What's YOUR inflation rate? How renting, having children and being a high earner can drive it up
Renters are facing higher inflation than those who have a mortgage, according to new data from the Office for National Statistics.
It revealed that households in private rented properties had the highest annual inflation rate of 3.6 per cent in March, reflecting rising private rental costs.
A big contributor has been the fact that UK monthly private rents increased by 7.7 per cent in the 12 months to March, according to the ONS, but this fell to 7.4 per cent in April.
Private renters were followed by renters in social housing, who had a 3 per cent inflation rate.
In contrast, mortgage-free homeowners experienced the lowest annual inflation rate of all housing types, at 1.8 per cent in the year to March.
Households with mortgages had the next-lowest at 2.8 per cent.
Riz Malik, director at wealth management firm R3 Wealth, said: 'Once tenant costs increase they rarely decrease, particularly with many landlords raising rents due to the 2022 mortgage rate hikes following the infamous mini-Budget.
'This gap continues to grow, and while some may manage to get onto the property ladder, many will remain part of generation rent.
'This situation is especially challenging for those in the south east or working in major cities.'
Richer households see higher inflation
Overall household costs, as measured by the Household Costs Index, rose by 2.6 per cent in the year to March.
This is a fall from 2.9 per cent in the year to December 2024.
However, inflation is slightly higher for those who earn more. It rises to 2.7 per cent for high-income households and falls to 2.5 per cent for low-income households.
Inflation has dropped substantially for higher earners, though, coming in at 4.7 per cent a year earlier.
Another interesting disparity picked up in the data was that non-retired households are experiencing a higher annual rate of inflation at 2.8 per cent in March than retired households at just 2.1 per cent.
Sarah Coles, head of personal finance at Hargreaves Lansdown, said: 'The inflation rate slowed for retirees, and is now just 2.1 per cent - down from 3.1 per cent a year earlier.
'The change is thanks to lower bills, which tend to make up a larger proportion of the spending of this group so the cuts to the energy price cap have a disproportionately positive impact.
'Unfortunately, it means pensioners will have borne much of the brunt of Awful April, so early 2025 will only have been a brief respite from rising prices.'
Retired people also aren't paying fast-rising costs associated with commuting, such as train season tickets.
It is also costing more for those raising children. The annual inflation rate for households with children was 2.8 per cent in March.
However, for households without children, it was 2.6 per cent.
These inflation rates are likely to have risen since the data was gathered in March.
Overall CPI inflation rose to 3.5 per cent in April, up from 2.6 per cent in March, driven by a huge hike in household bills.
In addition, energy, water and council tax bills were hiked for many last month in what has been dubbed 'Awful April'.
Coles added: 'Inflation eased in early 2025, but it still put a real squeeze on lower earners and renters.
'Unfortunately, life is only going to get tougher, as shortly after these figures were calculated, Awful April hit hard. Those same groups are likely to face the biggest challenges in the months to come.'
Why is inflation different for everyone?
The consumer prices index measures the average change in prices of roughly 730 core goods and services over time.
This includes everything from transport to food and services.
Every month, a team of roughly 300 analysts visit 20,000 shops in 141 different locations recording around 180,000 prices in the process.
The truth is, there's no such thing as a single rate of inflation. Everyone will have their own because people buy different goods and services from an array of shops and sellers.
It means certain individuals will have noticed the rising cost of living far more than others over the past 12 months.
The changing price of dog food, for example, is not going to be relevant to someone who does not have a canine companion.
Instead, Britain's national statisticians aim to create a representative basket of goods broadly reflective of the nation's shopping habits.
This basket, which is used to calculate what we know as 'the rate of inflation', or the consumer prices index, is updated once a year to reflect changing tastes.
For example, at the start of 2024, 16 items were added to the consumer prices index and 15 items were removed.
Additions to the basket for 2024 included air fryers, vinyl records, gluten-free rice cakes and spray oil.
Removals from the basket included hand sanitiser, sofa beds, rotisserie cooked hot whole chicken and bakeware.
Best mortgage rates and how to find them
Mortgage rates have risen substantially over recent years, meaning that those remortgaging or buying a home face higher costs.
That makes it even more important to search out the best possible rate for you and get good mortgage advice, whether you are a first-time buyer, home owner or buy-to-let landlord.
> Mortgage rates calculator
> Find the right mortgage for you
To help our readers find the best mortgage, This is Money has partnered with the UK's leading fee-free broker L&C.
This is Money and L&C's mortgage calculator can let you compare deals to see which ones suit your home's value and level of deposit.
You can compare fixed rate lengths, from two-year fixes, to five-year fixes and ten-year fixes.
If you're ready to find your next mortgage, why not use This is Money and L&C's online Mortgage Finder. It will search 1,000's of deals from more than 90 different lenders to discover the best deal for you.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Guardian
16 minutes ago
- The Guardian
Liz Truss hits back at Tory shadow chancellor for mini-budget disavowal
Liz Truss has hit out at the Conservatives' shadow chancellor after he formally disowned her hastily reversed 2022 mini-budget, saying it had damaged the party's reputation for economic competence. The former prime minister labelled Mel Stride a 'creature of the system', part of a failed fiscal orthodoxy which, she argued, would prevent the Conservatives taking power again if left unchallenged. Stride's insistence at a speech in London that 'never again' would the Conservatives offer up a largely unfunded package of tax cuts is the first time that the party hierarchy under its leader, Kemi Badenoch, has definitively cut itself off from Truss, who lasted just 49 days in power. One Tory shadow minister said the impetus for Stride's speech was in part to allow the Conservatives to attack Reform UK's lavish programme of tax cuts as being a potential re-run of the Truss debacle, as Keir Starmer did last week. In his speech, Stride labelled Reform's economic policies 'pure populism'. He added: 'They would plough ahead with huge additional welfare spending, as well as tax cuts, with no plan for how to pay for any of it.' Addressing Truss's September 2022 fiscal plans, which involved about £45bn in unfunded tax cuts, he said: 'For a few weeks, we put at risk the very stability which Conservatives had always said must be carefully protected. 'Back then mistakes were recognised and stability restored within weeks, with the full backing of our party. But the damage to our credibility is not so easily undone. That will take time. And it also requires contrition. So let me be clear: never again will the Conservative party undermine fiscal credibility by making promises we cannot afford.' Truss released a statement that called Stride 'one of the Conservative MPs who kowtowed to the failed Treasury orthodoxy and was set on undermining my plan for growth from the moment I beat his chosen candidate for the party leadership [Rishi Sunak]'. She added: 'Until Mel Stride admits the economic failings of the last Conservative government, the British public will not trust the party with the reins of power again.' In a later tweet, she again took aim personally at Stride, calling him 'a creature of the system' who, when the pair were both Treasury ministers under Theresa May, 'always went along with officials'. In his speech, Stride also urged people to have patience with Badenoch's leadership, saying: 'She will get better through time at the media. She will get better through time at the dispatch box at PMQs. Sign up to First Edition Our morning email breaks down the key stories of the day, telling you what's happening and why it matters after newsletter promotion 'Just as Margaret Thatcher, when she became leader in '75, was often criticised for everything from her hair to the clothes she wore to the pitch of her voice to heaven knows what else, in the end she got it together and Kemi will do absolutely that.' The Conservatives currently poll in third place behind Reform UK and Labour, with a YouGov poll published on Wednesday showing the Tories on 18%, just one point ahead of the Liberal Democrats. Badenoch's own favourability ratings have also fallen since she became party leader, reaching -27% according to a More in Common poll carried out last weekend.
Daily Mail
2 hours ago
- Daily Mail
PETER HITCHENS: The police are revolting against the people of this country. They have failed to do their jobs and now they dare threaten us... the time has come for change
Our police chiefs have now quite obviously grown too big for their helmets. Their heads have got too swollen, while their feet, which they barely use any more, have gone soft from lack of contact with the pavement. The sheer nerve of their new threat to stop investigating some crimes if they don't like the size of their budget is an outrage. If Sir Keir Starmer wants to evoke a great cry of 'At last!' from the people of this country, he will very swiftly squash this disgraceful revolt against the public and Parliament by three of the most senior figures in the police hierarchy.
The Independent
3 hours ago
- The Independent
The ONS scandal that has made your bills higher than they should be
Is there a bigger numerical oopsie than getting inflation wrong? Given how important this data point is, and how profoundly it affects all of us, it is hard to find one. Yet this is what happened in April, also known as 'misery month' because of the slew of tax and price rises that took effect and delivered a vicious kick in the guts to the average consumer. These price rises were always expected to send the Consumer Prices Index (CPI) northwards, but not to the extent that the official data showed. The Office for National Statistics (ONS) put CPI inflation at 3.5 per cent, well ahead of the consensus City forecast (3.3 per cent). The trouble is, it got its sums wrong. It has now emerged that the actual number was 3.4 per cent. The cause? Dodgy data on vehicle excise duty – car tax to you and me – submitted by the Department for Transport (DfT) and used in the calculation. An error of 10 basis points mightn't seem like such a big deal. It doesn't look like a big deal on paper – but it really is. That number feeds through to businesses' pricing decisions and to wage settlements. It influences a dizzying array of contracts, too. The older Retail Prices Index (RPI) for the month was also wrong, coming in at 4.5 per cent when it should have been 4.4 per cent, meaning mobile phone contracts with built-in rises linked to RPI increased by more than they should have. The biggest problem, however, is the key role CPI inflation plays in the formulation of monetary policy. The Bank of England 's target is set at two per cent. How are the rate-setters on its Monetary Policy Committee (MPC) expected to set interest rates to hit that if the numbers are constantly moving? Needless to say, getting interest rate policy wrong can choke off growth, leading to higher unemployment, and even recession. So this is no small SNAFU. It matters. It is, in fact, a scandal. Wait a minute, I hear you say, isn't the problem here with the DoT? Surely that's where the red faces should be. Well, yes, but here's the thing: the pointy heads who pore over this stuff when it comes out were ringing alarm bells over the DfT data before the ONS admitted to the error. If outside commentators could smell a rat then you would expect the same to be true of the ONS. At the very least, you would expect someone there to pick up the phone and ask the DoT to double-check its figures. The ONS admits as much – albeit en passant – when it says in its statement that it is 'reviewing our quality assurance processes for external data sources in light of this issue.' The Office for Statistics Regulation was clearly on the right track when, in a recent interim report on the economic stats put out by the ONS, it highlighted that staff had said 'early warnings of emerging problems' were not always welcomed. This begs the question that, if someone did see something off, were they listened to? The report was prompted by signs of institutional weakness. The unreliability of the labour force survey, closely watched by both the MPC and the government, has been a bone of contention for some time. Errors in trade figures were also identified from January 2023 to December 2024. Andrew Bailey, the governor of the Bank of England, was asked about the impact of poor ONS data on interest rate policy at a hearing of the Treasury Committee on Tuesday. 'It does have a bearing on it,' he said. 'We certainly spend more time on it and that's obviously what we should do, given the uncertainty.' That might sound bland but central bankers choose their words carefully and with good reason: they move markets. It's probably overegging it a bit to say that a comma in the wrong place in one of Mr Bailey's speeches could create a crisis, but only a bit. Participants pore over his missives for clues on future interest rate policy. Billions of pounds can be moved if they sense a hardening or softening of the MPC's stance. Behind the scenes, I suspect Bailey has been a good deal more blunt. Despite the error, the ONS said it would not change the inflation figure 'in line with policy' in this area. That policy is partly informed by the sheer number of contracts that depend on the CPI and/or the RPI. Things would get very complicated if money was moving back and forth every five minutes as a result of the inflation data being subject to constant revision. So there will be no mobile phone refunds. However, this also means the records will forever be wrong. Tables and graphs and suchlike will require an asterisk from hereon out. This is an embarrassment when good data has never been so important. The ONS simply has to get its house in order. ONS chief Sir Ian Diamond resigned last month on health grounds. Stopping the rot must be at the top of his successor's inbox.
