The Measurement of Inflation During the Lockdown: A Trial Calculation

Huw Dixon

No 16, National Institute of Economic and Social Research (NIESR) Policy Papers from National Institute of Economic and Social Research

Abstract: The big changes in consumption patterns during the Lockdown need not of themselves have a big effect on measured inflation. Using a guesstimate of lockdown weights for different types of consumption and applying them retrospectively to the 2019 inflation data as an experiment led to a slight increase in measured CPIH from 1.7 per cent to 1.9 per cent. This net increase comes as some types of expenditure whose expenditure shares are reduced by Lockdown include ones with lower inflation (such as Clothing and Footwear) and some higher (Restaurants and Hotels) than CPIH. The experiment suggests that the net effect is thus small. The behaviour of inflation as measured by the CPIH may remain a reliable statistic during the lockdown period, but we need to keep a close look at the details as the effect of the lockdown might lead to changes that make the CPIH less reliable.

Date: 2020-04
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