New blow to official UK data with fall in responses to GDP and inflation survey

Unlock Editor’s Digest for free

FT Editor Roula Khalaf picks her favorite stories in this weekly newsletter.

Response rates to a survey supporting estimates of UK GDP and inflation rates have fallen, similar to the decline in the business survey, prompting the Office for National Statistics to take urgent action to ensure the quality of its figures.

The statistics agency said it deployed more interviewers into the field earlier this year to boost responses to its survey on living costs and food, in a bid to avoid the kind of data problems caused by the collapse of the labor force survey (LFS). ).

Problems with LFS has left policymakers unable to gauge the true state of the labor market – and this key input for decisions on interest rates may not be constant, the ONS says until 2027.

Cost of living and food research, which collects information on household spending patterns and living costs, is a key input for economic measures.

The ONS uses it, among other data sources, to compile GDP estimates and weight the basket of goods and services that underpin consumer price indices, particularly the retail price index. The latest GDP estimates will be published on Monday morning.

The survey is also the most comprehensive source of information for researchers and policymakers trying to understand how the cost of living crisis is affecting households at different income levels and the impact of changes in taxes and benefits on living standards.

But like the LFS, the cost of living and food survey response rate has declined over time, falling from 60 percent at the beginning of the millennium to 40 percent in 2019.

It fell precipitously when Covid lockdowns disrupted face-to-face meetings, reaching a new record low of 22 per cent in the financial year to 2023.

In 2022-23, the number of responses from “cooperating” households was just 4,061; This is a sharp decline from the more than 5,000 samples that supported the results in the previous five years.

Adam Corlett, chief economist at the Solution Foundation think tank, said the results, based on 2022-2023 data published in August, showed a fall in spending in real terms that appeared “implausible” when compared with national accounts data for the same period. .

Meanwhile, researchers are still waiting for microdata that was due to be made available by the ONS in September but has been postponed until next year due to staff shortages.

“The whole world changed in February 2022 – and we still don’t have data to see how that affects households,” said Peter Levell, senior research economist at the Institute for Fiscal Studies, adding that new electronic data sources cannot replace new electronic data sources. General opinion revealed by the survey.

The ONS said it began increasing the survey’s sample in April, increasing the number of interviews from around 900 in the first quarter of 2024 to around 1,240 in the third quarter. It also cross-checks the results by comparing them with a range of other data.

“Where the cost of living and food survey feeds into household spending estimates, its findings are paired with other sources such as business surveys and trade data to create a robust picture of household spending patterns,” the agency said. Start comparing results to card spending data in early 2025.

Levell said the way the ONS used the LCF and other sources to produce national accounts was “opaque” and the delay in publishing data was a “growing problem” as policymakers used figures to assess the impact of tax changes on households.

LCF feeds directly into RPI’s annual weight. This no longer has official statistical status, but is used to calculate some index-linked bond repayments and student loan repayments, and to determine annual increases in train fares and phone bills.

The survey’s response rate has always been lower than other surveys the ONS has run because it is unusually burdensome. Participants, including both adults and children, are asked to fill out a diary listing their expenses over a two-week period.

The Office for Statistics Regulation, which oversees the quality of UK statistics, flagged “significant” concerns about the quality of the LCF in 2022 and called on the ONS to “invest time and resources” to fix it.

In his assessment, he said a sample of 5,000 people was too small for some users to draw “useful and robust conclusions.” The regulator added that volatility in the data created a “risk of reputational damage” for the ONS because it could mean genuine errors went undetected, which would “have a major impact on price indices that use LCF data for weighting”.

The ONS took action at the time to address the most pressing issues and the regulator said this provided sufficient assurance about data quality. But the ONS’s progress in “digitising” its day-to-day process has been slow; A new tool that will automatically scan receipts will only be available from the end of next year.

Funding constraints have also delayed a long-term plan to combine the LCF with other surveys and create a single, streamlined source of data on income, spending and wealth.