Estimated Inflation by Household Characteristics March 2023

The following tables show estimated inflation from March 2018 to March 2023, and from March 2022 to March 2023, by household groups. The household groups analysed include households grouped by equivalised gross household income, by housing tenure, by housing location (urban/rural), by the age of the household reference person, and by the composition of the household. The contributions of various goods and services to the total inflation of each household group are also shown.

Equivalised Gross Household Income Deciles

Households with lower equivalised gross household income have a higher estimated inflation than the CPI while households with higher equivalised gross household income have lower estimated inflation than the CPI. For example, for households in the lowest income decile the estimated inflation in the last year was 8.1%, compared to 7.6% for the highest income decile. Estimated rates of inflation from March 2022 to March 2023 by income decile ranged from 7.3% for upper deciles (6th, 8th and 9th) to 8.3% for one of the lower deciles (2nd). See Table 2.1.

Over the five-year period from March 2018 to March 2023, Rent, and Electricity, Gas & Other Fuels have together been the biggest contributors to inflation for households with lower gross household income (1st to 4th deciles). Electricity, Gas & Other Fuels, and Restaurants & Hotels have been the biggest contributor to inflation in the last five years for households with higher gross household income (5th to 10th deciles). High inflation for Rent and for Electricity, Gas & Other Fuels has the effect of increasing the estimated difference in inflation between households with lower and higher incomes. High inflation for Restaurants & Hotels has the effect of reducing this estimated inflation gap. See Table 2.2.

In the 12 months to March 2023, Electricity, Gas & Other Fuels was the biggest estimated contributor to inflation for households with lower gross household income (1st to 8th deciles); this was followed by Food & Non-Alcoholic Beverages for the 1st to 6th deciles). Restaurants & Hotels followed by Mortgage Interest Payments were the biggest contributors to inflation in the last year for households with highest gross household income (10th decile). High inflation for Electricity, Gas & Other Fuels or for Food & Non-Alcoholic Beverages have the effect of increasing the gap in estimated inflation between households with lower and higher incomes. High inflation for Mortgage Interest Payments, and Restaurants & Hotels has the effect of decreasing this gap. See Table 2.3.

Household Tenure

Households that rent their accommodation had higher estimated inflation than households that own their home over the last five years. Inflation for households with a mortgage has been higher than for households that own their home outright in both the last five years and in the last 12 months. In the 12 months to March 2023, estimated inflation was highest for households that were renting from a local authority (8.2%) and households that were owned with a mortgage (8.1%). See Table 2.4.

For households renting their home, Rent has been the biggest contributor to estimated inflation over the five years since March 2018. The method used in this report estimates that rent contributed over half (9.1 percentage points) of the total estimated five-year inflation (17.4%) for private renters. The Rent subindex used in this analysis refers to all rents, i.e. not broken down between local authority and private rents. The calculation of the estimated price index for households renting from local authorities and renting from private owners reflects the differences in the share of rent in those households’ spending but does not take into account any difference in the rate of change of rents paid by local authority and private tenants. See Table 2.5.

In the 12 months to March 2023, Electricity, Gas & Other Fuels was the biggest estimated contributor to inflation for households that own their home outright (2.2 percentage points of 7.2% estimated inflation) and for those who rent from a local authority (2.3 percentage points of 8.2% estimated inflation). Mortgage Interest Payments were the largest contributor to estimated inflation for those who owned their house with a mortgage (2.4 percentage points of 8.1% estimated inflation). For households that rent privately, Rent was the largest contributor to their estimated annual inflation (2.7 percentage points of 7.3% estimated inflation) - see note on Rent in preceding paragraph. See Table 2.6.

Household Location (Urban/Rural)

There was a minor difference (0.1 percentage points) between estimated inflation for Urban and Rural households in the five years since March 2018. In the year to March 2023, Urban households had estimated annual inflation equivalent to the CPI (7.7%) while estimated inflation for Rural households, at 7.4%, was 0.3 percentage points lower than the CPI. See Table 2.7.

In the five years to March 2023, the rates of inflation for Urban (16.9%) and Rural (17.0%) households were similar but there are differences in what has been driving those changes. The main differences in the factors contributing to Urban and Rural inflation over that period were Rent (3.0 percentage points contribution to urban inflation, only 0.5 percentage points contribution to Rural inflation), and Transport (2.1 percentage points contribution to Urban inflation, 3.7 percentage points contribution to rural inflation). See Table 2.8.

In the 12 months to March 2023, Electricity, Gas & Other Fuels followed by Food & Non-Alcoholic Beverages, and Restaurants & Hotels were the biggest contributors to estimated inflation for both Urban and Rural households. Urban households’ higher estimated inflation in the last year is due largely to Rent being a higher proportion of their total expenditure than it is for Rural households. See Table 2.9.

Age of Household Reference Person

The household reference person in the Household Budget Survey (HBS) is the person in whose name the accommodation was owned or rented. Where the mortgage/rent is jointly paid, the respondent with the highest income is taken as the reference person. In cases where household members receive an equal salary, the eldest member is taken as the reference person.

In the five years since March 2018, the estimated inflation experienced by households with reference person aged 65 or over, at 17.8%, was 0.9 percentage points higher than the overall CPI; in the 12 months to March 2023, these households also had higher estimated inflation (+0.1 percentage points) than the CPI. Households with the household reference person aged under 35 had slightly lower estimated inflation than the CPI across the five-year period (-0.1 percentage points) and had lower estimated inflation than the CPI in the past year (-0.5 percentage points). See Table 2.10.

Over the five-year period since March 2018, Rent was the biggest contributor to estimated inflation for households where the reference person is aged under 35 (6.6 percentage points of 16.8%). This contrasts with the contribution of Rent to total estimated price change for households with reference person aged 35 to 64 (1.6 percentage points of 16.7%) or households with reference person aged 65 or over (0.7 percentage points of 17.8%). See Table 2.11.

In the 12 months to March 2023, Electricity, Gas & Other Fuels was the largest contributor to estimated inflation for households where the Reference Person was aged 35 to 64 (1.7 percentage points of 7.7%) or where the Reference Person was aged 65 or over (2.7 percentage points of 7.8%). Rent was the biggest contributor to inflation in the last 12 months for households where the Reference Person was aged under 35 (1.9 percentage points of 7.2% estimated inflation). See Table 2.12.

Household Composition

Households of one adult (without children) had the highest estimated inflation in the five years since March 2018 (19.3%) and in the 12 months since March 2022 (8.5%). Households with three or more adults (without children) had the lowest estimated inflation in the last five years (15.7%) and in the last 12 months (7.0%). See Table 2.13.

Over the five years since March 2018, Rent was the biggest contributor (7.2 percentage points of 18.7%) to estimated inflation for households of one adult with children. For households containing three or more adults, Restaurants & Hotels was the largest contributor to five-year inflation (4.3 percentage points of 15.7%) while Electricity, Gas & Other Fuels was the biggest contributor for all other household compositions. See Table 2.14.

Between March 2022 and March 2023, households of one adult (without children) had the highest rate of estimated inflation (8.5%) because of the high contribution of Electricity, Gas & Other Fuels (2.6 percentage points). Households of one adult with children had the next highest estimated inflation (8.0%), reflecting the high contribution of Electricity, Gas & Other Fuels and Rent (both 2.1 percentage points). Other households with children (households containing two adults with more than three children, or households containing three or more adults with children) also had higher than average inflation (7.9%) with Food & Non-Alcoholic Beverages and Electricity, Gas & Other Fuels contributing 1.7 and 1.6 percentage points respectively. Households of two adults without children also had higher than average estimated inflation (7.8%), reflecting the high contribution of Electricity, Gas & Other Fuels (1.9 percentage points), and Restaurants & Hotels (1.5 percentage points). See Table 2.15.