Money

📖 The economics of… — how this works ✕

One wallet question at a time

Each edition takes a spending decision ordinary households actually face — EV or petrol, solar or not, is the cheap petrol station worth the drive — and works it through with sourced, dated numbers for several kinds of consumer. You get the break-even points, not a verdict: the same purchase can be right for one household and wrong for the next.

Drafted by AI, checked by a person

A first draft is produced by AI from the sourced figures, then reviewed and edited by a person before anything is published — the same neutrality rule as the rest of the site: both directions stated, costs of each option shown, no side taken.

Editions are permanent, and get revisited

Every edition keeps a permanent link, so it can be cited and shared later. Each one also lists what would change its own maths — a duty change, a price-cap reset, a subsidy ending. When one of those happens, the same question is re-run and republished with a clear "what changed since we last looked".

General information, not financial advice. Figures are dated in each edition.

🧾 Smoking, drinking, driving — the workings ✕

Smoking, 10 a day ≈ £2,300/yr

Cigarette tax is three layers: £7.07 duty per pack of 20, plus 16.5% of the retail price, plus VAT on top of both. On a ~£17 pack that's ~£12.70 to HMRC (~75–80% of the price). Half a pack a day ≈ 183 packs a year. Duty rises again on 1 Oct 2026 (RPI +2% and an extra £2.20 per 100).

Drinking, 14 units a week ≈ £250/yr

Alcohol duty is charged per litre of pure alcohol (~£33 for spirits). 14 units a week — the NHS guideline ceiling — is about 7.3 litres of pure alcohol a year ≈ £240 duty, plus VAT on every bottle on top. Drink it as pub beer instead and the duty is lower (draught relief) but the VAT far higher.

Driving 10,000 petrol miles ≈ £835/yr more than an EV

At 40 mpg that's ~1,136 litres: fuel duty (52.95p/L, frozen only until Sept 2026) ≈ £601, plus VAT on the pump price ≈ £270. A home-charged EV pays just 5% VAT on electricity (~£35/yr); both now pay the same VED. From April 2028 EVs pay 3p/mile (~£300 at this mileage), narrowing the gap to roughly £530.

Caveats

These duties are set deliberately high, to cover health and carbon costs and to change behaviour — which is also why they're avoidable in a way income tax isn't. Figures use average prices and typical consumption; your brands, ABV and mpg will move them. The country comparison is total tax-to-GDP (OECD 2024), which includes employer costs — no single number captures "how taxed you are", but it's the least-bad one.

Rates: HMRC tobacco/alcohol/fuel duty pages (post Autumn Budget 2025). Comparison: OECD Revenue Statistics 2025. Refreshed after each Budget. General information, not financial advice.

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⏳ How the calculator works ✕

Which prices?

The Consumer Prices Index (CPI) — the official measure of the price of a basket of goods and services. The ONS publishes it from 1988 and a modelled back-series from 1949; we chain the two at 1988, which is what the Bank of England's own calculator does. Every year is the annual average, so "1975" means across 1975, not one day of it.

Why not RPI?

The Retail Prices Index runs back further but lost its status as a National Statistic in 2013 because of a flaw in how it is calculated. The Bank does not use it and neither do we.

What it is not

It is not house prices, wages, or any one thing's price. A pint, a house and a week's pay have each moved on their own path; CPI is what money in general buys. Use it to ask "was that cheap at the time?" — then compare with what the thing actually costs now.

The check we run

The Bank's worked example says £23 in 1975 is £57.68 in 1985, rising 9.6% a year. Our series gives the same answer to the penny; the build fails if it ever does not.

🛒 Why your shop doesn't feel like the headline rate ✕

The headline inflation rate is not your basket

The official rate averages ~700 items — rent, transport, haircuts, streaming — weighted by what the whole country spends. Food is only about a tenth of it. If your money mostly goes on groceries and essentials, your personal inflation rate can run well above or below the headline. That's what this tile tracks: how the price of each everyday item is actually moving, from the same ONS collection that feeds the official numbers.

Why movement, not prices in pounds

ONS stopped publishing average shelf prices (the "pint of milk" series), and item-level price quotes for groceries ended when supermarket checkout data replaced field collection. What is still published monthly is an index per item — so the tile shows each item's movement: change since January, and on the month. Direction and speed answer "is my shop getting worse?" more directly than a price tag did.

Reading the country columns

US prices are the official BLS city average (May–Jun 2026); German prices are typical supermarket prices (early 2026) — both are dated snapshots, updated by hand, converted at today's exchange rate. The gap moves when the pound moves, so a "cheaper than America" result is partly a currency story. Products aren't perfectly identical across countries (sizes, grades and farming standards differ), and UK food carries no VAT while some US states tax groceries. The UK price is a crowd-sourced supermarket average (no official UK shelf price is published at the moment); ONS's scanner-data average prices are due later in 2026 and will replace it. Some everyday items — butter, sugar, tea, coffee, cucumber, carrots, mushrooms — have no published UK average anywhere, so those rows show their price movement and no prices at all: a German figure with no British one beside it is not a comparison. Nothing here is ever a guess.

Why "since January" and not "on the year"

The shopping basket behind these indices is rebuilt every January, and the measuring stick resets with it — so item-level changes are only exact within a calendar year. A year-on-year figure stitched across that reset would be quietly wrong. The official food inflation rate at the top of the tile is the honest annual number, and it is comparable year to year.

UK data: ONS consumption segment indices — research-grade microdata, updated monthly alongside the inflation release, Open Government Licence v3.0. FX: ECB reference rates via Frankfurter. General information, not financial advice.

💷 Autumn Budget 2025 — what it means for you ✕

Tax thresholds frozen until April 2031 — the largest revenue-raiser

Income tax and NI thresholds stay put while wages rise, so each pay rise drags more of your income into tax, or into a higher band, without any headline rate changing. Threshold freezes raise more revenue than most headline rate rises.

Savings and dividends taxed more

Dividend tax rises 2p in the pound from Apr 2026; tax on savings interest and property income rises 2p from Apr 2027. Money inside an ISA is untouched — shelter savings there first.

Pay, benefits and pensions up

National Living Wage £12.21 → £12.71/hr (Apr 2026). The two-child benefit cap is scrapped (Apr 2026) — worth up to ~£3,500/yr per additional child for affected families. State pension up 4.8% to £241.30/wk (new) under the triple lock.

Driving costs rise later

The fuel duty freeze and 5p cut survive only to Sept 2026 — pump prices may rise after that. Electric cars pay 3p per mile (hybrids 1.5p) from Apr 2028.

Pension top-ups via salary sacrifice

From Apr 2029 only the first £2,000/yr of salary-sacrifice pension contributions escapes NI — if you pay more than that in this way, it matters to your take-home.

Refreshed after each Budget (one a year, in the autumn — next: autumn 2026, date TBA). General information, not financial advice. Sources: HM Treasury, House of Commons Library.

🏦 What do these numbers mean for mortgage rates? ✕

…

The 2% target

The Government sets the Bank of England a target of keeping inflation — measured by the CPI, the Consumer Prices Index — at 2%. The Bank's main lever is Bank Rate — the interest rate it pays on banks' deposits, which anchors what banks charge everyone else.

Inflation above 2% → rates tend to rise (or stay high)

When inflation runs above target, the Bank tends to raise Bank Rate, or hold it higher for longer. Dearer borrowing cools spending, which pulls inflation back down. When inflation falls back to (or below) target, the Bank tends to cut.

The knock-on effect on mortgages

Tracker mortgages follow Bank Rate directly — a change shows in your payment the following month. Standard variable rates (SVR) usually move within weeks, at the lender's discretion. Fixed-rate deals don't change until the deal ends — but new fixes are priced off market expectations of where Bank Rate is heading (swap rates), so they often move before the Bank does anything. The flip side: higher Bank Rate generally means better savings rates.

General information, not financial advice — mortgage pricing also depends on your deal, loan-to-value and lender competition. Sources: ONS CPI (D7G7), Bank of England.

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