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Estimated Inflation by Household Characteristics

CSO Frontier Series Research Paper

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The following tables show estimated inflation from December 2016 to March 2022, and from March 2021 to March 2022, by household groups. The household groups analysed include households grouped by 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, especially in the last year. 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 7.5%, compared to 6.1% for the highest income decile.

Table 3.1 Estimated Inflation by Equivalised Gross Household Income Deciles
Type of HouseholdDecember 2016 to March 2022 (63 months) March 2021 to March 2022 (12 months)
Inflation (%) Difference (%) from overall inflation  Inflation (%)Difference (%) from overall inflation
All Households9.60.0 6.70.0
1st (Lowest) Income Decile11.41.8 7.50.8
2nd Income Decile11.41.8 7.60.9
3rd Income Decile10.61.0 7.30.6
4th Income Decile10.20.6 7.30.6
5th Income Decile9.80.2 7.10.4
6th Income Decile9.60.0 6.90.2
7th Income Decile9.5-0.1 6.6-0.1
8th Income Decile8.9-0.7 6.4-0.3
9th Income Decile9.1-0.5 6.4-0.3
10th (Highest) Income Decile8.8-0.8 6.1-0.6

Over the 63-month period, Rent and Electricity, Gas & Other Fuels have together been the biggest contributors to inflation for households with lower gross household income. Transport and Restaurants & Hotels have been the biggest contributor to inflation for households with higher gross household income. High inflation for Rent and Electricity, Gas & Other Fuels has the effect of increasing the estimated difference in inflation between households with lower and higher incomes. High inflation for Transport, or for Restaurants and Hotels, has the effect of reducing this estimated inflation gap.

Table 3.2 Contributions to Estimated Inflation classified by Equivalised Gross Household Income Deciles, December 2016 to March 2022 (63 months)
Type of Household01. Food & Non-Alcoholic Beverages02. Alcohol Beverages & Tobacco04.1 Rent04.2 Mortgage Interest Payments04.5 Electricity, Gas & other Fuels07. Transport11. Restaurants & HotelsOtherTotal
All Households-0.11.11.70.32.32.82.6-1.09.6
1st (Lowest) Income Decile-0.21.54.00.13.11.91.9-0.911.4
2nd Income Decile-0.21.73.10.13.62.02.0-0.911.4
3rd Income Decile-0.21.72.70.12.92.52.0-1.210.6
4th Income Decile-0.21.62.50.22.82.62.0-1.310.2
5th Income Decile-0.21.32.00.22.62.82.1-1.19.8
6th Income Decile-0.21.01.40.22.33.22.6-1.19.6
7th Income Decile-0.11.01.20.32.23.22.6-0.99.5
8th Income Decile-0.10.91.10.32.02.92.8-1.08.9
9th Income Decile-0.10.71.10.31.83.33.0-0.99.1
10th (Highest) Income Decile-0.10.61.00.41.72.83.2-0.88.8

In the 12 months to March 2022, Electricity, Gas & Other Fuels was the biggest estimated contributor to inflation for households with lower gross household income. Transport was the biggest contributor for households with higher gross household income. High inflation for Electricity, Gas & Other Fuels has the effect of increasing the gap in estimated inflation between households with lower and higher incomes. High inflation for Transport has the effect of decreasing this gap.

Table 3.3 Contributions to Estimated Inflation classified by Equivalised Gross Household Income Deciles, March 2021 to March 2022 (12 months)
Type of Household01. Food & Non-Alcoholic Beverages02. Alcohol Beverages & Tobacco04.1 Rent04.2 Mortgage Interest Payments04.5 Electricity, Gas & other Fuels07. Transport11. Restaurants & HotelsOtherTotal
All Households0.40.40.70.11.92.40.50.36.7
1st (Lowest) Income Decile0.50.51.50.02.51.80.30.37.5
2nd Income Decile0.50.51.20.02.91.80.40.47.6
3rd Income Decile0.50.51.00.02.42.10.40.37.3
4th Income Decile0.50.61.00.12.32.30.40.37.3
5th Income Decile0.40.50.80.12.12.40.40.47.1
6th Income Decile0.40.40.50.11.92.70.50.36.9
7th Income Decile0.40.40.50.11.82.60.50.36.6
8th Income Decile0.30.40.40.11.72.50.60.36.4
9th Income Decile0.30.30.40.11.52.70.60.46.4
10th (Highest) Income Decile0.30.30.40.21.42.40.80.46.1

Housing Tenure

Households that rent their accommodation had higher estimated inflation than households that own their home. Inflation for households with a mortgage has been lower than for households that own their home outright.

Table 3.4 Estimated Inflation by Household Tenure
Type of HouseholdDecember 2016 to March 2022 (63 months) March 2021 to March 2022 (12 months)
Inflation (%) Difference (%) from overall inflation  Inflation (%)Difference (%) from overall inflation
All Households9.60.0 6.70.0
Owned Outright9.0-0.6 7.00.3
Owned with Mortgage8.4-1.2 6.3-0.4
Rented from Local Authority11.51.9 7.30.6
Rented from Private Owner12.42.8 7.00.3

Rent has been the biggest contributor to estimated inflation in the 63 months since December 2016 for households renting their home. For private renters it contributes more than half (6.8%) of their total estimated inflation (12.4%) over that period.

Table 3.5 Contributions to Estimated Inflation classified by Household Tenure, December 2016 to March 2022 (63 months)
Type of Household01. Food & Non-Alcoholic Beverages02. Alcohol Beverages & Tobacco04.1 Rent04.2 Mortgage Interest Payments04.5 Electricity, Gas & other Fuels07. Transport11. Restaurants & HotelsOtherTotal
All Households-0.11.11.70.32.32.82.6-1.09.6
Owned Outright-0.21.10.00.02.93.32.6-0.79.0
Owned with Mortgage-0.10.90.00.72.13.12.7-1.08.4
Rented from Local Authority-0.22.64.20.03.01.72.0-1.611.5
Rented from Private Owner-0.11.06.80.01.81.82.4-1.212.4

In the 12 months to March 2022, Transport was the biggest estimated contributor to inflation for households that own their home, whether outright or with a mortgage. Electricity, Gas & Other Fuels was the biggest estimated contributor to inflation for households that rent from a local authority. For households that rent privately, the Rents subindex was the largest contributor to their estimated annual inflation.

Table 3.6 Contributions to Estimated Inflation classified by Household Tenure, March 2021 to March 2022 (12 months)
Type of Household01. Food & Non-Alcoholic Beverages02. Alcohol Beverages & Tobacco04.1 Rent04.2 Mortgage Interest Payments04.5 Electricity, Gas & other Fuels07. Transport11. Restaurants & HotelsOtherTotal
All Households0.40.40.70.11.92.40.50.36.7
Owned Outright0.40.40.00.02.42.70.60.57.0
Owned with Mortgage0.40.40.00.31.72.60.60.46.3
Rented from Local Authority0.50.71.60.02.41.50.30.37.3
Rented from Private Owner0.30.42.60.01.51.70.40.17.0

Household Location (Urban/Rural)

Households in rural areas had lower estimated inflation than the CPI in the 63 months since 2016 but had higher estimated inflation than the CPI in the last 12 months. Households in urban areas had higher estimated inflation than the CPI since 2016 but had lower estimated inflation than the CPI in the last year.

Table 3.7 Estimated Inflation by Household Location
Type of HouseholdDecember 2016 to March 2022 (63 months) March 2021 to March 2022 (12 months)
Inflation (%) Difference (%) from overall inflation  Inflation (%)Difference (%) from overall inflation
All Households9.60.0 6.70.0
Urban9.80.2 6.5-0.2
Rural9.2-0.4 7.30.6

Over the 63-month period, the estimate of inflation has been slightly (+0.2%) above the CPI for urban households, and below (-0.4%) average for rural households. The biggest differences in items contributing are Rent (2.2% contribution to Urban inflation, only 0.4% to rural inflation), and Transport (2.4% contribution to urban inflation, 4.0% contribution to rural inflation).

Table 3.8 Contributions to Estimated Inflation classified by Household Location, December 2016 to March 2022 (63 months)
Type of Household01. Food & Non-Alcoholic Beverages02. Alcohol Beverages & Tobacco04.1 Rent04.2 Mortgage Interest Payments04.5 Electricity, Gas & other Fuels07. Transport11. Restaurants & HotelsOtherTotal
All Households-0.11.11.70.32.32.82.6-1.09.6
Urban-0.11.12.20.32.22.42.7-0.99.8
Rural-0.20.90.40.32.74.02.3-1.19.2

In the 12 months to March 2022, Electricity, Gas & Other Fuels and Transport have been the biggest contributors to estimated inflation for both urban and rural households. Rural households’ higher estimated inflation in the last year is due largely to Transport being a higher proportion of their total expenditure than it is for urban households.

Table 3.9 Contributions to Estimated Inflation classified by Household Location, March 2021 to March 2022 (12 months)
Type of Household01. Food & Non-Alcoholic Beverages02. Alcohol Beverages & Tobacco04.1 Rent04.2 Mortgage Interest Payments04.5 Electricity, Gas & other Fuels07. Transport11. Restaurants & HotelsOtherTotal
All Households0.40.40.70.11.92.40.50.36.7
Urban0.40.40.90.11.82.10.50.36.5
Rural0.40.30.20.12.23.20.50.47.3

Age of Household Reference Person

The household reference person in the 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 63 months since December 2016, the estimated inflation experienced by households with reference person aged 65 or over was very close to the overall CPI; in the 12 months to March 2022, these households had slightly higher estimated inflation (+0.5) than the CPI in the last 12 months. Households with the household reference person aged under 35 had higher estimated inflation than the CPI since 2016 (+1.5) but had slightly lower estimated inflation (-0.1) than the CPI since March 2021.

Table 3.10 Estimated Inflation by Age of the Household Reference Person
Type of HouseholdDecember 2016 to March 2022 (63 months) March 2021 to March 2022 (12 months)
Inflation (%) Difference (%) from overall inflation  Inflation (%)Difference (%) from overall inflation
All Households9.60.0 6.70.0
Reference Person aged under 3511.11.5 6.6-0.1
Reference Person aged 35 to 649.3-0.3 6.70.0
Reference Person aged 65 or over9.60.0 7.20.5

Over the 63-month period, Rent was the biggest contributor (4.9%) to estimated inflation for households with the household reference person aged under 35. This contrasts with the contribution of Rent to total estimated price change for households with reference person aged 35 to 64 (1.2%) or reference person aged 65 or over (0.5%).

Table 3.11 Contributions to Estimated Inflation classified by Age of the Household Reference Person, December 2016 to March 2022 (63 months)
Type of Household01. Food & Non-Alcoholic Beverages02. Alcohol Beverages & Tobacco04.1 Rent04.2 Mortgage Interest Payments04.5 Electricity, Gas & other Fuels07. Transport11. Restaurants & HotelsOtherTotal
All Households-0.11.11.70.32.32.82.6-1.09.6
Reference Person aged under 35-0.10.94.90.21.72.22.8-1.411.1
Reference Person aged 35 to 64-0.11.11.20.42.23.02.6-1.09.3
Reference Person aged 65 or over-0.21.10.50.03.42.92.3-0.59.6

In the 12 months to March 2022, households with the reference person aged 65 and over had higher estimated inflation than other age groups, due to Electricity, Gas & Other Fuels being a higher proportion of their total expenditure than it is for other age groups. Transport was the biggest contributor to estimated inflation for other age groups in the last year.

Table 3.12 Contributions to Estimated Inflation classified by Age of the Household Reference Person, March 2021 to March 2022 (12 months)
Type of Household01. Food & Non-Alcoholic Beverages02. Alcohol Beverages & Tobacco04.1 Rent04.2 Mortgage Interest Payments04.5 Electricity, Gas & other Fuels07. Transport11. Restaurants & HotelsOtherTotal
All Households0.40.40.70.11.92.40.50.36.7
Reference Person aged under 350.30.31.90.11.42.00.50.16.6
Reference Person aged 35 to 640.40.40.50.11.92.50.50.36.7
Reference Person aged 65 or over0.50.40.20.02.82.30.50.57.2

Household Composition

Households of one adult with children had the highest estimated inflation in the 63 months since December 2016, but households of one adult had the highest estimated inflation in the last year. Households with children and more than one adult had the lowest estimated inflation between December 2016 and March 2022.

Table 3.13 Estimated Inflation by Household Composition
Type of HouseholdDecember 2016 to March 2022 (63 months) March 2021 to March 2022 (12 months)
Inflation (%) Difference (%) from overall inflation  Inflation (%)Difference (%) from overall inflation
All Households9.60.0 6.70.0
1 adult11.41.8 7.71.0
1 adult with children11.92.3 7.20.5
2 adults10.20.6 6.90.2
2 adults with 1 to 3 children9.2-0.4 6.6-0.1
3 plus adults9.3-0.3 6.5-0.2
Other households with children8.0-1.6 6.3-0.4

Over the 63 months, Rent was the biggest contributor (5.4%) to estimated inflation for households of one adult with children. For one-person households, Electricity, Gas & Other Fuels contributed 3.5%. Transport was the biggest contributor for other household compositions.

Table 3.14 Contributions to Estimated Inflation classified by Household Composition, December 2016 to March 2022 (63 months)
Type of Household01. Food & Non-Alcoholic Beverages02. Alcohol Beverages & Tobacco04.1 Rent04.2 Mortgage Interest Payments04.5 Electricity, Gas & other Fuels07. Transport11. Restaurants & HotelsOtherTotal
All Households-0.11.11.70.32.32.82.6-1.09.6
1 adult-0.11.32.40.23.52.52.5-0.811.4
1 adult with children-0.21.75.40.22.81.71.6-1.211.9
2 adults-0.11.21.60.22.52.92.8-0.910.2
2 adults with 1 to 3 children-0.20.71.90.52.12.92.2-1.09.2
3 plus adults-0.11.21.40.21.93.02.9-1.19.3
Other households with children-0.20.81.20.42.12.72.2-1.38.0

Between March 2021 and 2022, households of one person had the highest estimated inflation because of the high contribution of Electricity, Gas & Other Fuels. Households of one adult with children also had higher estimated inflation, reflecting the high contribution of Rent and Electricity, Gas & Other Fuels.

Table 3.15 Contributions to Estimated Inflation by Household Composition, March 2021 to March 2022 (12 months)
Type of Household01. Food & Non-Alcoholic Beverages02. Alcohol Beverages & Tobacco04.1 Rent04.2 Mortgage Interest Payments04.5 Electricity, Gas & other Fuels07. Transport11. Restaurants & HotelsOtherTotal
All Households0.40.40.70.11.92.40.50.36.7
1 adult0.30.50.90.12.82.10.50.47.7
1 adult with children0.40.52.00.12.31.40.30.37.2
2 adults0.40.50.60.12.12.40.60.36.9
2 adults with 1 to 3 children0.40.30.70.21.82.40.50.46.6
3 plus adults0.40.40.50.11.62.60.60.26.5
Other households with children0.40.40.50.11.82.40.40.46.3
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