LONDON, March 12 (Reuters) - Britain's statistics agency launched a new measure of inflation on Tuesday that analysts said could give the Bank of England wiggle room to loosen policy if it were used as a future price stability benchmark.
The central bank currently targets a 2 percent rate of inflation using the Consumer Price Index (CPI) measure, which is calculated in the same way as the Harmonised Index of Consumer Prices tracked by the European Central Bank.
But the CPI measure does not include most housing costs faced by people who own their homes - about two-thirds of British households.
Both finance minister George Osborne and Bank of England governor Mervyn King have urged the Office for National Statistics to come up with a measure that does reflect those costs.
The ONS released monthly estimates for the new gauge, known only as CPIH, between 2005 and 2012 for the first time on Tuesday.
These showed that since 2006 CPIH inflation ran about 0.2 percentage point lower than the CPI equivalent, and that between March 2010 and September 2011 the gap often reached 0.5 percentage point.
Osborne, under pressure to lift the economy out of prolonged stagnation without resorting to more borrowing, is expected to tackle the BoE's mandate in his budget statement next week in a bid to pave the way for more quantitative easing.
Economists say that if he asked the central bank to target CPIH rather than CPI, policymakers would have more room to set looser policy and find it easier to meet their 2 percent inflation target.
"It gives a little bit more wiggle room that's worth probably something like 50 billion pounds more QE," said David Tinsley, economist at BNP Paribas.
CPI inflation has exceeded the bank's target for more than three years, helping dissuade policymakers from extending their asset purchase programme beyond the 375 billion pound ($559 billion) total reached in October, despite an economic contraction in late 2012 and a risk of another in early 2013.
"If the Bank of England were using CPIH rather than CPI, inflation would return to target more quickly," analysts at RBC Capital Markets said, adding that the new gauge was an "attractive" alternative for the central bank.
CPIH will be published as an experimental statistic until its evaluation is completed around the middle of this year, the ONS said. The new measure does not directly factor in home owners' mortgage payments, insurance and maintenance costs, and instead uses the rents paid on equivalent homes as a proxy.