Estimating regional harmonised indices of consumer prices: an application to the UK

This paper devises and implements a novel methodology to derive expenditure weights for regional
consumer price indices for the UK from 2010 to 2022. These are combined with regional price quote
data (where available) and national item indices, permitting regional inflation to be calculated in line
with modern practice. The resulting evidence demonstrates that the recent period of high inflation
had a significantly more severe impact on poorer regions than wealthier ones and that these effects are
predominantly driven by differences in expenditure weights (particularly for energy). The results suggest
an important role for actual rentals for housing in driving interregional differences in inflation and that
this has both a direct effect - through rental prices - and an indirect one, which operates via its impact on
expenditure weights.