New research shows that the prices of cheaper brands of food, drink and other grocery products rose much faster than more expensive varieties.
The study by the Institute for Fiscal Studies concluded that the fact food prices rose more than other prices will have meant that poorer households – who devote more of their spending to food – suffered higher inflation rates over this period than headline figures would suggest.
The research also shows that, on top of this, the prices of cheaper brands of food, drink and other grocery products – disproportionately consumed by lower income households – rose much faster than more expensive varieties.
In particular, the grocery products sold that were initially among the cheapest 10% in each spending category (i.e. the cheapest types of pasta, butter, milk and so on) rose in price by 36.2% compared to 15.8% for products that were initially in the 10% of most expensive products over this period.
This ‘cheapflation’ led to households in the bottom quarter of the spending distribution experiencing inflation rates 5.6 percentage points higher than those in the top quarter, adding around £100 to the annual cost of a shopping basket for households in the bottom quarter of spending, compared to a situation where poor had experienced the same inflation rates as the rich.
Tao Chen, an IFS Research Scholar said
“The Widespread ‘cheapflation’ pushed up the prices of the most inexpensive varieties of grocery products over the last 2 years. This hit poorer households harder. Individual households will almost always experience a different rate of inflation to headline numbers such as the CPI because these measures are based on average consumer spending patterns across the economy. Our research shows that it’s important to take account of differences in the products people buy at a very fine level to detect differences in how they are being affected by the rising cost of living.”
