Household Costs Indices bulletin for January to March 2024 published

UK household costs, as measured by the Household Costs Index (HCI), rose 4.4% in the year to March 2024, slowing from 5.3% in the year to January 2024, the Office for National Statistics said in its bulletin published on 30 May 2024¹. The HCI tracks how inflation is experienced by different groups of households, rather than the single all-household figure given by the Consumer Prices Index including owner occupiers' housing costs¹.

The all-household rate was 4.4% in March 2024, against a CPI annual inflation rate of 3.2% in the same month¹. The ONS said the largest contributor to the gap was housing and household services, which added 1.30 percentage points more to the all-household HCI rate in March 2024, mainly because the HCI includes owner occupiers' housing costs¹. The use of democratic weights, which give each household's spending pattern equal weight rather than weighting by total expenditure, partly offset this, lowering the all-household HCI relative to CPI by 0.37 percentage points in March 2024, primarily because falling gas, electricity and other fuel prices carry more weight under that approach¹.

By tenure, mortgagor and other owner-occupier households had the highest annual rate at 5.5% in March 2024, which the ONS attributed to rising mortgage interest payments, while outright owner occupiers had the lowest at 3.3%¹. Private renters' rate was 4.6% and social and other renters' 4.3%¹. Non-retired households saw 4.8% against 3.4% for retired households, and households with children 4.8% against 4.2% for those without¹.

Group	Mar 2023	Jan 2024	Feb 2024	Mar 2024
All households	12.3	5.3	4.7	4.4
Income decile 2 (low)	13.2	4.8	4.2	3.9
Income decile 9 (high)	11.4	5.9	5.2	5.0
Mortgagor and other owner occupier	12.6	6.6	5.9	5.5
Outright owner occupier	12.7	4.2	3.6	3.3
Private renter	10.0	5.1	4.8	4.6
Social and other renter	13.1	5.2	4.5	4.3
Retired	13.6	4.2	3.6	3.4
Non-retired	11.7	5.7	5.0	4.8
With children	11.7	5.8	5.1	4.8
Without children	12.5	5.1	4.5	4.2

Source: ONS, Household Costs Indices, Table 1¹

High-income households, represented by the ninth income decile, saw costs rise 5.0% in the year to March 2024, against 3.9% for low-income households in the second decile, a gap of 1.1 percentage points that had narrowed from 1.4 percentage points in October and November 2023¹. The ONS said the difference was driven mainly by mortgage interest payments, which added 0.95 percentage points more to the high-income rate than the low-income rate, and by lower electricity, gas and other fuel prices, which reduced the rate more for low-income households by a further 0.60 percentage points¹. Over five years to March 2024, cumulative costs rose 28.6% for low-income households and 28.2% for high-income households¹.

"These are official statistics in development, and we advise caution when using these data, as estimates may be revised because of methodological improvements."

Office for National Statistics, Household Costs Indices for UK household groups, January to March 2024¹

The ONS also published a correction on 22 August 2024, stating that previous HCI publications contained an error regarding CPI comparisons, caused by using an outdated CPI weights file¹. It said the error affects Figure 2 in the bulletin and its commentary, and tables 26 and 27 in the reference tables, and estimated the impact increases the contribution of democratic weighting to the difference between HCI and CPI by up to a maximum of 0.51 percentage points in January 2023, when HCI annual inflation was 12.1%¹. All CPI publications and HCI data are unaffected, as are the main points in the publications, and the error was to be corrected on 28 August 2024 alongside the next HCI update¹.

Why it matters for households

The HCI is designed to show that inflation is not the same for everyone. In the year to March 2024, the gap between the highest and lowest tenure rates was 2.2 percentage points, between mortgagor owner occupiers at 5.5% and outright owner occupiers at 3.3%¹. Households with a mortgage were affected by mortgage interest payments, a cost the CPI does not include directly¹. Renters' costs rose at rates between 4.3% and 4.6%, depending on whether the tenancy was private or social¹. Retired households faced a lower rate than non-retired households, 3.4% against 4.8%¹. The figures are 12-month growth rates to March 2024, so they describe cost changes over that year rather than the level of prices, and the ONS classes them as official statistics in development, meaning estimates may be revised¹.