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The generic inflation rate affects wage and tax changes in order to maintain the same standard of living. This has a big assumption attached: that people buy the same goods and services, and that the price value of those goods and services changes at the same rate.

This, however, is not the case. 

Without an accurate measure that is actively used the real wages of some demographics disproportionately increase slower than the cost of goods and services they buy. Although for everyone the price of bus travel has increased by 65% since 2008, lower income households spend more on these services as a share of total income. In terms of the inflation rate, these households cannot be compared to someone of a higher income whose spending habits do not mirror this.

The project aimed to share why a breadline inflation rate is important as well as influencing the Bank of England to alter public policy. The research into the alternative 'breadline' measure, formally known as the HCI, was to see the suitability of the ‘breadline’ measure as well as comparing against the current 'headline' measure, CPIH.

Katie Biggerstaff

Katie Biggerstaff

 

Harry Cooke

Harry Cooke

 

Tom Harrison

Tom Harrison

Assistant Researcher, Public Services and Communities

 

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