Economic assumptions

Consumer price index¶

We apply CPI to these variables:

• All reported benefits– carers_allowance_reported, child_benefit_reported, child_tax_credit_reported, esa_contrib_reported, esa_income_reported, housing_benefit_reported, iidb_reported, incapacity_benefit_reported, income_support_reported, jsa_contrib_reported, jsa_income_reported, maternity_allowance_reported, pension_credit_reported, sda_reported, state_pension_reported, universal_credit_reported, winter_fuel_allowance_reported, working_tax_credit_reported

• All consumption categories EXCEPT energy– alcohol_and_tobacco_consumption, clothing_and_footwear_consumption, communication_consumption, education_consumption, food_and_non_alcoholic_beverages_consumption, health_consumption, household_furnishings_consumption, housing_water_and_electricity_consumption, miscellaneous_consumption, recreation_consumption, restaurants_and_hotels_consumption, transport_consumption

domestic_energy_consumption, electricity_consumption and gas_consumption are deliberately excluded. The data build calibrates them to NEED mean kWh and converts to pounds at Ofgem Q2 2026 unit rates, so the stored values already carry FY26/27 price levels; uprating them from the dataset’s data year would re-apply price changes that are already included. See PolicyEngine/policyengine-uk#1867.

• Other variables– afcs_reported, bsp_reported, childcare_expenses, free_school_fruit_veg, free_school_meals, free_school_milk, maintenance_expenses, statutory_maternity_pay, statutory_paternity_pay, statutory_sick_pay, state_pension

Road fuel volume¶

We use HMRC road-fuel clearances and OBR-implied forecast volumes for petrol and diesel spending, because PolicyEngine converts these spending fields into litres by dividing by pump prices.

We apply this to: diesel_spending, petrol_spending

The pump prices that turn spending into litres (household.consumption.fuel.prices.petrol and .diesel) are DESNZ calendar-year averages (Quarterly Energy Prices tables 4.1.1 and 4.1.2), the same basis Microcosm UK uses to price household fuel spending. The spending growth rates (petrol_spending_litre_proxy, diesel_spending_litre_proxy) are derived from those prices, so that weighted litres follow the volume path above: (1 + growth) = (1 + volume growth) × price_t / price_t−1 ÷ (1 + population growth). Whenever the prices change, re-derive the growth rates; a test checks that they match.

Average earnings¶

We use average earnings for these variables: employee_pension_contributions, employer_pension_contributions, employment_income, employment_income_before_lsr, personal_pension_contributions, student_loan_repayments

Lagged average earnings¶

We lag earnings growth by one year and use that to uprate housing service charges (including ground rent).

Per capita GDP¶

We derive these rates from OBR GDP growth and ONS population projections.

We use per capita GDP for these variables: capital_gains, capital_gains_badr, capital_gains_before_response, capital_gains_carried_interest, capital_gains_residential_property, corporate_wealth, dividend_income, gross_financial_wealth, household_lifetime_isa_balance, lifetime_isa_balance, lump_sum_income, main_residence_value, maintenance_income, miscellaneous_income, mortgage_capital_repayment, net_financial_wealth, non_residential_property_value, other_investment_income, other_residential_property_value, owned_land, pension_income, private_pension_wealth, private_transfer_income, property_income, property_rental_income, savings, savings_interest_income, sublet_income

Council tax¶

We use the OBR’s Council Tax receipts and projections.

We apply this to: council_tax

Mortgage interest¶

We use the OBR’s mortgage interest rate index growth rates.

We apply this to: mortgage_interest_repayment, property_finance_costs, property_finance_costs_brought_forward

Private pension index¶

We use RPI year-on-year change from the previous year, capped at 5%.

We apply this to: private_pension_income

Rent¶

We use the OBR’s rental growth projections.

We apply this to: rent

Per capita mixed income¶

We derive these rates from OBR mixed income growth and ONS population projections.

We apply this to: self_employment_income

Population¶

We use ONS population projections.

We apply this to: household_weight