The Office for National Statistics (ONS) has started using Auto Trader’s market pricing data as part of its calculations to measure the rate of inflation in the UK.
The ONS has already used its figures for experimental estimates, but as of today (for the figures covering February) Auto Trader data has been fully incorporated into the headline statistics to help represent the movement in used car prices more accurately.
The ONS stats are used as part of the Consumer Prices Index (CPI), which is monitored by the Bank of England.
UK inflation fell to 3.4% in the year to February, which is the lowest level for nearly two and a half years.
The ONS is the UK’s largest independent producer of official statistics and the recognised national statistical institute of the UK; its main responsibilities are collecting, analysing and disseminating statistics about the nation’s economy, society and population.
It reports directly to the UK Parliament.
The partnership with Auto Trader marks an important milestone in its programme of transforming its consumer price statistics, which includes identifying new data sources – such as Auto Trader’s used car pricing analysis.
Prior to the partnership, official inflation in car prices was calculated by tracking a sample of around a hundred different models at three different ages, taken from a manual of industry guide prices.
Sometimes it was necessary to estimate prices for some months, which risked missing key trends and behaviours.
Using Auto Trader data will significantly boost the quotes it uses in this area to circa 300,000 monthly price quotes (around 3,000 times more).
Auto Trader said it was “very privileged to support” the ONS with the data and said it would help the ONS stay ahead of new trends and strengthen the UK’s inflation statistics.
While both the Auto Trader Retail Price Index and the ONS’ Consumer Prices Index are based on the same data, there will be variances in the respective headline figures. This is due to different methodologies and independent analytic decisions, such as accounting for outlier vehicles, product grouping, and other calculation differences. Despite two different groups of statisticians and data scientists, the resulting estimates are similar.
Richard Walker, Auto Trader’s director of data and insights, said: “Car prices are heavily influenced by changing market dynamics, which can move at an incredible pace.
“We work with nearly 14,000 automotive retailer partners, list an average of 450,000 vehicles every day, and receive around 80 million consumer visits each month.
“This unique view of the automotive retail market means we’re able to provide the most accurate and current pricing data available, which we hope will help the ONS stay ahead of new trends and help further strengthen the UK’s inflation statistics, something we feel very privileged to support.”
Walker said there are signs that wider used car prices are stabilising, following a softening in recent months.
Auto Trader is expecting healthy used car demand to continue over the months ahead, helping prices to stabilise further.
Mike Hardie, deputy director, prices transformation at the ONS, said: “Today sees an important step in ONS’s economic statistics transformation journey.
“Feeding into today’s inflation measures, for the first time we have gone live with an improved measure of second-hand car prices using data from Auto Trader.
“This marks another improvement in our inflation measures, and in how the ONS responds to user demand for more tailored, timely and granular data, through using innovative methods and partnerships.”