The Consumer Price Index (CPI) is designed to measure the annual rate of inflation, i.e. the change in the average level of prices paid by households for consumer goods and services.

The CPI measures the change in the level of prices paid by households for a fixed basket of goods and services.

Price indices for each CPI item are calculated and then weighted together by the proportion of total consumer expenditure that is spent on each, to give the total Consumer Price Index.

The fixed basket of goods and services measured in the CPI is comprehensively updated every five years based on the CSO’s Household Budget Survey (HBS). The HBS provides a detailed profile of household expenditure, item by item.

However, the Central Statistics Office notes that every household has its own unique consumption pattern and therefore its own personal experience of inflation.

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Households that spend a higher proportion of their total expenditure on goods and services that are increasing in price by more than the rate of inflation, will experience higher inflation than the CPI average rate.

Price increases have remained relatively stable for the last number of years, and until 2021 the CPI had not increased by more than 2% since 2011 (+2.6%). 

While prices decreased through much of 2020, inflation has been increasing since April 2021. In July 2021, annual inflation was 2.2% and the rate of inflation continued to rise for the rest of the year, reaching 5.5% in December.

In 2022 so far, the annual rate of inflation has been 5.0% in January, 5.6% in February and 6.7% in March 2022. The latest figure is 7.0% for the year to April 2022.

The increasing rate of inflation since the middle of 2021 has prompted greater interest in price change and its effect on households.

Between December 2016 and March 2021, the CPI increased by 2.7%, and in the 12 months from March 2021 to March 2022, the CPI increased by 6.7%.

For Electricity, Gas & other Fuels, prices increased by 9.1% in the 51 months from December 2016 to March 2021, followed by an increase of 46.7% in the 12 months from March 2021 to March 2022.

The Transport subindex saw an increase of 2.7% in the 51 months from December 2016 to March 2021, followed by an increase of 18.7% in the 12 months to March 2022.

The index for Rents increased by 16.5% in the 51 months from December 2016 to March 2021, and by 8.4% in the 12 months from March 2021 to March 2022.

Looking at these CPI results, we can expect that household groups which spend higher than average proportions of their total expenditure on Electricity, Gas & Other Fuels and on Transport to have experienced higher inflation than the CPI.