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Northern Ireland inflation diverges from UK rate

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The rate of inflation in Northern Ireland was significantly below the UK average for much of 2023, experimental data suggests.

Figures from the Office for National Statistics (ONS) show that in March 2023 the UK rate was 10.1% while in Northern Ireland it was 6.9%.

The position has reversed since October with the Northern Ireland rate trending above the UK average.

This is largely explained by differences in home heating between Northern Ireland and the rest of the UK.

Most Northern Ireland households use oil for home heating while other parts of the UK mainly use gas.

The prices of those fuels changed at different rates over different time periods.

Getty Images An oil delivery driver filling up a residential oil tank. The mains gas is not connected. The man is wearing protective overalls and gloves as he carefully fills the green plastic tank with home heating oil, in preparation for the winter months. He is squeezing a metal nozzle attached to a long rubber hose that runs from his oil delivery lorry parked nearby to maintain control of the amount being delivered.Getty Images
Most NI households use oil for home heating while other parts of the UK mainly use gas

The ONS said: "Gas experienced very high inflation throughout the first six months of 2023 while inflation rates in heating oil were not as high.

"Heating oil also experienced negative inflation earlier in 2023 compared with gas.

"The opposite effect has then been taking place since October 2023 with both gas and heating oil experiencing negative inflation but gas being of larger magnitude.

"Gas and other fuels had a stronger downward effect on UK annual inflation since October 2023 than Northern Ireland is experiencing."

The most recent month of comparable data, July 2024, shows UK inflation at 2.2% and the NI rate at 3.3%.

Getty Images A man is standing in an aisle in a grocery store. The background is out of focus, but food is displayed on shelves. The man is holding a basket with some items in it.Getty Images
The ONS calculates the rate by monitoring a "basket" of goods and services that is representative of spending in the UK

Cumulatively, between January 2022 and July 2024, Northern Ireland inflation was slightly higher at 17% compared with 16.5% for the UK.

Inflation is the increase in the price of something over time.

The ONS calculates the rate by monitoring a "basket" of goods and services that is representative of spending in the UK.

It assigns weighting to the items in the basket, which reflects the amount households spend on each good or service compared with their total consumption.

For example, the price of rice going up by 10% will not have the same impact on the overall inflation rate as the price of fuel going up by 10% would.

Similarly home-heating oil has a greater weight in Northern Ireland compared to other parts of the UK.

The ONS has been conducting an experiment to try to improve the accuracy of consumer price inflation estimates for Northern Ireland.