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Development plans for the final expenditure prices index
Planned methodological improvements to the measurement of the change in prices paid by UK consumers, business and government for final purchases of goods and services.
This article paper provides a summary of recent and planned methodological improvements in the broader measure of inflation called the Final Expenditure Prices Index (FEPI) which is currently produced on an experimental basis. The FEPI measures the change in prices paid by UK consumers, business and government for final purchases of goods and services.
Amongst other things, this article describes in detail a method that would enable the government expenditure component of the FEPI to be based on output prices, thereby reflecting changes in productivity and making it consistent with the other components of the FEPI.
The proposed methodology involves the estimation of implied output prices and the use of these prices in the calculation of the FEPI instead of the input prices currently included. Productivity change would be implicitly reflected in the imputed output prices. The new methodology will be introduced into a variant of the FEPI, to be published alongside the existing measure, for a trial period starting in March 2000.
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