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23 March 2022

Personal inflation calculator: how do you compare to the rest of Britain?

Our calculator shows how you could be affected by surging prices in the UK.

By Nicu Calcea and Josh Rayman

Inflation is increasingly driving up the cost of living in Britain, with the latest figures showing an annual increase in prices of 8.8 per cent to July 2022, according to the Office for National Statistics (ONS). This figure represents the CPIH, which accounts for housing costs, rather than the more widely watched CPI.

The Bank of England expects inflation to rise to around 8 per cent this spring, with the figure slowly falling in the months after. These projections, however, do not account for Russia’s invasion of Ukraine and the subsequent disruption in global trade, which is set to drive prices further up.

The headline inflation rate – as the ONS itself admits – is only an average, and doesn’t reflect how rising costs affect the personal experiences of individuals.

“The headline CPIH measure captures the average, but everyone has their own personal inflation rate,” writes Mike Hardie, the head of inflation statistics at the ONS.

“Some people may spend a larger proportion of their income on gas and electricity, or petrol if you commute via car daily.”

The New Statesman has built a personal inflation calculator below that accounts for your individual spending habits to present a clearer picture of how rising costs may impact your standard of living.

Of course, even our calculator cannot offer a fully accurate picture of your finances. Inflation rates vary across different geographies, different lifestyles and different purchases. Even shopping at one supermarket over the other will change how you are affected by the living standards crisis.

It should, however, help you to understand your finances a little better. Even small deviations from the headline inflation indicators can add up month-to-month.

What inflation rate are we measuring?

The ONS mainly uses three indicators to measure inflations: Retail Prices Index (RPI), Consumer Price Index (CPI) and Consumer Prices Index including owner occupiers’ housing costs (CPIH).

The RPI, which is consistently the highest of the three, is considered outdated due to some major shortcomings, but it is still maintained for historic reasons. This measure includes mortgage interest payments, making it heavily reflect house prices.

The RPI has largely been replaced by the CPI across various government calculations. Compared with its predecessor, the CPI doesn’t include any housing costs. There are also differences in what kinds of expenses are counted in, with the latter excluding things such as the TV licence but including university accommodation fees. The CPI is often the inflation indicator most widely covered in the media – especially when it is higher than the CPIH.

The CPIH, which has for the past five years been the headline rate measured by the ONS and what we used for our calculations, is similar to the CPI, but includes owner-occupiers’ housing costs and council tax.

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