The Directorate-General of Budget, Accounting and Statistics (DGBAS) factors in housing costs in line with the methods of the US, the UK and Japan when measuring inflation, the central bank said yesterday, responding to criticism.
The central bank clarified the statistics agency’s methods after several academics said the DGBAS should follow the eurozone’s practice of including home prices when compiling the consumer price index (CPI) to help the central bank shape its monetary policy decisions.
Some academics have said that rising home prices increase inflationary pressures and longstanding low interest rates contribute to increases in home prices.
Photo: Hsu Yi-ping, Taipei Times
Rents are included in CPI calculations, but home prices are not because they are considered part of the asset prices category and are unrelated to sheltering services or costs experienced by the average family, the central bank said.
South Korea does not even include rent in its CPI calculations, it added.
Countries use different approaches when assessing the influence of rent on CPI, mainly based on actual market rent and owner-occupied housing, it said.
The DGBAS has long factored in rents, in line with the practice of its peers in advanced nations, the central bank said.
The eurozone has sought for a decade to introduce the rent formula, but has failed to sort out certain technical barriers, it said.
The nation’s CPI last month rose 2.35 percent from a year earlier, while core CPI — a more reliable long-term price tracker that excludes volatile items — increased 2.72 percent, the DGBAS reported on May 5.
Food costs expanded 4.19 percent from a year earlier, followed by an increase of 3.29 percent in education and entertainment costs, and a rise of 2.34 percent in accommodation costs, the agency said.
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