The Central Statistical Office will consider the possibility of reversing the disproportionate impact of the price increase on lower-income groups amid rising inflation.
Concerns have been raised that the CSO’s Consumer Price Index (CPI) does not reflect how the sharp rise in the cost of living affects certain households in Ireland.
An index is a measure of the average prices of a group of goods and services and it tracks how those prices have changed over time.
The latest CPI showed by the Statistics Agency Prices were on average 5.5% higher in December than they were in December 2020.
But St. Vincent de Paul cautioned that the index does not show how cost-of-living increases affect low-income families when prices for necessities are rising faster than key levels of inflation.
The latest CPI showed that increases in the energy sector made the second largest contribution to inflation over the year, as bills for gas, electricity and home heating rose 11.8% in the twelve months through December.
“When food and energy prices are rising at a much greater pace, the proportion of per capita income that is spent on those is greater for lower-income people,” said Tricia Keelthe, head of social justice and policy at the senior vice president.
“In real terms, what that means and what we’re seeing is that people are having to cut back on expenses.
“We get calls from people who, for example, use prepaid electricity meters who probably got five or six days of gas and electricity supply for 20 or 30 euros last year. Now they have to recharge the meter after two or three days again.
“Transportation is another big thing, especially for families who live in rural areas where public transportation is not available.
« We’ve had calls from people who actually have to choose between putting gasoline in the car to get to the store or getting the kids to school. »
Keilthi added that if CSOs can reflect the impact of inflation on those on lower incomes, this could lead to appropriate policy responses to alleviate poverty.
in briefing for the magazine , CPI statistician Colin Cotter explained that the CPI is averaged across all Irish households and that the true impact of inflation on everyone is different.
« Every family has its own unique consumption pattern and therefore personal experience with inflation, » he said.
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It would be impractical to calculate an index for each household. However, some statistical offices have provided « personal inflation calculators » on their websites, where users can enter a general outline of their spending pattern.
« The Central Statistical Office will consider the possibility of including a feature like this on its website to directly interact with the public about inflation. »
Kotter also said that it would be possible to calculate a « personal » CPI using weights from the Household Budget Survey, which includes data on household consumption patterns at different income levels.
The last household budget survey was conducted by the Central Statistical Organization in 2015/2016, and the next survey is expected to be conducted over 2022/23, as it will be used to update the consumer price index basket and weights at the end of next year.
« At this point, the CSO will also be able to analyze the feasibility and technical implications of producing price trend statistics for subgroups of the household population, such as low-income families, retirees and renters, » Cotter added.
It comes after the Office for National Statistics (ONS) – the UK’s CSO counterpart – confirmed earlier this week that it will do more to show the effects of inflation on specific income groups.
The Office for National Statistics also measures inflation by looking at the cost of consumer items from a number of different price points, but said it would look at ways to capture the impact of price increases on households with different incomes in the future.
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