The UK’s troubled statistics agency has warned there are errors in its growth figures after spotting problems with the price data it uses to calculate the size of Britain’s economy.
In the latest admission of failure to maintain reliable economic data, the Office for National Statistics (ONS) said it had uncovered problems with two indices used to measure prices in the economy.
The admission will come as an embarrassment for the government body as it battles to fix problems with another key economic statistic, the labour force survey, which provides headline unemployment and employment data.
The ONS is already spending millions on temporary workers to fix the survey, which has been described as “virtually unusable”.
Experts have warned that these problems have left the Bank of England and the government “flying blind” amid reliability problems that could take until 2027 to rectify.
The ONS said its latest errors were uncovered during work to improve the systems used to create its producer price index (PPI) and services producer price indices (SPPI).
“Our quality assurance identified a problem with the chain-linking methods used to calculate these indices,” it said.
Often referred to as “factory gate prices”, the indices are published with the ONS’s monthly inflation snapshot and gauge changes in the price for goods and services bought and sold by manufacturers and service sector companies.
The ONS said its headline consumer prices index, and another key inflation metric including housing costs, were “completely unaffected by this issue”.
However, it warned the PPI and SPPI data was used within its estimates for gross domestic product (GDP), regarded as one of the most important yardsticks in economics, which could force it to revise its data for 2022 and 2023.
The UK economy grew by 4.8% in 2022, in a rapid rebound from the Covid pandemic, and by 0.4% in 2023, as high inflation and interest rates weighed on output. The data problem began in 2008 but the “main impact” was in 2022 and 2023, it said.
The ONS said the changes were most likely to lead to impacts on the level of GDP in some industries, and could lead to some revisions for the UK’s dominant services sector, as well as production and construction.
Despite this, at an aggregate level for GDP, these revisions should be offsetting to an extent, meaning there is unlikely to be an impact on the UK’s headline growth figures. The ONS also said early indications suggested that there would not be a notable change in the recent economic trends seen in the data.
The ONS said it was pausing the release of its PPI and SPPI data, with a plan to recommence publication in the summer. “The ONS apologises for the inconvenience caused,” it said.
Earlier this month, the ONS said it could not reverse a pandemic-era decision to release official data on the state of the economy before financial markets open because its creaking website could crash.
Separately on Friday, the Institute for Fiscal Studies criticised a major recent revision by the ONS to official estimates of household wealth. A change to its methodology subtracted £2.2tn from estimates of household wealth in 2018 to 2020 in a calculation that the IFS said was “fundamentally flawed”.
