis Payment Payment Payment

Weighting Democratic Plutocratic Democratic

Interest payments Mostly included (all

in principle)

All included All included

Insurance weights Gross Gross Gross

Owner occupier costs Mortgage interest,

all payments other

than capital costs*

Mortgage interest Mortgage interest

payments indexed by

house prices

Taxes related to

properties

Included Included Included

5

In 2022 and, currently, in 2023 we have had very high inflation in the UK. Of

course, we are not alone in that. Food and energy prices in particular have

increased rapidly. You do not need to think very hard to realise that in these

circumstances lower income households will be particularly affected due to the

high proportion of energy and food costs in their overall expenditure.

But what happened in the past when inflation was modest?

The chart below shows that lower income households (we are using those in

the second decile), represented by the blue line, have experienced a higher

rate of inflation over the period shown than richer households - those in the 9th

decile – represented by the grey line. Specifically this happened over the

period 2008 to 2014 – it can be seen that the gap widened then and was then

broadly stable for the next few years.

Next, consider the CPI/HICP, represented by the orange line. It can be seen

that this is very close to the line for richer households and below that for

poorer households.

Chart 1: CPI/HICP vs HCIs for High income and Low income households (indices, 2005 = 100)

Source: ONS

90

100

110

120

130

140

150

160

Jan-05 Jan-07 Jan-09 Jan-11 Jan-13 Jan-15 Jan-17 Jan-19 Jan-21

Richer households have greater weight in CPI

HCI low income households (Decile 2)

HCI high income households (Decile 9)

CPI

so it is closer to the HCI for richer households

6

Could the CPI if available for income deciles show this? As it happens the ONS

has also periodically published CPI broken down by income deciles. Consider

the following chart.

Chart 2: CPI/HICP and HCI for low and high income deciles (indices, 2005=100)

Source: ONS

For most of this period the high income decile lines for CPI – light blue – and

the HCI – grey are so close they can hardly be distinguished. But the lines for

CPI low income decile - orange – and HCI low income decile – dark blue - are

clearly different.

For policy makers who need to understand, in particular, the pressures low

income households are experiencing, this insight is helpful. For households

living close to the edge a small difference between the rise in prices and the

rise in incomes can cause real hardship.

We hope that this paper gives an idea of what household indices are and why

they are needed. The original purpose of many consumer price indices was

primarily for use in wage bargaining. Then the rise of inflation targeting in the

90

100

110

120

130

140

150

160

Jan-05 Jan-07 Jan-09 Jan-11 Jan-13 Jan-15 Jan-17 Jan-19 Jan-21

HCI low income (decile 2) HCI high income (decile 9)

CPI low income (decile 2) CPI high income (decile 9)

CPI high income decile and HCI high income decile are very close, at least from 2009. But there is a clear difference between the low income deciles.

7

1990s required a series focused on that need. But it is important – indeed

crucial – that household experience is not neglected.

There remain some points where further development or discussion is needed.

How to deal with owner occupier housing costs is one. Longer term questions

include dealing with quality change – is it right to aim to measure all items at

constant quality even when the unimproved product is no longer available?

Another point is to look not just at the weights that are appropriate to

different household groupings but at the different brands they might be more

or less likely to buy or which outlets they are more likely to shop at.

References Astin, J. and Leyland, J. (2015): Towards a Household Inflation Index: Compiling a consumer price index with public credibility

Astin, J. & Leyland, J. (2023) Measuring Inflation as Households see it: next steps for the Household Costs Indices Astin, J. (2021) “Measuring EU Inflation: the Foundations of the HICP” (Palgrave Macmillan. E-book also available at Measuring EU Inflation | SpringerLink Flower, T. and Wales, P. (2014): Variation in the Inflation Experience of UK Households: 2003-2014” (UK Office for National Statistics.) International Labour Organisation et al. (2004): “Consumer Price Index manual: theory and practice International Monetary Fund et al. (2020): Consumer Price Index Manual: Concepts and Methods | 2020 UK Office for National Statistics: Links to HCI publications can be accessed at: https://www.ons.gov.uk/search?q=Household%20Costs%20indices&page=1

8

Payne, Christopher, Office for National Statistics (2021): Measuring households’ experience of price change: the Household Costs Indices (HCIs) Presentation to 2021 UNECE Group of Experts on Consumer Price Indices meeting) United Nations et al. (2009) Practical Guide to Producing Consumer Price Indices

Measuring Inflation as Households Experience it

Languages and translations
English

1

Measuring Inflation as Households Experience it

John Astin and Jill Leyland1

What is inflation? The famous economist Roy Harrod (1900-1978) defined it as

“the name of that state of affairs in which all or most prices are continually

rising”.

But that doesn’t tell us how to measure it. Any expert knows that there are

many ways to measure it.

As some readers will know, in the 1990s John Astin – one of the authors of this

paper - was in charge of the Eurostat team which was responsible for

developing the EU Harmonised Indices of Consumer Prices (HICP). This was

intended initially to facilitate the inflation test for countries that were

candidates for the euro, so that when two countries’ inflation rate was, say,

4.5%, it was clear that they were facing the same degree of inflation; they were

measuring it in more or less identical ways. Later it was to become a tool for

the management of the euro zone by the ECB (European Central Bank).

The UK government decided in 2003 that the HICP (now known in the UK as

the CPI) should be the target inflation measure for the Bank of England - fine!

At that time, the main index used for purposes such as uprating pensions,

wages, and so on was the RPI (Retail Prices Index) which had originally been

designed for these types of uses (as had consumer price indices in most

countries). However, in 2010 the UK government decided the RPI should be

replaced as the main inflation index for public sector use by the CPI (HICP). Of

course John was pleased that his “baby” had achieved adulthood - but it was

obviously not the best index to be used for most indexation purposes. Then,

changes made to the way clothing prices were collected reacted badly with the

formulae used in the RPI, which began clearly to overestimate inflation,

resulting in it eventually being deprived of “national statistic” status and its use

discouraged – although its use was, and is still, widely embedded in contracts.

In 2030 the RPI will effectively turn into a derivative of CPI.

All of this led to both authors separately (we did not know each other at the

time) working from 2014 on proposals for a new household-oriented index.

1 [email protected] [email protected] This paper contains our own opinions. It should not be assumed that the UK Office for National Statistics will necessarily agree with all of them.

2

We both felt there was a clear need for an index that measured inflation as

households actually experienced it – or at least as close as possible. We

realised we were both thinking along the same lines and in 2015 we joined

forces to develop the ideas for what we eventually called the HII (Household

Inflation Index).

It took a while for our ideas to be accepted in official circles, but the ONS

decided it was useful and important, and started gradually to publish the new

index (re-named HCI - Household Costs Index) on an annual experimental

basis. Importantly HCIs for different household groupings – for example by

income deciles or working age vs retired – were also published.

With the recent public interest in inflation measures, the ONS have

announced that from around September this year they will be publishing the

HCIs quarterly. Our hope and expectation is that this will become monthly, and

that the HCI can eventually replace the RPI. The HCIs – and not the HICP/CPI -

could – and should - be used for such things as updating pensions, wages etc.

as well as being the standard national measure of inflation regarding food,

clothing and all the goods and services that households buy.

So, what are the differences between the HCI and the CPI/HICP? Bear in mind

that the aim of HCIs is to measure inflation as closely as possible to what

households actually experience:

The HCIs :

(a) are notionally on a payments basis- although acquisition is used in practice

where the two are not very different;

(b) are weighted on a household (democratic) basis, as opposed to a

“plutocratic” basis – a household index should give equal weight to every

household regardless of the level of income or expenditure;

(c) include interest payments (including mortgage interest);

(d) include student loan repayments (in the UK);

(e) use gross insurance premiums - rather than net premiums which exclude

the value of claims paid;

(f) include all housing-related payments made by owner occupiers, including,

we believe, at least some elements of capital payments;

3

(g) are on a “national” basis, excluding payments by foreign visitors and

including, as far as possible, payments by residents when abroad.

(Macroeconomic indices like the HICP are calculated on a “domestic” basis,

including expenditure by foreign visitors and excluding spending by residents

when abroad.)

Table 1 summarises these differences

Table 1: Differences between HCIs and CPI/HICP

We now turn to two other countries, who also publish household indices –

Australia and New Zealand. As far as we are aware these are the only two

other countries who explicitly publish household indices of the type we

describe but please do let us know if there are others.

Table 2 compares the household indices of the three countries.

HCIs CPI/HICP

Timing Payment (in principle) Acquisition

Weighting Democratic (household) Plutocratic (expenditure)

Interest payments All included Excluded

Student loan repayments Included All tuition fees included

when due

Insurance premiums Fully weighted Net weight only

Owner occupied housing All housing related payments (we

believe this should include at

least some capital payments)

Minor repairs only (net

acquisition method to be

added to HICPs)

National or domestic National basis (in principle) Domestic basis

4

Table 2: Household indices of UK, Australia and New Zealand

* The current plan is to include these in a separate derivative index

All three countries use a payments approach, at least in principle. Two use

democratic (that is household) weighting.

All three countries include interest payments made by households while

insurance premiums have full weight. Importantly we all develop these indices

for different groups of households since the experience of different household

types is a key reason for developing household indices.

So while we all developed these indices separately, there is a lot of consensus

between us on how a household index differs from a standard consumer price

index. The fact that we ended up with so much similarity of approaches is

telling.

One area we do not – or not yet – have an agreed approach on is the vexed

issue of owner occupied housing. Although we all include mortgage interest

payments, the authors believe that at least some part of capital payments

needs to be included. The arguments for this are set out fully in our recent

paper listed in the references.

But now let’s turn to the question of why we need household indices. These

charts (which currently only go up to the end of 2021) give one answer.

UK Australia New Zealand

Household Costs

Indices (HCIs)

Selected Living Costs

Indexes (SLCIs)

Household living-costs

price indexes (HLPIs)

Household groups

covered

19 groups plus total 4/5 groups only 13 groups and total

Timing basis Payment Payment Payment

Weighting Democratic Plutocratic Democratic

Interest payments Mostly included (all

in principle)

All included All included

Insurance weights Gross Gross Gross

Owner occupier costs Mortgage interest,

all payments other

than capital costs*

Mortgage interest Mortgage interest

payments indexed by

house prices

Taxes related to

properties

Included Included Included

5

In 2022 and, currently, in 2023 we have had very high inflation in the UK. Of

course, we are not alone in that. Food and energy prices in particular have

increased rapidly. You do not need to think very hard to realise that in these

circumstances lower income households will be particularly affected due to the

high proportion of energy and food costs in their overall expenditure.

But what happened in the past when inflation was modest?

The chart below shows that lower income households (we are using those in

the second decile), represented by the blue line, have experienced a higher

rate of inflation over the period shown than richer households - those in the 9th

decile – represented by the grey line. Specifically this happened over the

period 2008 to 2014 – it can be seen that the gap widened then and was then

broadly stable for the next few years.

Next, consider the CPI/HICP, represented by the orange line. It can be seen

that this is very close to the line for richer households and below that for

poorer households.

Chart 1: CPI/HICP vs HCIs for High income and Low income households (indices, 2005 = 100)

Source: ONS

90

100

110

120

130

140

150

160

Jan-05 Jan-07 Jan-09 Jan-11 Jan-13 Jan-15 Jan-17 Jan-19 Jan-21

Richer households have greater weight in CPI

HCI low income households (Decile 2)

HCI high income households (Decile 9)

CPI

so it is closer to the HCI for richer households

6

Could the CPI if available for income deciles show this? As it happens the ONS

has also periodically published CPI broken down by income deciles. Consider

the following chart.

Chart 2: CPI/HICP and HCI for low and high income deciles (indices, 2005=100)

Source: ONS

For most of this period the high income decile lines for CPI – light blue – and

the HCI – grey are so close they can hardly be distinguished. But the lines for

CPI low income decile - orange – and HCI low income decile – dark blue - are

clearly different.

For policy makers who need to understand, in particular, the pressures low

income households are experiencing, this insight is helpful. For households

living close to the edge a small difference between the rise in prices and the

rise in incomes can cause real hardship.

We hope that this paper gives an idea of what household indices are and why

they are needed. The original purpose of many consumer price indices was

primarily for use in wage bargaining. Then the rise of inflation targeting in the

90

100

110

120

130

140

150

160

Jan-05 Jan-07 Jan-09 Jan-11 Jan-13 Jan-15 Jan-17 Jan-19 Jan-21

HCI low income (decile 2) HCI high income (decile 9)

CPI low income (decile 2) CPI high income (decile 9)

CPI high income decile and HCI high income decile are very close, at least from 2009. But there is a clear difference between the low income deciles.

7

1990s required a series focused on that need. But it is important – indeed

crucial – that household experience is not neglected.

There remain some points where further development or discussion is needed.

How to deal with owner occupier housing costs is one. Longer term questions

include dealing with quality change – is it right to aim to measure all items at

constant quality even when the unimproved product is no longer available?

Another point is to look not just at the weights that are appropriate to

different household groupings but at the different brands they might be more

or less likely to buy or which outlets they are more likely to shop at.

References Astin, J. and Leyland, J. (2015): Towards a Household Inflation Index: Compiling a consumer price index with public credibility

Astin, J. & Leyland, J. (2023) Measuring Inflation as Households see it: next steps for the Household Costs Indices Astin, J. (2021) “Measuring EU Inflation: the Foundations of the HICP” (Palgrave Macmillan. E-book also available at Measuring EU Inflation | SpringerLink Flower, T. and Wales, P. (2014): Variation in the Inflation Experience of UK Households: 2003-2014” (UK Office for National Statistics.) International Labour Organisation et al. (2004): “Consumer Price Index manual: theory and practice International Monetary Fund et al. (2020): Consumer Price Index Manual: Concepts and Methods | 2020 UK Office for National Statistics: Links to HCI publications can be accessed at: https://www.ons.gov.uk/search?q=Household%20Costs%20indices&page=1

8

Payne, Christopher, Office for National Statistics (2021): Measuring households’ experience of price change: the Household Costs Indices (HCIs) Presentation to 2021 UNECE Group of Experts on Consumer Price Indices meeting) United Nations et al. (2009) Practical Guide to Producing Consumer Price Indices