§ Mr. Matthew Taylor
To ask the Chancellor of the Exchequer, pursuant to his answer of 15 July 2002,Official Report, column 65W, on inflation, if he will estimate the cost of measuring such differences; and if he will make a statement. 
§ Ruth Kelly
The information requested falls within the responsibility of the National Statistician. I have asked him to reply.
Letter to Mr. Matthew Taylor from Len Cook, dated 6 November 2002:
As National Statistician I have been asked to reply to your recent question concerning an estimate of the cost of measuring inflation rates between regions.
The development of regional inflation measures would require a major expansion of existing data collections and a substantial development programme to resolve a number of conceptual and technical issues. This would involve significant additional expenditure involving many millions of pounds.
There are several reasons why the current available data is not suitable for the compilation of reliable regional indices. The selection of locations is not designed to be representative of individual regions; the locations would have to be resampled, increased in number, and substantially more prices collected. In addition, many of the centrally compiled indices (e.g. housing, cars, PCs) are designed as national indices; the possibility of developing these to produce regional indices would need to be investigated.
The data used for the weights (such as the Expenditure and Food Survey) would also have to be significantly enhanced to ensure that detailed regional expenditure categories (by type of good or service, and by type of outlet) were being weighted appropriately and represented in the sample of prices being collected. Finally, there will be a significant cost arising from the development of computer systems to produce regional indices.
The conceptual issues to be resolved include whether the items to be priced should be representative of national or regional baskets (different users will have different needs), and also the treatment of regional boundaries. Households do not necessarily restrict their shopping to the region where they live; they may physically cross regional borders for shopping or do so via Internet or mail order shopping.