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Lower income households face higher rate of inflation, data shows

The Central Statistics Office said each individual household ‘has its own unique consumption pattern of goods and services’.

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Inflation rates were different for those in high and low earning households (PA)

Inflation rates were different for those in high and low earning households (PA)

Inflation rates were different for those in high and low earning households (PA)

Lower income households experienced inflation rates of up to 10.3% compared to 8.2% for those on the highest incomes, new data shows.

Compared with the annual Consumer Price Index (CPI) inflation figure of 9.1% in June 2022, a new breakdown by the Central Statistics Office (CSO) estimates that households with the lowest incomes experienced higher inflation.

CPI is a measure of average inflation for all households.

For households in the lowest 10% income, electricity, gas and other fuels was the largest contributor to their estimated inflation rate. This was followed by rent and transport.

The CSO published an update to its first research paper on inflation broken down by various household characteristics up to June 2022.

For households in the top income bracket, transport was the largest contributor to their estimated inflation. This was followed by electricity, gas and other fuels, and restaurants and hotels.

New data shows households paying a mortgage had estimated annual inflation of 8.4%, while for those which own their home outright, inflation was estimated to be 9.3%

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Each household has its own unique consumption pattern of goods and services and therefore its own personal experience of inflationJoseph Keating, CSO

Households renting their home from a private owner had an estimated inflation rate of 9.4%, versus 9.9% for those renting from a local authority.

Compared with the June CPI figure of 9.1%, the annual inflation rate was 8.8% for urban households and 9.7% for those in rural areas..

Higher than average inflation was calculated for households of one adult at 10.2%, one adult with children at 9.8%, or two adults without children at 9.2%.

Joseph Keating, statistician in the CSO prices division, said: “The increasing rate of inflation since the middle of 2021 has prompted greater interest in price change and its effects on households.

“Each household has its own unique consumption pattern of goods and services and therefore its own personal experience of inflation.

“The updated research paper published by the CSO today attempts to take account of those differences between households and provides an estimated breakdown of the CPI results by household characteristics up to June 2022.

“This has been calculated by combining the CPI results with more detailed expenditure data from the 2015/16 Household Budget Survey.

“The report presents estimates of inflation classified by household income, composition of the household, housing tenure, age of the household reference person, and whether the household is in an urban or rural setting.”

Mr Keating said the official measure of inflation as published in the CPI shows prices for consumer goods and services increased by 9.1% in the year to June 2022.

“Over the same period, the estimated annual inflation by household income categories showed a range from 8.2% for the top decile of households by income, to 10.0% or more per annum for households in the two lowest income deciles,” Mr Keating added.

“In the 12 months to June 2022, household groups which were estimated to have experienced inflation at a higher rate than the official measure of inflation of 9.1% included lower income households, with estimated rates of inflation of up to 10.3%.

“The cost of energy was one of the major drivers of inflation in the 12 months to June 2022.

“Transport-related price changes were responsible for almost a third of the 9.1% annual change in the CPI, while electricity, gas and other fuels contributed more than another quarter of the change.”

Mr Keating said that over the last five years, overall inflation as measured by the CPI was 12.0%.

“The lowest income decile experienced an estimated price increase of 13.9% over those five years and the highest income decile had an estimated increase of 10.6%,” he added.

“Rural households experienced slightly higher estimated inflation than the CPI over the five years to June 2022.

“Inflation estimated for rural households was also higher than the CPI in the final 12 months, June 2021 to June 2022.”


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