Soaring Inflation in UK
The
recent surge in UK inflation has
received a lot of attention on
this important indicator. However,
headline inflation is, of course, just
an average and does not
necessarily reflect price fluctuations
experienced by different people. In this post, Mike Hardie discusses
the challenges of measuring the
cost of living for everyone and
how some significant new improvements will provide a clearer
picture of the future.
As I wrote last November, ONS summarizes its headline inflation
every month. It is created by
collecting prices for over 700 important goods and services purchased online by UK homes from various locations across the country and offering over 180,000 prices. Combine this with detailed
information on spending patterns to calculate accurate price fluctuations for UK goods and services.
Individual price fluctuations can vary significantly
However, average annual inflation can be significantly
hidden. If you collect 180,000 prizes on a regular basis, there is a wide variety. And there have
been some big changes in the last few months. Some items, such as "Fruit
Drinks" and "Low Fat Spreads," recorded an average annual price increase of over 30% in December,
and analysis of individual price quotes shows that price changes of over 100% are one. It is not
unusual for items in the club.
However, given its relative importance to overall household spending, its
impact on headline inflation was small. Prices for low-fat spreads have risen
sharply, but contributed only 0.02 percentage points to December's annual headline inflation rate of 4.8%
(using the consumer price index, which includes the owner-occupant housing cost index CPIH).
It was. Very small part of the
One inflation rate does not fit all.
The headline CPIH index shows the average,
but everyone has their own inflation rate. If you commute by car every day, some people spend most of their income on gas, electricity, and gasoline. However, if you categorize this data in different
ways, for example, B. This is always
the case, depending on how much income you earn or whether you own or
rent your property. Historically,
the difference was small, though not always. For example, during
periods of economic stagnation,
inflation in low-income
households was high in 2008 and
early 2009.
We have
suspended this more detailed analysis of inflation during a pandemic because so many items were
temporarily unavailable. However,
given the great interest in
living expenses and inflation, we plan to resume this
series and will release these
experimental Consumer Price
Index (CPI) statistics on
Friday. However, looking at
these subgroups, they still use the same 700 items, and the differences between the groups are due to
different spending patterns.
How ONS is developing and improving price statistics
In the long run, we are changing the way we measure prices to better understand people's spending behavior in a more detailed and timely
manner. Current inflation baskets measure price changes for more than 700 specific
items that are typically purchased,
but what happens when the price of individual items changes? If the price of one type
of apple goes up and the price of another kind of apple goes down, does anyone switch varieties to avoid the price increase? And given that people are definitely buying different types of products in different ways,
what are the prices for their own branded baking beans and branded baking beans?
Currently, we are developing a radical new plan to dramatically
increase the number of price points from 180,000 to hundreds of millions each month using the prices offered directly from supermarket checkouts. That is, not only adding one apple to the store (selected as a
representative based on shelf space and market intelligence), but also
the cost of each apple and the
number of varieties purchased at more stores in each region.
Countries of
the world. It doesn't show what
each consumer bought to protect
privacy, but it does show exactly what was sold and how much it was sold, and how inflation is
affecting UK households. Let me explain
in more detail. Learn more about our long-term transformation program.
But this last point presents
another challenge. To create truly
accurate data about who is buying and how much, even if you know how much each item is being purchased, detailed information about the item that people in each income group are buying. Is required Of course, not everything is easy, but we are working hard to create the important data people need.
