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Estimated Inflation by Household Characteristics March 2022

CSO Frontier Series Research Paper

CSO research publication, , 11am
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Background

The Consumer Price Index (CPI) is designed to measure the annual rate of inflation, i.e. the change in the average level of prices paid by households for consumer goods and services. The index follows established international practice for consumer price indices. The CPI measures the change in the level of prices paid by households for a fixed basket of goods and services. Price indices for each CPI item are calculated and then weighted together by the proportion of total consumer expenditure that is spent on each, to give the total Consumer Price Index.

The fixed basket of goods and services measured in the CPI is comprehensively updated every five years based on the CSO’s Household Budget Survey (HBS). The HBS provides a detailed profile of household expenditure, item by item. Following each HBS, the CSO reviews the basket of goods and services included in the CPI. The HBS is also used, together with other data, to establish the weights (i.e., the share of total consumer spending represented by each item) used in calculating the index and these weights are updated annually. The expenditure weights used in calculating the CPI represent expenditure on consumer goods and services by Private Households, Visitors to Ireland, and Institutional Households. The most recent HBS, measuring expenditure by private households, was in 2015/16.

The CPI is a measure of average inflation, based on average expenditure weights.

However, every household has its own unique consumption pattern and therefore its own personal experience of inflation. Households that spend a higher proportion of their total expenditure on goods and services that are increasing in price by more than the rate of inflation, will experience higher inflation than the CPI average rate.

Price increases have remained relatively stable for the last number of years, and until 2021, the CPI had not increased by more than 2% since 2011 (+2.6%).  While prices decreased through much of 2020, inflation has been increasing since April 2021. In July 2021, annual inflation was 2.2% and the rate of inflation continued to rise for the rest of the year, reaching 5.5% in December.

In 2022 so far, the annual rate of inflation has been 5.0% in January, 5.6% in February and 6.7% in March 2022. The latest figure is 7.0% for the year to April 2022.

The increasing rate of inflation since the middle of 2021 has prompted greater interest in price change and its effect on households. A paper by the Central Bank of Ireland in February 2022 addressed the topic of  Household characteristics, Irish Inflation and the cost of living.

This report undertakes a similar analysis at a more detailed level. This report provides an estimated breakdown of the CPI results by household characteristics up to March 2022, calculated by combining the CPI results with more detailed expenditure data from the 2015/16 HBS. The report looks at the period from December 2016 to March 2022. The household groups analysed include households grouped by equivalised gross household income deciles, by household tenure, by the location of the household (urban/rural), by the age of the household reference person, and by the composition of the household.

See also: Information Note - The Consumer Price Index (CPI) Explained 

Recent trends in the Consumer Price Index (CPI)

In the tables and commentary, the following periods are distinguished:

  • Overall period (63 months) from December 2016, the base period of the present CPI series, to March 2022;
  • The period (51 months) from December 2016 to March 2021;
  • The 12 months from March 2021 to March 2022.

In the 63 months from December 2016 to March 2022, the CPI increased by 9.6%, most of this increase being concentrated in the final 12 months.  Between December 2016 and March 2021, the CPI increased by 2.7%; and in the 12 months from March 2021 to March 2022, the CPI increased by 6.7%.

Further details for selected CPI subindices are shown in Table 1.1.

Table 1.1 Change in All Items CPI and selected subindices, December 2016 to March 2022 (63 months), December 2016 to March 2021 (51 months) and March 2021 to March 2022 (12 months)
 01. Food & Non-Alcoholic Beverages02. Alcohol Beverages & Tobacco04.1 Rent04.2 Mortgage Interest Payments04.5 Electricity, Gas & other Fuels07. Transport11. Restaurants & HotelsCPI All Items
Dec-2016 to Mar-2022 (63 months)-2.119.426.310.560.121.915.59.6
Dec-2016 to Mar-2021 (51 months)-5.011.616.56.59.12.711.52.7
Mar-2021 to Mar-2022 (12 months)3.17.08.43.846.718.73.66.7
CPI All Items01. Food & Non-Alcoholic Beverages02. Alcohol Beverages & Tobacco04.1 Rent04.2 Mortgage Interest Payments04.5 Electricity, Gas & other Fuels07. Transport11. Restaurants & Hotels
Dec 2016100100100100100100100100
Jan 201799.5100.4101.510099.7100.6100.299.7
Feb 2017100.199.5100.710199.8100.2101100.2
Mar 2017100.799.8100.4100.999.899.8103.1101.1
Apr 2017101.199.4100.8101.499.599.9105.5101.6
May 2017100.9100102.2101.599.698.8101.8102.2
Jun 201710199.3101.6102.899.898.3102.3103.4
Jul 201710199.6101.9103.199.998.3104.8104.5
Aug 2017101.4100101.1103.8100.198.6105.2105
Sep 2017100.899.2101.3104.999.999.1101.2104.2
Oct 2017100.799.6102.3105.4100.1100.9100103.4
Nov 2017100.599.2101.7105.498.8103.3100.5102.6
Dec 2017100.498.510110699.1103.5101.3102.5
Jan 201899.798.7104.3106.299104.1100101.6
Feb 2018100.697.7103.7107.299.3104.8101.7102.5
Mar 2018100.998103.110898.8105103.2103.4
Apr 2018100.797.4103.8108.599.1105.3101.3103.8
May 2018101.397.7104.110999.1106.3103.2104.7
Jun 2018101.497.2104.4109.199.4107.3103.8105.6
Jul 2018101.897.5104.8109.399.3108107.1106.4
Aug 2018102.197.4104110.399.7111.4106107.2
Sep 2018101.797104.5111.199.7111.8103.4106.5
Oct 2018101.697.4105111.8100110.9103.3105.6
Nov 2018101.197.2104.9112.4100110101.4104.6
Dec 2018101.197.1103.8112.6100.4108.7101.9104.7
Jan 2019100.497.2107.1113101.210898.7105.4
Feb 2019101.297106.5113.3101.2108.5100.4106.2
Mar 201910297.4106.3113.7101.5109.8103.6107.1
Apr 2019102.497.3106.3114.2101.9111.4105107.6
May 2019102.397.5106.9114.5102.3111.9103.3108.1
Jun 2019102.597.1107.8115.1101.8110.9105108.9
Jul 2019102.397107.4115.5102.2110.9105.8108.9
Aug 2019102.897.1107.2116.1102.6110.6105.7109.3
Sep 2019102.696.2107.7117.3103110.9103109
Oct 2019102.396.3107.8117.5103111.5102.4108.3
Nov 2019102.296.2107.5117.5103.4110.7101.7107.6
Dec 2019102.496.2107117.7103.7110.8104.2107.4
Jan 2020101.796.1111.2117.6104.1111.3101.8106.9
Feb 2020102.396109.8117.9104.1109.2103.4107.6
Mar 2020102.795.8109.2117.7104.5107105.5108.1
Apr 2020102.396.1110.5115.9104.5101.7104.6108.7
May 2020101.896.2110.6114.8104.898.4101109
Jun 2020102.195.6110.4114.6104.8100.1103.2110.5
Jul 2020101.995.8111.2114.8105.2101.2101.2109.9
Aug 2020101.895.4110.3115105.5101.1101110.2
Sep 2020101.494.8108.7115.1105.9100.699.4110.2
Oct 2020100.894.8108.7114.6105.5103.798108.4
Nov 2020101.194.8108.7114.7105.4103.798.6108.5
Dec 2020101.494.7107.4115105.8105.299.9110.1
Jan 2021101.594.1111.5115.3105.7106.399.5110.3
Feb 2021101.994.2110.9115.5106.1107.6100.6111
Mar 2021102.795111.6116.5106.5109.1102.7111.5
Apr 2021103.495.4112.9117.7106.5110.7104.3111.9
May 2021103.595.2112.6117.6106.9112.6104.6112.2
Jun 2021103.795.3112.2117107.3113106.4112.4
Jul 2021104.195.8112.7117.2107.3115.3109.2113.3
Aug 2021104.795.5112.9118.8107.7120.9111.3113.9
Sep 2021105.295.2114121.5108.2122.6110.7113.2
Oct 2021105.995.6113.2122.5108.7129.6113.1112.8
Nov 2021106.595.7112.4123.1108.8133.8114.6112.7
Dec 202110796.2110123.9109.3134117.9113
Jan 2022106.696.1120.9124.3109.8135.4113.5112.8
Feb 2022107.697119.5125.3110.4138.5116.1113.4
Mar 2022109.697.9119.4126.3110.5160.1121.9115.5

For Electricity, Gas & other Fuels, prices increased by 9.1% in the 51 months from December 2016 to March 2021, followed by an increase of 46.7% in the 12 months from March 2021 to March 2022.

The Transport subindex saw an increase of 2.7% in the 51 months from December 2016 to March 2021, followed by an increase of 18.7% in the 12 months to March 2022.

The index for Rents increased by 16.5% in the 51 months from December 2016 to March 2021, and by 8.4% in the 12 months from March 2021 to March 2022.

Looking at these CPI results, we can expect that household groups which spend higher than average proportions of their total expenditure on Electricity, Gas & Other Fuels and on Transport to have experienced higher inflation than the CPI. The Rents subindex between 2016 and 2021 would suggest that households which spend a higher than average proportion of their total expenditure on rents were experiencing higher than average inflation over that period. The results analysing these questions are presented in the third chapter (Estimated Inflation by Household Characteristics).

Household Budget Survey (HBS)

The Household Budget Survey (HBS) provides the detailed item by item profile of expenditure used in establishing the basket of goods and services measured by the CPI. The results of the HBS can be broken down to show the spending patterns of different types of household.

Table 1.2. Proportion of expenditure by household characteristics, Household Budget Survey 2015/16
 01. Food & Non-Alcoholic Beverages02. Alcohol Beverages & Tobacco04.1 Rent04.2 Mortgage Payments04.5 Electricity, Gas & other Fuels07. Transport11. Restaurants & HotelsOtherTotal
All Households12.72.56.79.05.414.27.042.5100.0
         
1st (Lowest) Income Decile16.03.315.93.77.410.45.238.1100.0
2nd Income Decile17.03.412.33.78.49.75.540.0100.0
3rd Income Decile16.93.410.84.27.012.35.539.9100.0
4th Income Decile15.73.410.05.76.712.85.440.3100.0
5th Income Decile14.22.97.97.75.913.75.841.9100.0
6th Income Decile13.62.65.47.75.515.07.243.0100.0
7th Income Decile12.42.24.99.95.115.67.242.7100.0
8th Income Decile11.02.14.311.14.614.57.844.6100.0
9th Income Decile10.51.94.211.24.216.98.143.0100.0
10th (Highest) Income Decile8.91.83.813.93.914.98.544.3100.0
          
Owned Outright15.32.70.10.07.017.77.549.7100.0
Owned with Mortgage11.12.10.120.04.514.06.941.3100.0
Rented from Local Authority17.45.017.90.07.59.15.937.2100.0
Rented from Private Owner11.32.528.50.04.611.16.935.1100.0
          
Urban12.12.78.99.35.112.77.441.8100.0
Rural14.12.01.58.56.018.16.243.6100.0
          
Reference Person aged under 3510.42.219.76.44.012.47.837.1100.0
Reference Person aged 35 to 6412.42.54.611.55.114.67.042.3100.0
Reference Person aged 65 or over16.52.72.01.08.214.96.548.2100.0
          
1 adult12.02.89.76.98.113.06.840.7100.0
1 adult with children14.03.121.25.16.78.14.237.6100.0
2 adults12.92.96.56.45.915.48.042.0100.0
2 adults with 1 to 3 children12.01.86.914.34.713.35.741.3100.0
3 plus adults12.82.85.66.14.615.48.344.4100.0
Other households with children14.12.24.511.94.713.35.943.4100.0

Results from the 2015/16 HBS on how households’ pattern of spending on goods and services differs depending on household characteristics tell us that:

The proportion of spending on Rent is higher among:

  • Households with lower gross household income
  • Households that rent privately in comparison to households that rent from a local authority
  • Urban households
  • Households where the reference person is aged under 35 years
  • Households of one adult with children

The proportion of spending on Electricity, Gas & Other Fuels is higher among:

  • Households with lower gross household income
  • Households that either own their home outright or rent from a local authority
  • Rural households
  • Households where the reference person is aged 65 and over
  • Households of one adult or one adult with children

The proportion of spending on Transport is higher among:

  • Households with higher gross household income
  • Households that own their home (outright or with a mortgage)
  • Rural households
  • Households where the reference person is aged 35 to 64 or aged 65 and over
  • Households of two adults or three or more adults