ECB wants housing included in CPI

The ECB is considering counting owner-occupied housing in its calculation of the consumer price index (CPI):

Consumer-price indices are meant to reflect the cost of typical baskets of goods and services. The euro area’s have a big omission. They capture rents paid by tenants, but not the costs of buying and owning property—even though two-thirds of people in the zone own their homes. As Benoît Cœuré, who until recently sat on the ecb’s board, pointed out, the bank’s chosen measure “captures only marginally the largest single lifetime expenditure of households”.

In fact, euro-area statisticians do calculate the cost of buying and owning a home. Adding it to price indices could raise measured inflation by 0.2-0.3 percentage points, notes Davide Oneglia of ts Lombard, an investment-research firm. That is nothing to sneeze at when official inflation is only 1.3%…

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