Estimating UK regional price indices, 1974–96

Abstract

Hayes P. (2005) Estimating UK regional price indices, 1974–96, Regional Studies 39 , 333–344. This paper examines the behaviour and construction of regional expenditure indices published in the Croner–Reward Regional Cost of Living Surveys for 1974–96. It identifies a number of problems in using these data as an appropriate deflator to the New Earnings Survey regional wages series in examining labour supply‐side decisions. Instead, an alternative method with which to construct regional prices is recommended using a combination of data from Croner–Reward, from the published Retail Price Index (RPI) and from the Expenditure and Food Survey (EFS) (formerly known as the Family Expenditure Survey). Whilst these new data suggest that regional inflation rates were not significantly different from one another over the sample period, they point to an episode of increased regional price variation over the late 1980s and early 1990s. This paper suggests that these alternative indices would be of interest when examining adjustment processes to economic shocks across the regions of the UK.