Household housing costs - an insight from the ONS

1 . Main points

Overall, UK household costs, as measured by the Household Costs Index (HCI), rose 5.0% in the year to December 2023, down from 8.3% in September 2023.

 

Over the past three years, the all-households inflation rate has followed the fifth income decile most closely; costs for these households rose 4.9% in the year to December 2023, compared with rises of 5.6% for high-income households (decile 9) and 4.5% for low-income households (decile 2).

 

By tenure type, mortgagor owner occupier households had the highest annual inflation rate of 6.3% in December 2023, reflecting rising mortgage interest payments; the rate for outright owner occupiers fell below the rate for private renters at 4.0% in the year to December 2023.

 

In the year to December 2023, private renters, and social and other renters faced similar inflation rates of 4.9% and 4.8% respectively, with bigger contributions from food and non-alcoholic beverages for social renters partially offsetting a bigger downward contribution from the fall in gas and electricity prices.

 

Non-retired households continued to experience a higher annual rate of inflation (5.4% in December 2023) than retired households (4.0%). Annual rates for households with and without children fell to 5.5% for households with children and 4.8% for households without children in the year to December 2023.

 

These are official statistics in development, and we advise caution when using these data, as estimates may be revised because of methodological improvements. Priorities for development are discussed with our Advisory

Panels. For more information on how Household Costs Indices (HCIs) are produced, future developments, and our revisions policy, please refer to Section 7: Measuring the data.

 

Other snippets

In the most recent month, December 2023, the all-households HCI annual rate was 5.0%, compared with a CPI annual inflation rate of 4.0%.

 

In the most recent month, December 2023, the all-households HCI annual rate was 5.0%, compared with a CPI annual inflation rate of 4.0%.

 

The factors affecting Household Costs Indices (HCI) inflation rates for tenure also affected the experiences of other subgroups. Those groups who spent a higher proportion of their basket on mortgage interest payments, or a lower proportion of their basket on electricity, gas and other fuels where prices were falling, saw higher annual inflation rates in the most recent three months. Broadly, those subgroups with lower inflation rates were more affected by contributions from food and non-alcoholic beverages, and recreation and culture, but this was offset by falling electricity, gas and other fuel prices. Higher inflation rates were experienced by higher income households, non-retired households and households with children

 

However, when considering the cumulative effect of rising household costs, private renter households had the lowest rate in the four years to December 2023, of 21.2% (compared with between 24.8% and 26.4% for other tenure types).

 

In October 2023, the gap of 3.1 percentage points between mortgagor and other owner occupier households, and outright owner occupier households was the largest since November 2009, when the relationship was reversed. (Then, outright owner occupiers experienced a rate that was 4.7 percentage points higher, at 1.9%.)

 

The October 2023 gap was largely because of mortgage interest payments, which increased the rate for mortgagor households by 3.02 percentage points, relative to outright owner occupiers. This was partially offset by food and non-alcoholic beverages, which contributed 0.22 percentage points more to the rate for outright owner occupiers, and electricity, gas and other fuels, where falling energy prices reduced their rate by 0.63 percentage points more than for mortgagor households (since they are a larger proportion of the basket for outright owner occupiers).

  

Source: ONS, 26 February 2024, Household Costs Indices for UK household

groups: October 2023 to December 2023, Statistical bulletin.