THE collapse in the value of the pound—down by nearly 20% against the dollar since the Brexit vote—will result in rising inflation as the cost of imported goods goes up. Figures released on October 18th show that inflation in September was 1%, up from 0.6% in August. Economists reckon that by next year it will be nearing 3%, a forecast with which officials at the Bank of England now appear to agree.
Those economists tend to talk about “the” rate of inflation, but in reality different households experience different rates of price increases. The basket of goods and services that is used to calculate Britain’s official inflation rate is not representative of most Britons’ consumption choices; since it is based on aggregate consumption of different goods, it can be skewed by the choices of the rich, who consume more than everyone else. One research paper found that in the 1980s and 90s, on average only a third of British households experienced inflation rates within one percentage point of the official rate.
The Economist