Coutts Wealth Inflation Index
The Coutts Wealth Inflation Index (CWII) has been developed to demonstrate that High Net Worth Individuals, who purchase luxury, or high-end products and services, experience a higher rate of inflation than is currently demonstrated by the Consumer Price Index (CPI).
However, as no two households spend their money in exactly the same way, everyone's experience of inflation is different. Historically, high-income households have not benefited from a comprehensive index where spend is focused not only on luxury products and services, but also weighted according to the real spending habits of HNWIs, providing them with a true insight into the changes in their living costs. The CWII aims to redress this balance by calculating a realistic inflation rate for that group of individuals.
The Coutts Wealth Inflation Index aims to change this. With detailed analysis of over £600 million of card spend data, and the gathering of nearly 100 luxury price items, we have been able to construct a comprehensive index, weighted to truly reflect the spending habits of HNWIs and the impact luxury purchases can therefore have on their personal rates of inflation.
However we do recognise that not all wealthy individuals spend all of their disposable income on luxury goods. Every individual will experience a unique inflation rate, depending on the goods and services they purchase. As the chart to the right shows, if an individual spends only 50% of their income on luxury products and services, they will still experience an inflation rate of 5.8% - almost three times the CPI.
The analysis and weighting of the Coutts Wealth Inflation Index has shown that in the past year (November 2006 – November 2007) the inflation for luxury products and services, has hit 9.5%, 7.4 percentage points higher than the CPI at 2.1% over the same period.
For more information on how the index was constructed, please download the report and press release by clicking on the links to the right.
click here .
The Coutts Wealth Inflation Index has been featured on leading business channel, CNBC. To watch the interview with Duncan MacIntyre, Head of Coutts Private Office, click here .
*This is for illustrative purposes only.
