Flipping quickly between the UK and the US here will reveal many similarities—and one glaring difference. The UK’s expenditure on health is just 2% of inflation, thanks to the free healthcare of the National Health Service. In the US, that figure is 8%.
Nearly 17% Canadian household expenditure goes into paying for transportation. Canadians love their cars. As the country’s Office of Consumer Affairs notes, “Private transportation has accounted for at least 90 percent of average transportation expenditures in the survey years available since 1982.”
Among the wealthy countries in our set, changes in transport costs have the smallest effect in Japan. Private car ownership there has been declining for years—in part because owning a car is expensive. Parking fees and taxes are high, so it’s no surprise the Japanese are shedding car ownership, and relying on mass transit, thus shrinking their total expenditure on transport.
In the dozen countries in our set, food and beverage spending makes up the largest fraction in Ethiopian household budgets. Ethiopia is also the poorest country here, as measured by per-capita GDP—a clean match with Engel’s Law.
The UK has just left the EU, deciding it doesn’t belong in the bloc of the continent’s countries. But its spending patterns match those of Germany to such near-exactness that it’s easy to see that the people of the UK have more in common with their erstwhile blocmates—in habits and in economics—than they might otherwise believe.
Expenditure weights vary within countries as well, from region to region. People in the northeastern corner of South Africa, in the province of Limpopo, spend a smaller fraction of their expenditure on housing and utilities than nearly everyone else in South Africa—but they spend the greatest fraction on food.
For calculating inflation, Mexican households have been observed to spend a greater portion of their money on food than households in the wealthiest countries, such as the US, the UK and Canada, but a smaller portion than those in the poorest, such as Ethiopia and Nigeria.
In France’s distribution of CPI weights, the category of “Miscellaneous” goods and services is weighted heavily. What does it include? Among other things: payments for sex, bodyguards, handwriting experts, and astrologers.
German consumers’ spending on housing is weighted at around 32% of their total outlay. Just across the border, in France, that figure is 15%. In the EU, only Greece and Denmark routinely report higher housing expenditures, as a fraction of total household spending, than Germany.
Hong Kong’s residential property market is famously and eye-wateringly expensive. Last year, it was ranked the costliest place in the world to buy housing and the third-most expensive place to rent it. Not surprisingly, in Hong Kong’s calculation of inflation, housing and utilities count for over a third of total spending.
Along with France and Germany, its fellow EU members, education accounts for very little when it comes to calculating inflation in Italy: about 1% of the measure, a result of the free and inexpensive state-subsidized education available in all three countries.
More than half of Nigeria’s weighted spending is allocated to food. Only 1%, by contrast, is allocated to eating out, which can indicate it happens infrequently, that it is an inexpensive activity, or both. To Engel’s Law, Nigeria is a much poorer country than every other listed here save Ethiopia—which is also the only other country with higher weighted spending on food.
Data: IMF Note: Text on weights 0.4% or smaller are not shown.