Defence Inflation

This section provides information on defence inflation with a breakdown by type of expenditure.

Defence inflation is defined as the average rate of increase in pay, and prices of all goods and services making up the Defence budget, after allowing for changes in quality and quantity. This definition allows the pure price movements of defence inputs to be targeted.

Table 1.10a presents the overall estimates of defence inflation from 2005/06 to 2009/10. Chart 1.10b compares defence inflation with general inflation in the UK economy. Table 1.10c presents inflation within defence contracts, broken down into four categories. Table 1.10d presents inflation for overall defence labour costs, broken down into military and civilian personnel.

Main Findings

• Defence inflation was 3.1% in 2009/10 - the lowest rate since the current series began in 2005/06.



• Defence inflation has averaged 3.7% over the period 2005/06 to 2009/10.



• In 2009/10, inflation in the GDP deflator was 1.5% and inflation in RPIX (a widely accepted proxy for UK general inflation) was 2.5%. Defence inflation has been higher than the GDP deflator and RPIX for four out of the five years between 2005/06 and 2009/10; in 2006/07 the three measures were broadly similar.



• The inflation rate for all defence contracts was 2.4% in 2009/10.



• The Inflation rate for all defence labour costs was 3.9% in 2009/10 - inflation in civilian labour costs was 2.9%, and inflation in military labour costs was 4.2% in 2009/10.

Further Information

More information on the methodology can be found in Defence Statistics Bulletin No.10.

More information on the estimates for 2005/06 to 2009/10 can be found in the latest Defence Inflation Statistical Notice.