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UK tenants faced the highest inflation rate among household groups, surpassing those with mortgages, as rents continued to rise, according to official statistics.
In the year leading up to September, household cost inflation for private renter households increased by 3 per cent, exceeding the 2.6 per cent for mortgage holders for the first time since comparable data was recorded in 2022, as reported by the Office for National Statistics on Thursday.
The inflation rate for renters was the highest among all groups, compared to 1 per cent for outright homeowners, 1.1 per cent for retirees, and 2 per cent for all households.
The ONS attributed this trend to the uptick in rent payments. Recent data showed that average private rents surged by 8.7 per cent in the 12 months leading to October, marking the fastest pace since April.
Sarah Cumbers, CEO of the Royal Statistical Society, highlighted that inflation impacts different groups unequally, with private renters experiencing the highest rate, closely followed by mortgage holders.
She emphasized the importance of policymakers referring to household cost indices to gain a better understanding of how rising costs affect various groups, especially the most vulnerable.
Household cost inflation figures contrast with the 1.7 per cent consumer price inflation rate for September.
This data is part of the inaugural quarterly release of the ONS household cost index, which is based on spending patterns of different household types.
Unlike the headline inflation rate, which averages goods and services across all UK households, the household cost index provides insights into how specific groups are affected by price changes. Services prices, which have risen, impact wealthier households more due to their higher spending on non-essentials. Conversely, falling energy prices disproportionately affect lower-income households.
Recent data revealed that richer households experienced an annual inflation rate of 2.5 per cent, while poorer households saw 1.4 per cent inflation.
In October, new tenants spent around 30 per cent of their income on rent, the highest since records began in 2017, according to property data from PriceHubble, as reported by the ONS on Thursday.
In recent years, more individuals have turned to renting due to rapid house price increases since 2020 and surging mortgage costs in 2023. Meanwhile, landlords have reduced property listings for rent, reflecting higher costs, according to the Royal Institution of Chartered Surveyors.
Unlike rents, mortgage rates have decreased since peaking in the summer of 2023, following rate cuts by the Bank of England.