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The digital era and globalisation have wrought unprecedented changes in the UK economy, with an increasing variety of goods and services being purchased, often online, by UK consumers. In response, the Office for National Statistics has been busy ensuring our measures of inflation reflect these changes, and that we better understand their impact on different households.

Measuring inflation is complex and we’ve often encountered a range of challenges, which have required innovative solutions, but we are pressing ahead and have reached some firm conclusions.

Traditionally, the majority of price quotes are gathered manually once a month. This means people going into retail stores across the country armed with tablet computers. We plan over the next few years to replace many of these quotes with scanner data (collected as products are sold) and prices scraped from retailers’ websites. These new data sources will give us many more price points and better reflect the changing buying patterns of households, including the relative popularity of different products.

Recently, we’ve also been developing inflation rates for different household groups. They show, perhaps unsurprisingly, that different types of households face different rates of inflation.

For example, our latest results based on our headline measures of inflation suggest that, since March 2017, higher income households have faced consistently higher inflation rates than lower income households: this was largely driven by spending on transport and on recreation and culture. However, this goes against the longer-term trend where lower income households have faced higher rates of inflation.

Our headline consumer prices measures, which include the Consumer Prices Index (CPI) and CPI plus owner occupiers’ housing costs (CPIH), for the most part reflect the change in price of acquiring goods and services—in other words, we record the advertised price for an apple or a new car. However, this doesn’t always reflect the actual costs experienced by consumers from month to month; for example, when they are committed to repayment plans such as when they are financing a car.

So, we have been developing a new set of measures called the Household Costs Indices (HCIs), which aim to reflect the changing prices and costs as experienced by different groups of households. We are already measuring student loans based on when repayments are made rather than when tuition fees are charged, and we also capture mortgage interest…

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