Consumer Prices Advisory Committee (CPAC) 2010 Annual Report, UK

The CPAC 2010 annual report focused on the inclusion of housing cost in the CPI. They have proposed three new measures of CPI which include housing costs. The first is the net acquisitions approach which treats a house as the purchase of a good which is part asset and part consumable and would incorporate changes to the price of the house and in the costs associated with buying and maintaining it. Second is the rental equivalence approach treats a house as a capital good providing a flow of services that are consumed each period, the value of which is assumed to be the same as the rent that the dwelling might attract. The third the narrow user cost approach which is similar to the rental equivalence approach but tries to also calculate the opportunity cost of having money tied up in a house. This approach has been dismissed as a candiate as it is too subjective a measure. The report was published on the 3rd of November and can be found here.