We have produced a joint paper with Citizens Advice and the abrdn Financial Fairness Trust on how to best to measure inflation as experienced by different households. Shared with the Chancellor of the Exchequer and government officials, the paper follows a joint roundtable on the topic earlier this year, chaired by RSS president Dr Andrew Garrett.
The paper argues that the Household Costs Indices (HCIs), which the RSS has long been campaigning for and are now published quarterly by ONS, are ‘a significant step forward’ in giving us a more accurate reflection of inflation as experienced by households. The paper calls for them to be given national statistical status. It points to a number of issues with the Consumer Price Index, the current main measure of inflation, which has led to significant underestimations of household inflation, for the poorest households in particular.
It also calls for further work to be done by ONS to estimate the impact of differing inflation rates between similar products and brands, and for these to be incorporated into the HCIs, something which ONS has already begun experimental work on. The paper points to the impact a particular choice of inflation measure can have on benefit uprating and asks that the HCIs are used to inform this process.
Along with Citizens Advice and the abrdn Financial Fairness Trust, we hope the work will help inform policy and ensure that decision-makers have as full picture as possible when looking to tackle the cost-of-living crisis.
Read the full paper.