The U.K.’s Office for National Statistics (ONS) has started to use market pricing data from Auto Trader as part of its system to calculate the rate of inflation.

The ONS already uses Auto Trader’s figures for experimental estimates. The latest release this week covering February’s data, showed inflation fell to 3.4%, its lowest level for almost two and a half years. Auto Trader’s data has been fully integrated into this data set to highlight the movement in used car prices accurately.

It is the same data used to inform Auto Trader’s own retail price index that it publishes monthly but there will be variances in headline figures because of different methodologies and independent analytic decisions, like accounting for outlier vehicles, product grouping, and other calculation differences.

The ONS creates a ‘basket of goods’ that changes to reflect items that the U.K. public regularly buys. The pricing trends for goods and services are then measured for movements over a 12-month period to calculate the annual rate of inflation for the consumer prices index (CPI).

The Bank of England use this to try and meet its target of maintaining inflation at or around 2% over the medium term and to inform interest rate decisions.

The collaboration is part of the method of introducing new, relevant data into the figures, such as used car pricing and to make the inflation figures a more accurate representation of what the U.K. public typically spends its money on.

Prior to this, information about car prices was calculated by tracking a sample of roughly 100 different vehicle models at three different ages, taken from manual industry price guides. Under this system data was sometimes estimated, meaning it was possible to miss important trends and pricing behaviour.

Auto Trader’s data sourcing ability means the figures now used for inflation are more dynamic, up-to-date and cover much more vehicles and different ages, mileage and models. Using Auto Trader data means the number of quotes it uses to calculate the figures will increase to around 300,000, an increase of 3,000 times.

“Car prices are heavily influenced by changing market dynamics, which can move at an incredible pace,” said Richard Walker, Auto Trader’s director of data and insights.

“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.”

Walker added that the latest date shows signs that prices are stabilising after a softening in recent months. He said Auto Trader anticipates strong used car demand over the coming months, helping prices to stabilise further.

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