CSO Frontier Series outputs may use new methods which are under development and/or data sources which may be incomplete, for example new administrative data sources. Particular care must be taken when interpreting the statistics in this release.
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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.
In the tables and commentary, the following periods are distinguished:
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 Beverages||02. Alcohol Beverages & Tobacco||04.1 Rent||04.2 Mortgage Interest Payments||04.5 Electricity, Gas & other Fuels||07. Transport||11. Restaurants & Hotels||CPI All Items|
|Dec-2016 to Mar-2022 (63 months)||-2.1||19.4||26.3||10.5||60.1||21.9||15.5||9.6|
|Dec-2016 to Mar-2021 (51 months)||-5.0||11.6||16.5||6.5||9.1||2.7||11.5||2.7|
|Mar-2021 to Mar-2022 (12 months)||3.1||7.0||8.4||3.8||46.7||18.7||3.6||6.7|
|CPI All Items||01. Food & Non-Alcoholic Beverages||02. Alcohol Beverages & Tobacco||04.1 Rent||04.2 Mortgage Interest Payments||04.5 Electricity, Gas & other Fuels||07. Transport||11. Restaurants & Hotels|
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).
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 Beverages||02. Alcohol Beverages & Tobacco||04.1 Rent||04.2 Mortgage Payments||04.5 Electricity, Gas & other Fuels||07. Transport||11. Restaurants & Hotels||Other||Total|
|1st (Lowest) Income Decile||16.0||3.3||15.9||3.7||7.4||10.4||5.2||38.1||100.0|
|2nd Income Decile||17.0||3.4||12.3||3.7||8.4||9.7||5.5||40.0||100.0|
|3rd Income Decile||16.9||3.4||10.8||4.2||7.0||12.3||5.5||39.9||100.0|
|4th Income Decile||15.7||3.4||10.0||5.7||6.7||12.8||5.4||40.3||100.0|
|5th Income Decile||14.2||2.9||7.9||7.7||5.9||13.7||5.8||41.9||100.0|
|6th Income Decile||13.6||2.6||5.4||7.7||5.5||15.0||7.2||43.0||100.0|
|7th Income Decile||12.4||2.2||4.9||9.9||5.1||15.6||7.2||42.7||100.0|
|8th Income Decile||11.0||2.1||4.3||11.1||4.6||14.5||7.8||44.6||100.0|
|9th Income Decile||10.5||1.9||4.2||11.2||4.2||16.9||8.1||43.0||100.0|
|10th (Highest) Income Decile||8.9||1.8||3.8||13.9||3.9||14.9||8.5||44.3||100.0|
|Owned with Mortgage||11.1||2.1||0.1||20.0||4.5||14.0||6.9||41.3||100.0|
|Rented from Local Authority||17.4||5.0||17.9||0.0||7.5||9.1||5.9||37.2||100.0|
|Rented from Private Owner||11.3||2.5||28.5||0.0||4.6||11.1||6.9||35.1||100.0|
|Reference Person aged under 35||10.4||2.2||19.7||6.4||4.0||12.4||7.8||37.1||100.0|
|Reference Person aged 35 to 64||12.4||2.5||4.6||11.5||5.1||14.6||7.0||42.3||100.0|
|Reference Person aged 65 or over||16.5||2.7||2.0||1.0||8.2||14.9||6.5||48.2||100.0|
|1 adult with children||14.0||3.1||21.2||5.1||6.7||8.1||4.2||37.6||100.0|
|2 adults with 1 to 3 children||12.0||1.8||6.9||14.3||4.7||13.3||5.7||41.3||100.0|
|3 plus adults||12.8||2.8||5.6||6.1||4.6||15.4||8.3||44.4||100.0|
|Other households with children||14.1||2.2||4.5||11.9||4.7||13.3||5.9||43.4||100.0|
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:
The proportion of spending on Electricity, Gas & Other Fuels is higher among:
The proportion of spending on Transport is higher among: