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Prices and inflation in the UK - A new dataset

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  • Richard Davies

Abstract

This paper presents a new dataset of 41 million UK consumer prices, providing facts on the frequency, size and timing of price changes between 1988 and 2020. The micro data are the 'price quotes' of individual consumer products that make up the official Consumer Prices Index (CPI) for the UK. Prices are recorded between January 1988 and December 2020 and cover a wide-ranging selection of items including food and drink, homewares, furniture and appliances, motoring supplies and fuels as well as a range of services. The extended time coverage allows a comparison of historic shocks, including the ERM crisis, 2008 financial crash and 2016 EU referendum, with the Coronavirus pandemic. The long-run facts fit closely with the pattern of nominal rigidities seen in other countries. Overall, state-dependent rather than time-dependent pricing models are consistent with UK firm behaviour, and the data show strong support for the notion that prices are 'volatile while anchored' as in the more recent menu cost models. The facts show the extraordinary experience of 2020, which was the most volatile year, in terms of pricing, since at least 1991.

Suggested Citation

  • Richard Davies, 2021. "Prices and inflation in the UK - A new dataset," CEP Occasional Papers 55, Centre for Economic Performance, LSE.
    • Handle: RePEc:cep:cepops:55
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    File URL: https://cep.lse.ac.uk/pubs/download/occasional/op055.pdf
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    Citations

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    Cited by:

    1. Bakker, Jan David & Datta, Nikhil & Davies, Richard & De Lyon, Josh, 2023. "Brexit and consumer food prices," The Warwick Economics Research Paper Series (TWERPS) 1461, University of Warwick, Department of Economics.
    2. Chen, Haixia & Le, Vo Phuong Mai & Meenagh, David & Minford, Patrick, 2023. "UK Monetary Policy in An Estimated DSGE Model with State-Dependent Price and Wage Contracts," Cardiff Economics Working Papers E2023/22, Cardiff University, Cardiff Business School, Economics Section.
    3. Bakker, Jan David & Datta, Nikhil & Davies, Richard & De Lyon, Josh, 2023. "Did the policy response to the energy crisis cause crime? Evidence from England," CAGE Online Working Paper Series 663, Competitive Advantage in the Global Economy (CAGE).
    4. Engin Kara & Ahmed Pirzada, 2023. "Unraveling the Impact of Higher Uncertainty on Profits and Inflation," CESifo Working Paper Series 10587, CESifo.
    5. Bakker, Jan & Datta, Nikhil & Davies, Richard & De Lyon, Joshua, 2022. "Non-tariff barriers and consumer prices: evidence from Brexit," LSE Research Online Documents on Economics 118040, London School of Economics and Political Science, LSE Library.
    6. Jan David Bakker & Nikhil Datta & Richard Davies & Josh De Lyon, 2022. "Non-tariff barriers and consumer prices: evidence from Brexit," CEP Discussion Papers dp1888, Centre for Economic Performance, LSE.

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    More about this item

    Keywords

    EU referendum; covid-19; consumer prices; inflation;
    All these keywords.

    JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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