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MrWallace

House Prices - Are They Part Of Inflation Rate Calculations

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Hello,

I'm trying to write an article for an internet site about why house prices in a UK rocketed. No doubt there are many reason for this, but I believe that Labour gave the Bank of England a remit to keep inflation below 2%? Did they also remove house prices and asset values from the calculation to allow them to rocket and do you have sources for this?

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Hello,

I'm trying to write an article for an internet site about why house prices in a UK rocketed. No doubt there are many reason for this, but I believe that Labour gave the Bank of England a remit to keep inflation below 2%? Did they also remove house prices and asset values from the calculation to allow them to rocket and do you have sources for this?

Only mortgage interest payments are included in the RPI measure, not the cost of the house or the size of the loan which generates the interest. RPI-X strips out mortgage interest.

CPI does not include it either. The other main difference between RPI and CPI is that CPI assumes that consumers buy less of things that get more expensive, dampening the effect of rising prices.

There is continued talk of including house prices in CPI but would not be a small undetaking.

http://www.ft.com/cms/s/0/35ca2dce-e78b-11df-b5b4-00144feab49a.html#axzz1cxTe5II9

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  • 276 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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