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Response rates to the survey that underpins estimates of UK GDP and inflation rates fell in a similar way to the decline in the jobs survey, prompting the Office for National Statistics to take emergency action in order to ensure the quality of its figures.
The statistics agency said it sent more interviews into the field earlier this year to boost responses to its survey on living and food costs, in an attempt to pre-empt data problems of the kind caused by the collapse of the Labor Force Survey (LFS). ).
Problems with LFS It has left policymakers unable to gauge the true state of the jobs market – and the ONS says these crucial inputs to decisions on interest rates may not be constant. Until 2027.
The Cost of Living and Food Survey, which collects information on household spending patterns and costs of living, is an essential input for economic measures.
It is used by the Office for National Statistics, along with other data sources, to compile estimates of GDP and the weight of the basket of goods and services that underpin consumer price indices, in particular 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 seeking 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, as with the Labor Force Survey, the response rate to the Food and Living Costs Survey has declined over time, falling from 60% at the beginning of the millennium to 40% in 2019.
It fell suddenly when coronavirus lockdowns disrupted face-to-face interviews and reached a new record low of 22 per cent in the financial year to 2023.
The number of responses from “cooperative” households in 2022-2023 was just 4,061, a sharp decline from the sample of more than 5,000 that underpinned the results in the previous five years.
Adam Corlett, chief economist at Decision Research, said the results based on 2022-23 data, published in August, showed a decline in spending in real terms that looked “unbelievable” compared to national accounts data for the same period. .
Meanwhile, researchers are still waiting for partial data that the ONS was supposed to provide in September, but was postponed until next year due to staff shortages.
“The whole world changed in February 2022 – and we still don't have the data to know how that affected households,” said Peter Leffel, chief research economist at the Institute for Fiscal Studies, adding that new electronic data sources were no substitute for the global economy. The comprehensive view provided by the survey.
The ONS said it began boosting the survey sample in April, increasing the number of interviews conducted from around 900 in the first quarter of 2024 to around 1,240 in the third quarter. It also checks the results against a range of other data.
“When the cost of living and food surveys feed into key household spending estimates, their results are compared with other sources, such as business surveys and trade data, to form a robust picture of household spending patterns,” the agency said, adding that it would do so. Start checking results against card spending data as early as 2025.
Leavell said the way the ONS used the LCF and other sources to build national accounts was “ambiguous” and that delays in publishing data were an “increasing problem” as policymakers used the figures to assess the impact of tax changes on households.
The LCF feeds directly into the RPI's annual weighting. This no longer has the status of official statistics, but is used to calculate some index-linked bond repayments and student loan payments and to determine annual increases in train fares and phone bills.
The survey has always had a lower response rate than other surveys conducted by the Office for National Statistics, because it is unusually cumbersome. Participants, including adults and children, are asked to fill out diaries over a two-week period detailing their spending.
The Office for Statistical Regulation, which monitors the quality of UK statistics, cited “significant” concerns about the quality of the LCF in 2022 and urged the ONS to “invest time and resources” in reforming it.
The sample of 5,000 was too small for some users to draw “useful and robust conclusions,” she said in her evaluation. The regulator added that the volatility of the data created a “risk of reputational damage” to the ONS because it could mean true errors were not identified, with a “significant impact on the price indices that LCF data are used to weight”.
The ONS took action at the time to address the most pressing issues, and the regulator said this provided sufficient assurance of data quality. However, progress by the ONS in “digitizing” the diary process has been slow – and a new tool to automatically scan receipts will only be rolled out from the end of next year.
Funding constraints have also delayed a long-term plan to integrate the LCF with other surveys and create a single, streamlined source of data on income, spending and wealth.
