UK ONS says energy bill support won’t feed into inflation stats

By Thomson Reuters Aug 31, 2022 | 1:22 AM

LONDON (Reuters) -Britain’s statistics agency ruled on Wednesday that an energy bill rebate offered to households by the government will not feed directly into the country’s inflation statistics.

Economists and bond investors had been looking closely at whether statisticians would classify the support packages as price cuts for consumers that would directly lower headline inflation rates – and with it debt interest costs for the government arising from inflation-linked bonds.However, the Office for National Statistics (ONS) ruled that the Energy Bills Support Scheme (EBSS) should be treated as increasing household income rather than reducing their expenditure.

“Therefore… the payment will not affect either the Consumer Prices Index including owner occupiers’ housing costs (CPIH), the Consumer Prices Index (CPI) or the Retail Prices Index (RPI),” the ONS said in a statement.

Announced in May when energy price forecasts were much lower, the EBSS comprises 400 pounds ($467) of discounts on household bills, paid in installments over six months starting in October.

The two candidates to become Britain’s next prime minister – Foreign Secretary Liz Truss and former finance minister Rishi Sunak – have clashed over how to respond to soaring energy prices, with the front-runner Truss initially saying she would rather cut taxes than give “handouts”.

Both sides have acknowledged that the poorest in society will need support and the government went further on Friday in saying that households should look at how much energy they use – after previously saying people would know what to do.

The leadership race concludes on Sept. 5.

($1 = 0.8564 pounds)

(Reporting by Andy Bruce; Editing by William James)