Changes in Housing Index Methodology

The Ministry of Statistics and Programme Implementation has proposed significant changes to the methodology for compiling the housing index to better capture housing inflation. These changes are part of the base-year revision exercise for the Consumer Price Index (CPI).

Key Proposed Changes

• Exclusion of employer-provided accommodation: Employer-provided housing is currently included in the housing index, which distorts data as rents or allowances are based on the occupant’s rank rather than market forces.
• Monthly collection of housing rental data: Currently, data is collected every six months, which may not accurately reflect real-time housing inflation trends.
• Extension of price survey coverage to rural areas: The current index excludes rural areas due to outdated data assumptions from the Household Consumption Expenditure Survey 2011-12.

Rationale and Impact

Housing is a critical component of the CPI, with a significant weight of 21.67% in urban areas and 10.07% at the national level. Accurate measurement is crucial as housing costs significantly impact household budgets, affecting overall financial well-being and consumption patterns.

Additional Details

• The discussion paper suggests using Census 2011 data for assigning weights to accommodation categories.
• There will be no change in how dwellings are categorized, which will continue to be based on the number of living rooms.

Consultation Process

The discussion paper is available for public consultation until November 20, allowing stakeholders to provide feedback on the proposed methodology changes.