Household Costs Indices For UK Household Groups - July 2024 To September 2024
28th November 2024
Overall, UK household costs, as measured by the Household Costs Index (HCI), rose 2.0% in the year to September 2024, slowing from the annual rate of 2.5% in June 2024.
The all-households inflation rate has followed the fifth income decile most closely; costs for these households rose 1.8% in the year to September 2024, compared with rises of 2.5% for high-income households (decile 9) and 1.4% for low-income households (decile 2).
By tenure type, private renter households had the highest annual inflation rate of 3.0% in the year to September 2024, reflecting rising private rental payments; followed closely by mortgagor and other owner occupiers with a 2.6% inflation rate, in the year to September 2024.
Outright owner occupiers experienced the lowest annual inflation rate by tenure type at 1.0% in the year to September 2024; social and other renters had the next lowest at 1.9%.
Non-retired households continued to experience a higher annual rate of inflation (2.3%) in the year to September 2024 than retired households (1.1%).
The annual inflation rate for households with children fell to 2.2% and the rate for households without children fell to 1.8%, in the year to September 2024.
Overview of the Household Costs Indices inflation rates
The Household Costs Indices (HCIs) complement the Consumer Prices Index including owner occupiers' housing costs (CPIH) and the Consumer Prices Index (CPI), and show how the prices of goods and services consumed by households in the UK change over time. They do this by providing insight into the inflationary experience of different household groups.
Consumer price statistics measure the change in price of a "fixed basket" of goods and services, as described in our 2017 guide to CPI. For the HCIs, the weight of each component in a household group's "fixed basket" is based on the average household's share of expenditure ("democratic" weights). By contrast, the CPIH and CPI baskets reflect the total share of expenditure across all households in the UK ("plutocratic" weights).
The HCIs also include changes in mortgage interest rates, stamp duty and other costs related to the purchase of a dwelling. These are omitted from CPI and estimated using equivalent rental prices in CPIH, reflecting its different use case (see our Measuring changing prices and costs for consumers and households article). Further differences are described in our Household Costs Indices for UK household groups quality and methodology information (QMI).
The overall Household Costs Index (HCI) annual growth rate decreased from 2.5% in June 2024 to 2.0% in September 2024. The decline was largely because of a decreased growth in transport costs. As a result, the contributions to the all-households HCI from this category dropped by 0.4 percentage points, between June 2024 and September 2024.
Figure 2 shows the contributors to differences in the annual inflation rates for CPI and the all-households HCI over the period January 2022 to September 2024. In the most recent three months, the largest difference came from housing and household services, which when compared with CPI, contributed 1.1 percentage points more to the all-households HCI annual rate in September 2024. This difference mostly reflects the inclusion of owner occupiers' housing costs in the HCIs.
However, the use of democratic weights partially offset this increase, lowering the all-households HCI by 0.5 percentage points relative to CPI in September 2024. This is primarily because the democratic approach gives more weight to falling gas, electricity, and other fuel prices.
Household Costs Indices across the household groups
There is substantial variation across household groups in how much they spend on housing costs and energy. This has led to different inflation rates across different groups of households. In the year to September 2024, the Household Costs Indices (HCIs) inflation rate for all households was 2.0%. However, private renters experienced the highest rate at 3.0%, followed by mortgagors at 2.6% and high-income households (decile 9) at 2.5%.
Higher inflation for high income households (decile 9) was a result of higher contributions from mortgage interest payments, 0.6 percentage points more than low-income households (decile 2). Falling gas, electricity and other fuel prices reduced the annual inflation rate more for low-income households, by minus 1.6 percentage points, compared with minus 0.9 for high-income households. This resulted in an annual inflation rate of 2.5% for high-income households compared with 1.4% for low-income households (Figure 5).
Likewise, in the year to September 2024, households who spent a higher proportion of their basket on mortgage interest payments saw higher annual Household Costs Inflation rates than those who spent a greater proportion on household energy bills. As a result, higher annual inflation rates were experienced by non-retired households (2.3%) and those with children (2.2%), while retired households (1.1%) and households without children (1.8%), experienced lower rates of inflation (Table 1).
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