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ONS Economic Forum
Email: economicforum@ons.gov.ukTwitter: @ONS
#ONSeconomyWebsite: http://www.ons.gov.uk/ons/about-ons/get-involved/events/events/economic-forum/index.html
15 January 20151
ONS Economic Forum – January 2015
09.45 Introduction & welcome
10.00 Johnson review of price statistics
11.00 Refreshment break
11.30 What’s new
12.10 What’s next
12.30 Close
2
Agenda
Introduction and welcome
John Pullinger, National Statistician
ONS Economic Forum
15 January 2015
3
The Johnson Review
Paul Johnson, Institute for Fiscal Studies
ONS Economic Forum: 15 January 2015
4
What’s new
Peter Patterson, Deputy Chief Economic Adviser
ONS Economic Forum
15 January 2015
5
• Latest ONS economic statistics, including quarterly national accounts
• New quarterly release on indicators of economic well-being
• NA measure of living standards - relationship between RHDI and GDP growth
• Variations in the inflation experience of UK households
What’s new - outline
6
Sharp fall in inflation to 0.5%, record low
7
% changes on a year earlier
GDP growth stabilised in 2.5-3% annual range during past year
8
Revisions to three measures of GDP
9
Mean revisions to GDP growth estimates
10Source: OECD
4 time intervals:M5_P 5 mthsY1_P 1 yearY2_P 2 yearsY3_P 3 years
Percentage points
Services maintain the momentum of growth
11
More than half of growth in services output (or 70% of cumulative GDP growth) since 2011 is due to 3 sectors:•Other professional service activities•Admin & support service activities•Real estate activities
Sectoral financial balances
12
UK current account deficit
13
Primary income balance
14
Economic Well-being Q3 2014
• Traditional measures of progress such as GDP are increasingly considered an incomplete picture of the state of the nation.
• First of regular quarterly bulletins to coincide with QNA.
• Economic Well-being provides a fuller understanding of the economy & how it impacts on national well-being
• To give a more rounded and comprehensive basis for assessing changes in material well-being
15
GDP, GDP per head and NNDI per head
90.00
95.00
100.00
105.00
110.00
115.00
120.00
125.00
130.00
135.00
2000 Q1
2001 Q3
2002 Q3
2003 Q3
2004 Q3
2005 Q3
2006 Q3
2007 Q3
2008 Q3
2009 Q3
2010 Q3
2011 Q3
2012 Q3
2013 Q3
2014 Q3
Gross Domestic Product (GDP)
GDP per head
Real Net National Disposable Income (RNNDI) per head
Q1 2000 = 100
16
GDP and household income per head
95
100
105
110
115
120
125
2000 Q1
2001 Q1
2002 Q1
2003 Q1
2004 Q1
2005 Q1
2006 Q1
2007 Q1
2008 Q1
2009 Q1
2010 Q1
2011 Q1
2012 Q1
2013 Q1
2014 Q1
GDP per head RHDI per head
2000 Q1 =100
17
Cumulative contributions to growth since 2007 – GDP and RHDI
18
GDP = £1,618bn in 2011
Variation in the inflation experience of UK households
• Developed alongside the Johnson Review, this paper is one response to their second recommendation: the regular publication of inflation indices for sub-groups in the UK
• Uses micro-level expenditure data and detailed price indices to estimate inflation rates for:o Expenditure and income decileso Households with and without childreno Retired and non-retired households
• Published 15th December 2014, it is the first UK paper to do this on a CPI consistent basis
• Full methodology and supporting documents available online, headline results presented here
19
Lower income households have experienced higher inflation rates ...
Note: 1= lowest income, 10= highest income20
... as have lower expenditure households
Note: 1= lowest expenditure, 10= highest expenditure21
Retired households have experienced higher price increases than non-retired households...
22
... mostly because of Energy & Fuel costs
23
Headline results, average inflation 2003 - 2013
%
Group Inflation
Decile of 1 2 9 10
Disposable Income 2.9 2.7 2.5 2.6
Expenditure 3.7 3.3 2.3 2.3
Households with Children 2.4
Households without Children 2.7
Retired Households 2.8
Non-Retired Households 2.5
CPI 2.624
What’s next
Frankie Kay, Head of National Accounts Methods and DevelopmentDerek Bird, Head of Prices
ONS Economic Forum
15 January 2015
25
What’s next - outline
• ONS response to NSQR of National Accounts and BoP
• Flow of Funds
• Blue Book 2015 plans
• New ONS website
• Prices update – owner occupier housing costs, house price consultation, web-scraping and scanner data
26
NSQR of National Accounts and Balance of PaymentsONS Response - Overview
• ONS very supportive of review recommendations and suggestions and grateful to Dame Kate Barker and Art Ridgeway
• ONS accepts most of the recommendations completely and partially accepts the remainder (where full acceptance requires further practical considerations, review or consultation)
• Response to the review means we will:• develop annual volume balanced Supply and Use tables. This will include the
introduction of annual double deflation of Gross Value Added, reintroduction of the Purchases survey and a possible change to the alignment of GDP(O) with annual expenditure.
• develop the IDBR
• review capital stock methodology including consultation with experts
• prioritise development of the extended flow of funds dataset
• draw on wider statistical and economic expertise to support and enhance our work
• Response work will be open to public consultation later in 2015 and will influence future work plans 27
Flow of Funds
• Developing financial data is considered essential for identifying the build-up of risks in the financial sector and to understand better the financial connections. An important part of this development is the ‘Flow of Funds’.
• New tables published in BB14 (Chapter 14).
28
Flow of Funds
• ONS is considering wider options for developing Flow of Funds datasets, in conjunction with the Bank of England
• Wider consultation and user engagement will be taken forward this year
• A business case is being prepared around options by May/June 2015
• Email: Flowoffundsdevelopment@ons.gsi.gov.uk
29
Scope of BB 2015
• On-going work to address Gross National Income (GNI) reservations
• Classification changes
• Other methodological improvements
• Take on of new data and moving forward base and reference year
30
BB15 Communications
• Similar process to Blue Book 2014
• Series of articles on impact of changes
• Seminars and user groups
• External peer review
31
Saving and “visible” income
• Users have requested a measure of the saving ratio that corresponds more closely to the economic factors that are pertinent to households' decisions on what to spend and what to save.
• ONS considering whether to publish a supplementary indicator that users may find useful, including reviewing the approach taken by other countries
• Stakeholders will be consulted ahead of any publication
32
Alpha.ons.gov.uk
33
House price index consultation
• User consultation around the development of a single 'official' house price index - closed 12 December 2014.
• Over 40 responses received and good attendance at a series of user events held across UK. ONS will publish formal response to the consultation by mid-March 2015.
• Further work to follow after which a case for the next stage of the development will be put before departments for agreement to proceed.
34
Owner occupiers’ housing costs in CPIH
• National Statistics status was suspended for CPIH in August 2014
• ONS and VOA have completed work looking into Owner Occupiers’ Housing (OOH) component
• Growth in private rents now more responsive to recession
• Still at odds with HPI, but rents a stock measure and HPI a flow measure
• 70% of rent updates result in no price change
35
OOH - next steps
• Improvements to OOH in CPIH will be introduced as part of the 2015 annual update on 24 March 2015
• Revise only OOH component of CPIH back to 2005
• Article documenting the improvements to be published 30 January 2015, responds to Johnson Review: Recommendation 21
• Planned user event in February/March around housing statistics
36
OOH - next steps
• Also take opportunity of revision to VOA data to align OOH weight in CPIH with national accounts estimates historically and anticipate methodological changes to the measurement of imputed rents, planned for BB16.
• Begin process for re-accreditation of National Statistic status for CPIH (from 30 January 2015), aim for process to be completed March/April 2015
37
Prices by webscrapingONS is looking at alternative options for obtaining price quotes including:1. Scanner data 2. Web scraping
Web scraping can be:1. collected by the ONS directly 2. purchased. ONS is investigating both of these options – in two research phases
Phase one: Web scraping started in April 2014 collecting 35 CPI/RPI items from 3 online supermarkets – 6,500 price quotes collected dailyPrototype cleaning and classifying programs have also been set up – and exploratory analysis is being conducted on the data
Phase two: Will assess data ONS has recently purchased from mysupermarket.com, and further explore methodological and technical challenges of using such data
.....</div><div class="productLists" id="endFacets-1"><ul class="cf products line"><li id="p-254942348-3" class=" first"><div class="desc"><h3 class="inBasketInfoContainer"><a id="h-254942348" href="/groceries/Product/Details/?id=254942348" class="si_pl_254942348-title"><span class="image"><img src="http://img.tesco.com/Groceries/pi/121\5010044000121\IDShot_90x90.jpg" alt="" /><!----></span>Warburtons Toastie Sliced White Bread 800G</a></h3><p class="limitedLife"><a href="http://www.tesco.com/groceries/zones/default.aspx?name=quality-and-freshness">Delivering the freshest food to your door- Find out more ></a></p><div class="descContent"><!----><div class="promo"><a href="/groceries/SpecialOffers/SpecialOfferDetail/Default.aspx?promoId=A31234788" title="All products available for this offer" id="flyout-254942348-promo-A31234788--pos" class="promoFlyout"><span class="promoImgBox"><img src="/</a></li></ul></div></div></div></div><div class="quantity"><div class="content addToBasket"><p class="price"><span class="linePrice">£1.45<!----></span><span class="linePriceAbbr"> (£0.18/100g)</span></p><h4 class="hide">Add to basket</h4><form method="post" id="fMultisearch-254942348"
......
38
Prices by webscrapingSuch data has the benefits of:1. Being high frequency2. Collecting many items3. Timely collection
It has its challenges, such as: 1.Item classification2. Methodological challenges3. Website diversity4. Website change5. Cleaning challenges
ONS is learning/using open source tools, data science concepts and big data technologies to overcome these challenges
High frequency data allow detailed investigation of price distributions at the lowest level
The production of (very) experimental indices...more methodological research needed
39
Scanner Data Project
• Scanner data are point of sale data held within retailers’ systems. They can:o provide real-time price and quantity information, allowing for use of
up to date weightso allow for complete coverage of sales by selected retailerso create data handling and acquisition challenges
• ONS has test scanner data from one UK retailer for two products (shampoo and toothpaste)
• Investigations are in early stageso Continue to explore potential useso Learn from other countries whose
research is further advanced
60
70
80
90
100
110
120
130
Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13
CPI item level index
Scanner data item level index
Index values (Jan 2012 = 100) Shampoo
40
Forthcoming event – Trade & Balance of Payments Seminar
• 9.00am to 1.00pm, Friday 23 January• Will cover:
trade balance developments and why deficit persists.
UK net income account and its recent deterioration.
the UK's net international investment position and its expanding deficit.
change in the treatment of banks' profits and the impact on BoP up to, during and since the financial crisis.
41
ONS Economic Forum
Email: economicforum@ons.gov.ukTwitter: @ONS
#ONSeconomyWebsite: http://www.ons.gov.uk/ons/about-ons/get-involved/events/events/economic-forum/index.html
15 January 201542
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