FRANKFURT (Reuters) – House prices, now excluded from euro zone inflation data, would have persistently raised consumer prices in recent years, a study published by the European Central Bank showed on Tuesday, highlighting policymakers’ unease with the current indicator.

The study found that euro zone inflation could have exceeded or hit the ECB target in recent years if housing costs were corrected. However, the bank had been providing exceptional stimulus to drive up prices.

This paper was part of the ECB’s strategy review. It concluded that rising housing costs had led to “persistently high” inflation between 2014 and 2020. Between 2018 and 2020, however, inflation would have been about 0.2-0.3 percentage point higher.

Graphic: Euro area inflation vs house price growth: https://fingfx.thomsonreuters.com/gfx/mkt/mopankwynva/Pasted%20image%201632214952446.png

The ECB stopped asset purchases, commonly known as quantitative easing, at the end of 2018 and the figures on housing prices appear to support the argument of conservative policymakers at the time that inflation developments would have allowed for an earlier exit.

The ECB doesn’t calculate inflation data but it stated in July it would take into account estimates of the costs for owner-occupied housing inflation until Eurostat (the EU’s statistical agency) fixes the wider measure.

Graphic: Euro yone inflation corrected for house price growth: https://fingfx.thomsonreuters.com/gfx/mkt/gdpzyqkndvw/Pasted%20image%201632216466519.png

Over two decades, however, the adjusted inflation figure would have been little different, the study argued, as housing costs could have been a drag on prices.

Policy hawks maintain that extremely low interest rates create an upward pressure upon house prices. Data used to calibrate policies, however, do not capture this.

According to the paper, experimental quarterly figures of inflation with housing inclusion could be released in 2023. Official quarterly data will not be available until 2026.