Misery Index methodology

Misery Index = E + U

  E  essentials inflation — the spend-weighted annual rate of the
     CPI classes a household cannot opt out of:
       food and non-alcoholic drink        (COICOP 01)
       electricity, gas and other fuels    (COICOP 04.5)
       transport                           (COICOP 07)
     weighted by the ONS's own published CPI weights for that year,
     renormalised across the three.

  U  the unemployment rate, aged 16 and over, seasonally adjusted.

Both terms are annual percentage rates. Both enter at weight 1.

Alongside it we publish the Okun benchmark— headline CPI plus the same unemployment rate — which is the classic misery index used internationally since the 1970s. It is there so our number stays comparable with everyone else’s, and because the gap between the two lines is itself informative.

The index exists to explain something the standard measures do not: why people report feeling worse than the headline numbers suggest they should. So it is built from the costs a household cannot avoid, rather than from the economy as a whole. GDP, productivity and trade are excluded on purpose.

The weights are the ONS’s own, not ours. That is the point: an index whose weights were chosen by us could be tuned until it said what we wanted, and this one cannot be.

Consumer confidence. It is the thing the index is meant to explain, and an index that contains sentiment cannot explain sentiment. We hold it out and check the index against it instead.

Interest rates. Mortgage costs plainly hurt households, but rates rise when the economy is strong and fall when it is weak, so in the historical record they move with confidence rather than against it. Including them would put a term in the index that behaves backwards.

Wages. Prices relative to pay is the most intuitive version of this measure and we may yet publish one. It is not in version 1 because the earnings series begins in 2000, which would cut fifty years off the history for a small gain.

The index runs from January 1989, which is where the ONS’s published CPI class data begins. The Okun benchmark runs from February 1971, using the ONS’s own modelled historical CPI for the earlier years. Both are ranked against the same period so the two percentages can be read side by side.

A month is published only when every component exists for it. Inflation and labour-market data are released on different days, so the index typically sits a few weeks behind the newest inflation figure. We would rather be a month behind than carry a number forward and imply we know something we do not.

The ONS revises its statistics, so the index can change after publication. Every value we have ever held is kept, stamped with the release it came from, and the page always shows the newest. A number quoted from this page will not quietly disappear.

If the formula itself ever changes, the new version is published alongside the old one under a new version number rather than replacing it.

Every input is UK public data — the Office for National Statistics and the Bank of England — used under the Open Government Licence v3.0. Contains public sector information licensed under that licence. The full source list, with links and next publication dates, is on the index page.

The data is free to reuse. Please cite it as the Order Paper Misery Index.