Inflation

The Hamilton method for estimating CPI bias is simple, intuitive, and has been widely adopted. We show that the method conflates CPI bias with variation in cost-of-living across income levels.

This paper examines contrasting experiences of the United Kingdom in addressing high public debt to GDP ratios following major wars. A clear message is that interest rate / growth rate differentials were more important than primary budget surpluses for the different outcomes. The debt to GDP ratio fell very rapidly under financial repression following the Second World War but remained stubbornly high despite large budget surpluses with price deflation after the First World War. Implications for policymakers today are that averting price deflation is a high priority and that supply-side policies that raise growth could play an important part in debt reduction.

The UK Statistics Authority published the independent review of UK consumer prices statistics led by Paul Johnson, Director of the Institute for Fiscal Studies, on 8 January 2015. The full report and an executive summary are available via the links on the right-hand side of this page. Further information is also available in a news release also published on 8 January 2015.

This research looks at trends in poverty (relative and absolute) after taking into account households’ different experiences of inflation.

While house prices are on a general upward trend, exactly how fast house prices are increasing and whether they have attained their previous peak are less clear. This briefing note is designed to shed some light on these issues.

Peter Levell discusses the recent decision of the UK's Office for National Statistics to replace the controversial Carli index with the Jevons index in a new version of the retail price index—RPIJ.

Viewpoint in the Times Business section, published 30 November 2012.

This paper considers the case for replacing the Carli index in the Retail Prices Index for calculating price changes at the elementary aggregate level.

In October 2012, the ONS announced a consultation on whether the statistical methods used to calculate the Retail Prices Index (RPI) should be changed to bring them closer in line to those used in the Consumer Prices Index (CPI). Previous IFS work has looked at how inflation rates varied across different households, using survey data on household expenditure to calculate RPI-based measures of household-specific inflation. This paper analyses whether CPI-based measures give similar results and the reasons behind any differences.

Individual cost of living indices will vary across individuals, and thus any social cost-of-living index faces an aggregation problem. This article proposes a solution to this problem.