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Response rates to a survey underpinning estimates of UK GDP and inflation rates have fallen in line with a decline in jobs survey, prompting the Office for National Statistics to take emergency action to ensure the quality of its numbers.
The statistics agency said it had put more interviewers in the field earlier this year to increase responses to its survey on living and food costs, in an effort to preempt problems. in class data caused by the collapse of the labor force survey (LFS). ).
Problems with the LFS have left policymakers unable to gauge the true state of the labor market – and the ONS says this key input for interest rate decisions may not be fixed until 2027 .
The cost of living and food survey, which collects information on household spending patterns and living costs, is an important input for economic measures.
The ONS uses it, along with other data sources, to compile GDP estimates and to weigh the basket of goods and services that underpin its consumer price indices, particularly the retail price index. . The latest GDP estimate will be published on Monday morning.
The survey is also the most comprehensive source of information for researchers and policymakers seeking to understand how the cost of living crisis affects households at different income levels, and the impact of changes in those taxes and benefits of living standards.
However, like the LFS, the response rate for the cost of living and food survey has declined over time, from 60 percent at the turn of the millennium to 40 percent in 2019.
It fell sharply when Covid lockdowns disrupted face-to-face interviews and hit a new record low of 22 percent in the financial year to 2023.
The number of responses from “co-operating” households in 2022-23 was just 4,061, a sharp drop from the sample of more than 5,000 that underpinned the results over the past five years.
Adam Corlett, principal economist at the Resolution Foundation think-tank, said the results based on 2022-2023 data, published in August, showed a decline in real-terms spending that looked “implausible” compared to national accounts data at the same time. .
Meanwhile, researchers are still waiting for the microdata that was made available to the ONS in September, but has been delayed until next year due to staff shortages.
“The whole world changed in February 2022 – and we still don’t have the data to see how it affects households,” said Peter Levell, senior research economist at the Institute for Fiscal Studies, adding that the new sources of electronic data are not a substitute for the overall view provided by the survey.
The ONS said it began expanding the sample for the survey in April, increasing the number of interviews carried out from around 900 in the first quarter of 2024 to around 1,240 in the third quarter. It also checks the test results against different data.
“Where the cost of living and food surveys feed the headline household expenditure estimates, their findings are triangulated with other sources, such as business surveys and trade data, to produce a strong picture of household spending patterns,” the agency said, adding that it could. begin checking results against card spending data as early as 2025.
Levell said the way the ONS used the LCF and other sources to produce the national accounts was “opaque” and that the delay in publishing the data was an “increasing issue” as policymakers used figures to assess the impact of tax changes on households.
The LCF feeds directly into the annual weighted RPI. It no longer has official statistical status, but it is used to calculate some index-linked bond repayments and student loan repayments and to set annual increases in train fares and telephone bills.
The survey often has a lower response rate than others carried out by the ONS, as it is unusually heavy. Respondents, including adults and children, were asked to write a diary for a two-week period recording their spending.
The Office for Statistics Regulation, which monitors the quality of UK statistics, flagged “significant” concerns about the quality of the LCF in 2022 and urged the ONS to “invest time and resources” in improving it.
It said in its review that a sample of 5,000 was too small for some users to draw “useful and robust conclusions”. The volatility of the data created “a risk of reputational damage” for the ONS because it could mean that real errors were not identified, the regulator added, with “a significant impact on price indices that using LCF data for their weights”.
The ONS acted at the time to address the most pressing problems, and the regulator said it provided adequate assurance of data quality. However, the ONS is making slow progress in “digitizing” the diary process — a new tool for scanning receipts will only be rolled out automatically from the end of next year.
Funding constraints have also delayed a longer-term plan to integrate the LCF with other surveys and create a single, streamlined source of data on income, expenditure and wealth.