Statistics come in different kinds and each can be used to tell its own story. Rising inflation has made such variations even more obvious. Movements in the consumer price index — the UK’s main measure — aim to capture changes in the value of money. The CPI does less to highlight the specific challenges facing poorer households. Soon, though, access to digital data offers the prospect of producing statistics that paint a more complete picture of cost of living rises and directly represent more people’s experience.
Statistical measurements of the cost of living have been thrust on to the political agenda by anti-poverty campaigner Jack Monroe. Famous for her shoestring budget recipes, Monroe has lambasted the media for focusing solely on the average experience — missing the pressures on the very poorest. They, she says, have seen even tighter squeezes on their spending power thanks to steeper price rises for the most basic and low-cost food items.
Monroe has a point. It is possible to make generalised pronouncements about the cost of living from the CPI, the headline measure, but it will tend to over-represent the experience of richer households. Inflation is an economy-wide figure that looks to capture the purchasing power of pounds by tracking how they are spent through time. Richer households do a disproportionate amount of the aggregate spending in the UK, so the headline figure will always have more relevance to their purchasing patterns.
What is clear from the CPI is that the costs of necessities are increasing. A rise in the energy price cap in April will enable energy suppliers to start passing on steep price rises in wholesale markets to consumers. While this may be good for the viability of energy companies, it could be disastrous for the poorest households. Unlike many of its peers in Europe, the UK government is yet to unveil any scheme for helping the poorest; a mooted delay to the planned national insurance increase would do more for wealthier groups.
The Office for National Statistics on Friday rushed to restart publishing experimental data — suspended early in the pandemic when some key prices were temporarily unavailable — that showed prices in UK shops are rising at “similar” levels for both poorer and richer families; the cost of some more luxury categories is rising quickly too. But while weighted differently, the price points used to come up with these numbers are for the same items used to calculate the CPI — chosen to be representative of what average households buy, not the poorest.
In 2017, though, the Digital Economy Act gave the ONS permission to demand access to data held by certain businesses. Soon, it will use this power to gather prices directly from checkouts. This will give the statistics agency hundreds of millions of data points to track changes to food prices, including goods that tend to be purchased by the poorest in society. In time, and with ingenuity, the vast quantity of data available from this and other sources may make it possible to tie government payments and services to an index that more closely represents the lived experience of inflation.
Whether this possibility is realised or not will depend on whether politicians wish to ease cost of living pressures or to save money. Unfortunately, they do not have a great record on this front. UK student loan interest, inflation-linked bonds and train fares are all pegged to the discredited retail price index. It is to be hoped that this time is different. But while statistics can be used to tell many more stories, that alone is unlikely to stop politicians from only choosing their favourite.
Source: Economy - ft.com
