ONS says power bill rebates won39;t feed into inflation measures
UK inflation running at 10.1 and seen rising higher
Opposite ruling could have cut inflation by 0.30.4

LONDON, Aug 31 Reuters British government energy bill rebates for households cannot be viewed as lowering inflation, official statisticians said on Wednesday, ruling out the possibility of a modest reduction to rates of price growth that are running at 40year highs.

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 inflationlinked 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 occupiers39; housing costs CPIH, the Consumer Prices Index CPI or the Retail Prices Index RPI, the ONS said in a statement.

Economists had widely expected such a decision after the ONS ruled similarly on how to treat a government rebate for council taxes during the COVID19 pandemic.

British consumer price inflation hit a 40year high of 10.1 in July more than five times the Bank of England39;s 2 target.

Had the EBSS been classified as a price cut, this might have pushed the targeted…