ONS releases Household Costs Indices for April to June 2024

UK household costs, as measured by the Household Costs Index (HCI), rose 2.5% in the year to June 2024, slowing from an annual rate of 4.5% in March 2024, the Office for National Statistics (ONS) said in a bulletin published on 28 August 2024¹. The HCI is a separate measure from the Consumer Prices Index including owner occupiers' housing costs, and the ONS said the all-households HCI annual rate of 2.5% compared with a June CPI annual inflation rate of 2.0%¹.

The ONS said the fall largely resulted from a reduction in electricity, gas and other fuel prices, along with slower growth in the cost of food and non-alcoholic beverages, and miscellaneous goods and services. Contributions from those three categories dropped by 0.67 percentage points, 0.33 percentage points and 0.33 percentage points respectively between March and June 2024¹.

The bulletin gives annual HCI inflation rates for household groups. The ONS said the all-households rate has followed the fifth income decile most closely over the past three years; costs for that group rose 2.3% in the year to June 2024, compared with 3.3% for high-income households (decile 9) and 1.7% for low-income households (decile 2)¹.

Group	Jun-23	Apr-24	May-24	Jun-24
All households	9.8	3.1	2.7	2.5
Income decile 2	10.0	2.4	1.9	1.7
Income decile 5	9.7	2.9	2.5	2.3
Income decile 9	9.7	3.9	3.7	3.3
Mortgagor and other owner occupier	11.1	4.3	4.1	3.7
Outright owner occupier	9.4	2.0	1.5	1.3
Private renter	8.3	3.7	3.3	3.2
Social and other renter	10.0	2.6	2.2	1.9
Non-retired	9.8	3.6	3.2	2.9
Retired	9.9	1.9	1.4	1.2
With children	10.0	3.5	3.2	2.9
Without children	9.8	2.9	2.5	2.3

Source: ONS Household Costs Indices¹

By tenure, mortgagor and other owner-occupier households had the highest annual rate, 3.7% in the year to June 2024, which the ONS said reflected rising mortgage interest payments. Outright owner occupiers had the lowest rate, 1.3%. Private renters' HCI inflation was 3.2%, higher than social and other renters at 1.9%¹. Mortgage interest payments contributed 2.0 percentage points to the annual rate for mortgagor households, while private rental costs contributed 2.2 percentage points to the rate for private renter households¹.

Non-retired households had a higher annual rate, 2.9%, than retired households at 1.2%. The rate for households with children fell to 2.9% and for households without children to 2.3%¹.

The ONS said the HCI differs from CPI in part because it includes changes in mortgage interest rates, Stamp Duty and other costs related to buying a dwelling, and because its weights are based on the average household's expenditure share rather than the total share of expenditure across all households¹. In June 2024, housing and household services contributed 1.38 percentage points more to the all-household HCI annual rate than to CPI, while the weighting approach lowered it by 0.80 percentage points, mainly because it gives more weight to falling gas, electricity and other fuel prices¹.

"The overall Household Costs Indices (HCIs) annual growth rate decreased from 4.5% in March 2024 to 2.5% in June 2024"

Office for National Statistics, Household Costs Indices for UK household groups, April to June 2024¹

The ONS described the figures as official statistics in development and advised caution in using them, saying estimates may be revised because of methodological improvements¹. It said improved private rental and second-hand cars indices were introduced in February 2024, and that the publication corrected an error in previous editions regarding comparisons with CPI¹.

Why it matters for households

The HCI is designed to show how the prices of goods and services consumed by households change over time, and to give insight into the inflationary experience of different household groups¹. Because it includes mortgage interest payments and house purchase costs, the gap between the all-households HCI rate of 2.5% and the June CPI rate of 2.0% is a measure of costs that CPI does not capture¹.

The spread between groups is wider than the headline figure. In the year to June 2024, the annual rate ranged from 1.3% for outright owner occupiers to 3.7% for mortgagor and other owner-occupier households, and from 1.7% for the second income decile to 3.3% for the ninth¹. The ONS said higher inflation for high-income households reflected larger contributions from mortgage interest payments, 0.83 percentage points more than for low-income households, while falling gas, electricity and other fuel prices reduced the rate more for low-income households, a difference of 1.01 percentage points¹.

The figures cover the year to June 2024 and are a backward-looking measure of cost changes, not a forecast. The ONS said the first and tenth income deciles are not included in the table because the composition of those groups can be unusual and may be influenced by unrepresentative expenditures¹. The Household Costs Index guide sets out how the measure is built.