#Yed formula series#

The HCIs adopt a 'democratic' weighting approach, which assigns equal weight to each household's share of expenditure The CPIH and HCIs' methodology differs in five distinct ways: Hence, we choose to use the HCIs for this analysis. The HCIs instead take a bottom-up approach to inflation, describing the experience of households (or a group of households) as a result of changing prices in the UK, through measuring the impact of changing prices to the household budget. The CPIH shows the change in prices faced by households ( or a particular subgroup of households) in the UK. The difference between the Consumer Prices Index including owner occupiers' housing (CPIH), which is our lead measure of inflation, and the HCIs, is that the CPIH takes a top down approach to measuring inflation. The purpose of this article is to present further developed analysis, with a focus on low- and high-income households, to better understand their experience of changing prices and costs over time. Previous analysis of the HCIs suggests that different household groups, such as retired and non-retired households or households with and without children, experience different levels of inflation. We will continue to use feedback we receive along with the advice of the Advisory Panels on Consumer Prices (APCPs) to help determine the HCIs' development. The HCIs are an important part of the prices landscape and we are aiming to achieve National Statistic status. The HCIs measure how much the nominal disposable income of different household groups would need to change, in response to changing costs, to enable households to purchase the same quantity of goods and services of the same quality. To do so, we use a set of experimental measures of inflation called the Household Costs Indices (HCIs). The scope of this article is to investigate the relationship between household inflation and income inequality in the UK. Considering household inflation, real income for low-income households only increased by 4.3% and real income for high-income households increased by 7.7% over the time period. We found that over the time period, nominal income increased 45.9% and 43.4% for low- and high-income households, respectively. This enables us to better illustrate the real pressures felt on household budgets.

#Yed formula series#

Using the HCI for each income decile we deflated the monthly average income series to obtain a real income series for both low- and high-income households. This finding provides evidence towards the positive relationship between inflation and income inequality found in academic literature. Our analysis shows that generally, income inequality is improving over the time period, but in real terms it is not improving as quickly. The use of an HCI deflated series ensures the analysis is more representative of the household experience of changing prices and their effect on income inequality. This research also computes a real (HCI deflated) Gini coefficient, which illustrates the relationship between income inequality and inflation. Spending categories where low-income households have a large expenditure share and experience volatile price movements will have a large impact on the 12-month growth rate for low-income households. Using expenditure shares per income decile, we can see that the differences in expenditure shares between low- and high-income households highlight spending categories that have a large influence on the growth rate for the HCIs for low- and high-income households. This research aims to use the Household Costs Indices (HCIs) to analyse the relationship between household inflation and income inequality in the UK. It is calculated by dividing the percentage change in Qd x by the percentage change in P y.3. It's the percentage change of the quantity demanded (Qd x) of one product (x) as a result of a change in price (P y) of another product. It is calculated by dividing the percentage change in Qd by the percentage change in Y.XED refers to Cross Price Elasticity of Demand.

In other words it's the percentage change of quantity demanded (Qd) of a product as a result of a change in a consumer's income (Y). It is calculated by dividing the percentage change in Qs by the percentage change in P.YED refers to Income Elasticity of demand, although it doesn't stand for it. It refers to the percentage change of quantity supplied (Qs) of a product as a result of a change in price (P) of that product. It is calculated by dividing the percentage change in Qd by the percentage change in P.PES stands for the Price Elasticity of Supply.

It refers to the percentage change of quantity demanded (Qd) of a product as a result of a change in price (P) of that product. PED stands for Price Elasticity of Demand.