The Office for national Statistics (ONS) will use CPIH instead of CPI (consumer price index) from March 2017.
CPIH will track the costs of housing services associated with owning, maintaining and living in one’s own home. It will also include council tax.
CPIH tends to be higher than CPI. In September CPIH stood at 1.2%, while CPI was 1%.
It is unclear whether CPIH will become the official measure used by the Bank of England to set its inflation target, which at the moment is 2%. It currently uses CPI.
The Treasury confirmed it has no plans to use CPIH to uprate a number of benefits currently linked to CPI.
John Pullinger, national statistician and chief executive of the ONS, said: “I believe that CPIH has a number of desirable properties, most notably the inclusion of an element of owner occupiers’ housing costs. It also addresses several flaws and limitations present in alternative measures. We intend to make CPIH the preferred measure from March 2017, by which time all the planned improvements will have been implemented.”