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Open Door

Distributional Aspects of Inflation Report Launch

Wed, 4 September 2002

Inflation as experienced by households often differs from the official rate.

On 19th June, the Institute for Fiscal Studies launched its report on the differential impact on different groups of official inflation indicators. The research, funded by a Nuffield Foundation Open Door Grant, found that inflation as experienced by households often differs from the official rate. This is because household spending patterns vary and prices of various goods and services change at different rates. In addition, over the last 25 years the rate of inflation has tended to be lower for the poorest 10 per cent of households than for households at the other end of the scale. IFS thinks this is because lower income groups tend to consume a higher proportion of goods, and lower proportion of services, than higher income groups. On average, only a third of households are likely to actually experience inflation rates within one percentage point of the official rate.

Copies of the report can be downloaded from the IFS website.

Last Updated Wed, 12 May 2004