The Office for National Statistics (ONS) has today published new Household Costs Indices (HCIs) for various household types. The new HCIs, currently being developed by ONS, do not conform to usual rules about measuring inflation and instead directly record the changes in costs facing households.

While an ‘all-households’ index is being developed for comparison, the purpose of the HCIs is to show how prices are changing for different household types. Initially, this includes different household income groups, retired and non-retired households and those households with and without children.

The new indices allow changes in the costs of household outgoings to be compared with changes to their incomes. For example, between 2006 and 2016 the costs facing retired households grew by 32%, while their incomes grew by 49%. Meanwhile, over the same period, the costs facing non-retired households grew by 27%, while the incomes of these households grew by 26%.

The figures also show that the costs facing low income households grew by 31%, while their incomes grew by 39%. During the same period, the costs facing higher-income households grew by 26%, while their incomes grew by 28%.

Commenting on the new HCIs, ONS Deputy National Statistician for Economic Statistics Jonathan Athow said:

“These new Household Costs Indices look at how the payments different household groups are making change over time. This is a measure of the cash outgoings of households, which is different from other inflation statistics such as CPIH. The new Indices show directly how different household groups experience changing costs.

“By publishing these new figures alongside data on household income, we can see how well households’ incomes are keeping pace with changing costs.”

On average, the picture painted by the HCIs is similar to that shown by CPIH. Over the period 2006-2016, the annual all-households HCI grew 0.2 percentage points faster than the all-households CPIH. However, there have been periods where the all-households HCI grew up to 2 percentage points lower than the all-households CPIH. Between 2014 and 2016 the annual all-households HCI rose by 0.4 percentage points less than the all-households CPIH.

ENDS

Background notes:

  1. The full Household Costs Indices, UK: preliminary estimates 2005 to 2017 article.

  2. An article detailing how the new HCIs have been calculated and showing how they contrast with CPIH.