British households put inflation calculator to test

The online personal inflation calculator launched today by the Office for National Statistics (ONS) reveals that households can have wildly different rates of inflation across the country.

Three households in Newcastle, Somerset and East Sussex were asked to number crunch their personal inflation levels and see how their rates stack up against the official national Retail Price Index (RPI).

Trainee nurse Penny Staniaszek of Benton in Newcastle has a personal household inflation figure of 3%, which is below the 3.9% national inflation level.

As a student, she avoids many expenses such as council tax, saving her about £1,000 (€1,518) a year. She also lives on her own in a rented flat and therefore has minimal costs to pay for property repairs and maintenance costs, helping keep her monthly living expenses down, which sit at just over £400 (€607.40), not including rent.

However, as a keen traveller, the 31-year-old spends around £2,000 (€3,037) a year on trips abroad, which together with clothing, meals out and rent, boosts her annual expenditure to nearly £14,000 (€21,260).

The personal calculator shows her inflation used to be less than half the national figure two years ago. In February 2005, Miss Staniaszek’s household inflation figure was 1.1% versus the 3.2% national average, suggesting that inflation has speeded up considerably in recent years.

Her personal rate of inflation has grown at a faster pace than the national RPI as the cost of everyday items, including food and energy bill costs, has risen more quickly than less frequent purchases, such as cars and electrical items.

Somerset family Joe Lepper, 34, Emma Butterfield, 33, and their two-year-old son Dylan have a household rate of inflation that is nearly double the national RPI. The ONS online tool calculates the family’s inflation at 7.5% against the national RPI of 3.9%.

Having only recently bought their property in Street, Somerset, the family’s mortgage payments and maintenance costs account for most of their monthly spending.

With a young child as well, their day-to-day cost of living is high, although they are able to cut out the cost of childcare, as Miss Butterfield looks after Dylan at home, with help from Mr Lepper, who is a freelance writer.

As homeowners, their rate of inflation is closely linked to the Bank of England base rate, which can have a direct bearing on monthly mortgage repayments. According to the ONS calculator, the family's inflation rate stood at 12.8% at the beginning of 2005, after the interest rate had been upped by a quarter point to 4.75%.

However, in the summer of that year, the interest rate dropped back down to 4.5%, which cut their rate of inflation by nearly three quarters to 3.2% by the end of the 2005.

Pensioners Beryl and Peter Easton, aged 77 and 83, have seen their personal rate of inflation rise by 50% since the beginning of 2005, according to the ONS online calculator.

The couple, of Nutley, East Sussex, now have a rate of 4.5%, up on the national RPI of 3.9% – their highest since January 2005.

Mr and Mrs Easton’s day-to-day living expenses are relatively low, at less than £300 (€456) a month. They also do not pay rent or mortgage repayments, as they now own their property outright.

However, the pensioners have seen their expenditure rise dramatically in other areas, such as council tax, which has shot up to £2,000 (€3,037) a year. They also own two cars, which costs them more than £1,000 (€1,518) a year, not including petrol.

The price of energy for heating and lighting has likewise risen in recent years, costing the couple at least £600 (€911) a year after a series of increases in energy costs, contributing to their higher-than-average inflation rate.