Some Britons will suffer from a weak pound more than others

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.

How will the post-Brexit fall in the pound affect different groups? Poor households, which devote a greater proportion of their spending to imported goods, look most vulnerable to a spike in prices. The average household in the bottom income decile (ie, the poorest tenth) spends approximately 18% of its income (after housing costs) on food, double the proportion spent by the richest decile. Of all spending on food, over half is on imports, according to official statistics: 68% in the case of fish, for example, and 76% in the case of oils and fats. The dispute last week over the price of various goods including Marmite, a yeasty spread beloved of many Britons, shows the upward pressure on prices. As the cost of these essentials goes up, poor households’ inflation rate is likely to rise by more than that of rich ones.

On the flip side, richer households tend to spend a higher proportion of their income on services—restaurants, haircuts, nannies and so on—which are not traded internationally and whose price is therefore hardly affected by the value of the pound, at least in the short term. Rich households spend 6% of their income on education, largely in the form of private-school fees, compared with just 1% among those in the bottom income decile.

The rich do spend a lot more than the poor on foreign holidays, which have immediately become much more expensive, though these jaunts form only a small proportion of their total spending. Overall, about 31% of disposable spending of the richest decile goes on imports, compared with an average of 34% for the rest, official statistics suggest.

All this means that the rich will be more insulated than most from the fall in sterling. Their household inflation rates will rise, though by less than those for the poor. The pain of Brexit will not be shared out equally. And, not for the first time, the relatively disadvantaged households who tended to vote Leave will suffer most.