These are the slides presented at Glaziers Hall, London for the Economic Forum on Thursday 18 July 2019.

1. ONS Economic Forum
Wifi: GlaziersHall
Password: event123
#econstats @ons
18 July 2019

2. Agenda
09:30 – 10:00 Registration with tea and coffee
10:00 – 10:05 Welcome and introduction – Richard Heys
10:05 – 10:20 New data sources in Consumer Price statistics – Tanya Flower
10:20 – 10:35 Household Cost Indices: intersections of household groups – Helen Sands
10:35 – 10:50 Exchange rate pass through and the transmission to Consumer Prices following the 2015-16
depreciation of sterling – Mark Chandler
10:50 – 11:00 Question and answer session
11:00 – 11:15 Refreshment break
11:15 – 11:35 Upcoming changes to the Public Sector Finances in September 2019 – David Bailey/Foyzunnesa Khatun
11:35 – 11:55 Blue Book update – Rob Doody
11:55 – 12:00 Round-up and closing remarks – Richard Heys

3. Welcome and introduction
Deputy Chief Economist
Richard Heys
18 July 2019

4. New data sources in
Consumer Price
statistics
Economic Advisor
Prices Division
Tanya Flower
18 July 2019

5. Introducing alternative
data sources…

6. What are alternative data sources?
• Scanner data
• Web scraped data
• Used in conjunction with data as currently collected

7. Why use alternative data sources?
• Improved coverage – for example regional
• High frequency of collection
• Reduced burden

8. Advantages of scanner & web-scraped data
Data dimension Traditional Scanner data Web scraping
Data acquisition Manual Automated Automated
Completeness/
scope
Sample from all retailers All transactions (bulk) from medium
to large retailers
Bulk or sample from online
retailers
Metadata Item description Item description + (some) attributes
Backseries may be available
Item description +
attributes
Quantity data N/A Quantities sold N/A
Timing Single collection day Daily Daily/weekly

9. Experimental web
scraped statistics…

10. 88
90
92
94
96
98
100
102
Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19
Chart title
Laptops Desktops Smartphones Tablets
Experimental indices for tech goods show downward trend
Index Nov 18 = 100

11. 0
20
40
60
80
100
Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19
Chart Title
Laptops Desktops Smartphones Tablets
High product churn causes loss in sample size
%

12. 88
90
92
94
96
98
100
102
Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19
New index methods are available
Chained Dutot Fixed-base Dutot GEKS-J Chained Jevons Fixed-base Jevons
Index Nov 18 = 100

13. Roadmap for
delivery…

14. Q1 2019 – Q3 2020
Q1 2019 – Q4 2021
Q4 2020 – Q4 2021
Q1 2022 – Q1 2023
Q1 2022 – Q1 2023
1 2
3
4
5
6
7 8

15. Key messages…
• Aim to incorporate alternative data sources by Q1 2023
• Alongside existing sources, data will give
unprecedented level of insight into consumer price
inflation

16. Household Costs Indices:
intersections of household
groups
Economic Advisor
Prices Division
Helen Sands
18 July 2019

17. Overview
• What are the Household Costs Indices (HCIs)?
• What has the development of the HCIs allowed us to
explore?
• Disparities between indices for intersections of household
groups
• Underlying economic drivers of subgroup indices
• Limitations and future work
• Key messages

18. What are the Household Costs
Indices (HCIs)?

19. The HCIs have been in development since 2016. They
aim to capture the effects of changing prices and costs on
household budgets. While CPIH measures changing
prices of consumption goods across the population, the
HCIs aim to measure changes in the monetary outgoings
of households.
To do this the indices use:
• Democratic vs plutocratic weighting
• Payments vs acquisition approach

20. Our preliminary estimates of the HCIs were published in
Dec 2017 and April 2019
These covered different groups of the population:
• Income deciles
• Retired and non-retired households
• Households with and without children
• Households of different tenure types (2019)
A reference all-households index was also produced

21. What has the
development of the
HCIs allowed us to
explore?

22. By modifying the weights underlying the indices, we can
create indices for different subgroups of households:
• With / without children
• Retired / non-retired
• Tenure type
• Income deciles
Recent work has allowed us to produce indices for
intersections of these subgroups, for example:
• Non-retired households of different tenure type
• Households with children of different tenure type

23. %
Non-retired, owner occupied households have mostly
seen lower growth than non-retired households of
different tenures

24. Non-retired, privately rented households spend the
largest proportion of their expenditure on housing and
housing services

25. Mortgage interest contributes most to the differences in
household groups between 2007 and 2013
Percentage points

26. Limitations and future work

27. • Smaller sample sizes
• Prices paid assumed to be equal between groups
• HCIs are still in development, therefore results are
subject to revision while methods are refined:
• Improving student loans methodology
• Revisiting interest payments calculations and expanding
coverage
• Improving systems
• Experimental indices including capital housing costs

28. Key messages
1. Our latest developments allow us to look at changes in
household costs for all kinds of population groups
2. We can also look at what products contribute more or less to
the difference in subgroup measures to help us understand
why one group of households may have faster rising costs
than another
3. There are some limitations to these indices in that the sample
sizes can be small and the indices only account for
differences in expenditure shares (not prices)
4. We are continuing to improve this work, so these results are
still indicative, and subject to revision. We welcome feedback.

29. Mark Chandler
Senior Economic Adviser | Economic Advice and Analysis
@ONS
Exchange Rate Pass
Through and the
Transmission to
Consumer Prices
Following the 2015-16
Depreciation of Sterling
18 July 2019

30. 80
85
90
95
100
105
110
-0.5
0
0.5
1
1.5
2
2.5
3
3.5
31Jan15
28Feb15
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30Jun15
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31Aug15
30Sep15
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31Jan16
29Feb16
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30Apr16
31May16
30Jun16
31Jul16
31Aug16
30Sep16
31Oct16
30Nov16
31Dec16
31Jan17
28Feb17
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30Apr17
31May17
30Jun17
31Jul17
31Aug17
30Sep17
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31Jan18
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30Apr18
31May18
30Jun18
31Jul18
31Aug18
30Sep18
31Oct18
30Nov18
31Dec18
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28Feb19
31Mar19
30Apr19
31May19
IIndex,Jannuary2015=100
%
Index for the monthly average effective exchange rate and the 12 month Inflation rate for CPI, January 2015 to May
2019
CPI inflation rate EER 2015
Figure 1: Inflation rose following the depreciation of sterling

31. Figure 2. High import intensity buckets experienced more change in their inflation rates
following the depreciation of sterling
-3
-2
-1
0
1
2
3
4
2015JAN
2015FEB
2015MAR
2015APR
2015MAY
2015JUN
2015JUL
2015AUG
2015SEP
2015OCT
2015NOV
2015DEC
2016JAN
2016FEB
2016MAR
2016APR
2016MAY
2016JUN
2016JUL
2016AUG
2016SEP
2016OCT
2016NOV
2016DEC
2017JAN
2017FEB
2017MAR
2017APR
2017MAY
2017JUN
2017JUL
2017AUG
2017SEP
2017OCT
2017NOV
2017DEC
2018JAN
2018FEB
2018MAR
2018APR
2018MAY
2018JUN
2018JUL
2018AUG
2018SEP
2018OCT
2018NOV
2018DEC
2019JAN
2019FEB
2019MAR
2019APR
2019MAY
12-month inflation rates for import intensity buckets with CPI weights, January 2015
to May 2019
0-10% Import intensity 10-25% Import intensity 25-40% Import intensity 40% Import intensity

32. Figure 3: Different Sectors face the exchange rate shock differently
-3
-2
-1
0
1
2
3
4
2015JAN
2015FEB
2015MAR
2015APR
2015MAY
2015JUN
2015JUL
2015AUG
2015SEP
2015OCT
2015NOV
2015DEC
2016JAN
2016FEB
2016MAR
2016APR
2016MAY
2016JUN
2016JUL
2016AUG
2016SEP
2016OCT
2016NOV
2016DEC
2017JAN
2017FEB
2017MAR
2017APR
2017MAY
2017JUN
2017JUL
2017AUG
2017SEP
2017OCT
2017NOV
2017DEC
2018JAN
2018FEB
2018MAR
2018APR
2018MAY
2018JUN
2018JUL
2018AUG
2018SEP
2018OCT
2018NOV
2018DEC
2019JAN
2019FEB
2019MAR
2019APR
2019MAY
% 12-month growth rate of the consumer price index for goods and services
CPI ANNUAL RATE: Services 2015=100 CPI ANNUAL RATE: Goods 2015=100

33. Figure 4: The impact of depreciation on output producer price inflation and consumer price
inflation was lower and with more of a lag than on import price inflation and input producer
price inflation
-20
-15
-10
-5
0
5
10
15
20
25
%
12-month inflation rates for the input PPI and import price index, January 2015 to May 2019
Total Imports 12-month inflation rate Input PPI 12-month inflation rate
-4
-2
0
2
4
%
12-month inflation rates for output PPI and CPI, January 2015 to May 2019
CPI 12-month inflation rate Output PPI 12-month inflation rate

34. Figure 5. 12 month growth rate of Consumer Price Index for durable, non-durable and semi-
durable goods
-4.0
-3.0
-2.0
-1.0
0.0
1.0
2.0
3.0
4.0
5.0
2015JAN
2015FEB
2015MAR
2015APR
2015MAY
2015JUN
2015JUL
2015AUG
2015SEP
2015OCT
2015NOV
2015DEC
2016JAN
2016FEB
2016MAR
2016APR
2016MAY
2016JUN
2016JUL
2016AUG
2016SEP
2016OCT
2016NOV
2016DEC
2017JAN
2017FEB
2017MAR
2017APR
2017MAY
2017JUN
2017JUL
2017AUG
2017SEP
2017OCT
2017NOV
2017DEC
2018JAN
2018FEB
2018MAR
2018APR
2018MAY
2018JUN
2018JUL
2018AUG
2018SEP
2018OCT
2018NOV
2018DEC
%
12-month growth of CPI for durable, non-durable and semi-durable goods, January 2015 to
December 2018
Durables Goods Non-durables Goods Semi-durables

35. Main takeaways
• The 2016 exchange rate depreciation was followed a greater increase in inflation for high
import intensity products than low import intensity products.
• The exchange rate depreciation was followed by large increases in the inflation rate for
imported commodities and for inputs to the manufacturing process, and then more muted
increases in output producer prices and consumer prices
• Following the 2016 exchange rate changes, the growth rate for the Consumer Prices
Index for durable goods was more responsive than that for non-durable goods.

36. Economic Forum - London
Upcoming changes to
the Public Sector
Finances in
September 2019
Public Sector Division
David.Bailey@ons.gov.uk; Foyzunnesa.Khatun@ons.gov.uk
David Bailey and Foyz Khatun
18 July 2019

37. Overview
• Background
• Main changes in September 2019
• Provisional impacts in September 2019
• IMF Government Finance Statistics framework
• Summary
Economic Forum - London

38. Background
• June 2018: Pensions consultation (response in Nov 2018)
• July 2018: Looking ahead 2018
• December 2018: New treatment of student loans
• May 2019: Looking ahead 2019
• June 2019: Student loans methodological article &
estimates; IMF GFSM tables & article
• July/August 2019: Pensions estimates
Economic Forum - London

39. Main changes in September 2019
• Student loans: improved treatment of student loans that
better reflects both government’s and borrower’s financial
position: partitioned into loan and government spending
• Pensions: including public sector pensions schemes (and
their assets and liabilities) and the Pension Protection Fund
within the public sector boundary
• Depreciation: improvements to estimates of capital stocks
and therefore consumption of fixed capital in Blue Book 2019
Economic Forum - London

40. Impacts from student loan changes
• PSNB: increase - as portion of lending considered
spending at loan inception
• PSND: no impact
• PSNFL: increase - as portion of lending never gets
recorded as government (loan) asset
Economic Forum - London

41. Economic Forum - London
Student loans: Public Sector Net Borrowing ex (PSNBex) impacts
0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.0
2.0
4.0
6.0
8.0
10.0
12.0
£ billion
Student loans Impact as % of GDP
% of GDP

42. Economic Forum - London
Student loans: Public Sector Net Financial Liabilities ex
(PSNFLex) impacts
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
£ billion
Student loans

43. Impacts from pensions changes
• Estimated impacts to be published in next Public
Sector Finances bulletin (19 July)
Key impact:
• PSND: decrease - from liquid assets and consolidation of
gilts held by pension funds
Economic Forum - London

44. Economic Forum - London
Impacts on Public Sector Current Budget Deficit (PSCB)
from new depreciation estimates
-40.0
-20.0
0.0
20.0
40.0
60.0
80.0
100.0
120.0
140.0
£ billion
Current New

45. Economic Forum - London
IMF Government Finance
Statistics

46. IMF Government Finance Statistics
• What is it?
• Alternative framework for presenting government finance
statistics – used by most countries in the world
• Focuses on the impacts of economic events on
government finances and public sector
• Largely consistent with national accounts (ESA 2010) –
some presentational, methodological and coverage
differences exist
Economic Forum - London

47. IMF Government Finance Statistics
• Why are we introducing it?
• Provide a wider view of public sector assets and liabilities
• HMT Managing Fiscal Risks
• IMF Fiscal Transparency Evaluation
Economic Forum - London

48. Stocks Flows Stocks
Opening Balance
Sheet
Transactions Other Economic Flows Closing Balance Sheet
Revenue Holding Gains
Other Volume
Changes
£835,572
-
Expense
£849,040
=
Net Worth
+
Net operating balance
+
Change in net worth due to
other economic flows =
Net Worth
-£62,342 -£13,468 -£18,799 -£89,749
= = = =
Non-financial Assets
+
Net investment in
non-financial assets +
Other economic flows in
nonfinancial assets =
Non-financial Assets
£1,791,880 £28,355 -£114,380 £1,705,855
+ + + +
Net financial worth
+
Net
lending/borrowing +
Change in net financial worth
due to other economic flows =
Net financial worth
-£1,854,222 -£41,823 £95,581 -£1,795,604
= = = =
Financial Assets
+
Net acquisition of
financial assets +
Other economic flows in
financial assets =
Financial Assets
£596,074 £85,143 -£16,797 £664,420
- - - -
Liabilities
+
Net incurrence of
liabilities +
Other economic flows in
liabilities =
Liabilities
£2,450,296 £122,106 -£112,378 £2,460,024
Balance sheet
presentation under
Government Finance
Statistics Manual 2014
(GFSM 2014)
Economic Forum - London
2017/18

49. Economic Forum - London
Public sector balance sheet under GFSM 2014
-3,000
-2,000
-1,000
0
1,000
2,000
3,000
£ billions
Financial Assets Non-financial Assets Liabilities Net Worth

50. Summary
• Main changes in September 2019:
• Student loans, presentation of pensions, consumption of
fixed capital
• Improvements to IMF GFSM tables: inclusion of unfunded
pensions
Economic Forum - London

51. Blue Book Update
Senior Statistician
Office for National Statistics
@ONS
Rob Doody
18 July 2019

52. Outline
Overview
Component Improvements
Indicative impacts
Forward look

53. BLUE BOOK 2019 OVERVIEW
Used foundations and framework of ‘H approach’
Published impact article
Introduced new data sources
Improvements in deflator confrontation
Greater Integration of SFA and SU
We are on track to
publish major
improvements in this
year’s Blue and Pink
Books

54. Component
Improvements

55. Main BB19 Component Improvements
Capital Stocks – Review into life length of
fixed assets
Change in Inventories – Removal of
inventories that are work-in-progress in
services industries (and move to product
based deflation)
R&D – Redeveloped R system, which has
taken on up to date survey data
VAT – Improved estimates of VAT refunds
claimed back by local authority and
government departments.
Trade – Handling of intragroup payments,
improvements to Balance of Payment
adjustments and deflators
Purchases – Introduction of new purchases
patterns from the relaunched purchases
inquiry
GFCF – Improved asset to product allocation

56. Indicative Impacts

58. National Accounts articles: Blue Book 2019 indicative impacts on GDP current price and chained volume measure estimates: 1997 to 2016

59. Forward Look
Focus for Blue Book 2019 has turned to the quarterly data for GDP
The Sector and Financial Accounts, and Balance of Payments estimates are also
currently being quality assured
Further articles will be published in August giving more detailed information on the Blue
Book 2019 changes
The new framework has given us areas we need to look at
In particular we need to do more on deflators and margins before we can move to full
implementation

60. Forthcoming Articles
Title Indicative Publication
Date
Impact on GDP current price and chained volume measure annual estimates: 1997
to 2016
Thursday 27th June
Impact on GDP current price and chained volume measure annual and quarterly
estimates: 1997 to 2016
20th August
Change to the Capital Stock estimation, how Capital is recorded in the National Account 20th August
Improvement to NPISH charity data for 2019 Blue Book 20th August
UK Trade data impact assessment, (1997-2016) 20th August
UK GFCF – Improvements (working title) (1997-2016) 20th August
Annual Sector and Financial Accounts estimates, (1997-2016) 30th August
Annual Balance of Payments estimates, (1997-2016) 30th August