Use road fuel volumes for fuel spending uprating

Author: MaxGhenis

changelog.d/fuel-volume-uprating.md

@@ -0,0 +1 @@
+- Uprate petrol and diesel spending with HMRC/OBR road-fuel volume growth rather than CPI when projecting single-year datasets.

docs/book/assumptions/growthfactors.md

@@ -17,7 +17,17 @@ We use the OBR's CPI projections to drive most benefit and consumption variables
 We apply CPI to these variables:
 - All reported benefits– `carers_allowance_reported`, `child_benefit_reported`, `child_tax_credit_reported`, `esa_contrib_reported`, `esa_income_reported`, `housing_benefit_reported`, `iidb_reported`, `incapacity_benefit_reported`, `income_support_reported`, `jsa_contrib_reported`, `jsa_income_reported`, `maternity_allowance_reported`, `pension_credit_reported`, `sda_reported`, `state_pension_reported`, `universal_credit_reported`, `winter_fuel_allowance_reported`, `working_tax_credit_reported`
 - All consumption categories– `alcohol_and_tobacco_consumption`, `clothing_and_footwear_consumption`, `communication_consumption`, `domestic_energy_consumption`, `education_consumption`, `food_and_non_alcoholic_beverages_consumption`, `health_consumption`, `household_furnishings_consumption`, `housing_water_and_electricity_consumption`, `miscellaneous_consumption`, `recreation_consumption`, `restaurants_and_hotels_consumption`, `transport_consumption`
-- Other variables– `afcs_reported`, `bsp_reported`, `childcare_expenses`, `diesel_spending`, `free_school_fruit_veg`, `free_school_meals`, `free_school_milk`, `maintenance_expenses`, `petrol_spending`, `statutory_maternity_pay`, `statutory_paternity_pay`, `statutory_sick_pay`, `state_pension`
+- Other variables– `afcs_reported`, `bsp_reported`, `childcare_expenses`, `free_school_fruit_veg`, `free_school_meals`, `free_school_milk`, `maintenance_expenses`, `statutory_maternity_pay`, `statutory_paternity_pay`, `statutory_sick_pay`, `state_pension`
+
+## Road fuel volume
+
+We use HMRC road-fuel clearances and OBR-implied forecast volumes for petrol and diesel spending, because PolicyEngine converts these spending fields into litres by dividing by pump prices.
+
+| Fiscal year | 2022 | 2023 | 2024 | 2025 | 2026 | 2027 | 2028 | 2029 |
+|-------------|------|------|------|------|------|------|------|------|
+| Growth rate | 6.3% | -0.6% | -0.1% | -2.0% | -1.4% | -2.4% | -2.7% | -3.7% |
+
+We apply this to: `diesel_spending`, `petrol_spending`
 
 ## Average earnings
 

policyengine_uk/data/uprating_indices.yaml

@@ -15,7 +15,6 @@ gov.economic_assumptions.yoy_growth.obr.consumer_price_index:
 - childcare_expenses
 - clothing_and_footwear_consumption
 - communication_consumption
-- diesel_spending
 - domestic_energy_consumption
 - education_consumption
 - esa_contrib_reported
@@ -37,7 +36,6 @@ gov.economic_assumptions.yoy_growth.obr.consumer_price_index:
 - maternity_allowance_reported
 - miscellaneous_consumption
 - pension_credit_reported
-- petrol_spending
 - recreation_consumption
 - restaurants_and_hotels_consumption
 - sda_reported
@@ -50,6 +48,9 @@ gov.economic_assumptions.yoy_growth.obr.consumer_price_index:
 - universal_credit_reported
 - winter_fuel_allowance_reported
 - working_tax_credit_reported
+gov.economic_assumptions.yoy_growth.obr.road_fuel_volume:
+- diesel_spending
+- petrol_spending
 gov.economic_assumptions.yoy_growth.obr.mortgage_interest:
 - mortgage_interest_repayment
 gov.economic_assumptions.yoy_growth.obr.per_capita.gdp:

policyengine_uk/parameters/gov/economic_assumptions/yoy_growth.yaml

@@ -251,6 +251,77 @@ obr:
         - title: Bank of England inflation target (2031+ assumes 2% target)
           href: https://www.bankofengland.co.uk/monetary-policy/inflation
 
+  road_fuel_volume:
+    description: UK road-fuel petrol and diesel clearances year-on-year growth.
+    values:
+      # HMRC Hydrocarbon Oils Bulletin Table 2a: petrol plus diesel clearances.
+      2021-01-01: 0.24418262350052777
+      2022-01-01: 0.06256523245735934
+      2023-01-01: -0.005727524527185501
+      2024-01-01: -0.0012858149728238732
+      # OBR March 2026 fuel-duty receipts forecast, net of non-road fuel
+      # receipts, divided by fiscal-year average petrol/diesel duty rates.
+      2025-01-01: -0.019907019324541197
+      2026-01-01: -0.01438967286340953
+      2027-01-01: -0.02416859220902523
+      2028-01-01: -0.02700230120226388
+      2029-01-01: -0.037280775640417985
+      2030-01-01: -0.052236910509542045
+      # Hold the final OBR forecast volume flat after 2030-31.
+      2031-01-01: 0.0
+      2032-01-01: 0.0
+      2033-01-01: 0.0
+      2034-01-01: 0.0
+      2035-01-01: 0.0
+      2036-01-01: 0.0
+      2037-01-01: 0.0
+      2038-01-01: 0.0
+      2039-01-01: 0.0
+      2040-01-01: 0.0
+      2041-01-01: 0.0
+      2042-01-01: 0.0
+      2043-01-01: 0.0
+      2044-01-01: 0.0
+      2045-01-01: 0.0
+      2046-01-01: 0.0
+      2047-01-01: 0.0
+      2048-01-01: 0.0
+      2049-01-01: 0.0
+      2050-01-01: 0.0
+      2051-01-01: 0.0
+      2052-01-01: 0.0
+      2053-01-01: 0.0
+      2054-01-01: 0.0
+      2055-01-01: 0.0
+      2056-01-01: 0.0
+      2057-01-01: 0.0
+      2058-01-01: 0.0
+      2059-01-01: 0.0
+      2060-01-01: 0.0
+      2061-01-01: 0.0
+      2062-01-01: 0.0
+      2063-01-01: 0.0
+      2064-01-01: 0.0
+      2065-01-01: 0.0
+      2066-01-01: 0.0
+      2067-01-01: 0.0
+      2068-01-01: 0.0
+      2069-01-01: 0.0
+      2070-01-01: 0.0
+      2071-01-01: 0.0
+      2072-01-01: 0.0
+      2073-01-01: 0.0
+    metadata:
+      unit: /1
+      label: Road fuel volume growth
+      reference:
+        - title: HMRC Hydrocarbon Oils Bulletin
+          href: https://www.gov.uk/government/statistics/hydrocarbon-oils-bulletin
+        - title: OBR EFO March 2026 (fuel-duty receipts forecast)
+          href: https://obr.uk/efo/economic-and-fiscal-outlook-march-2026/
+        - title: OBR fuel-duty supplementary release, receipts by vehicle type
+          href: https://obr.uk/docs/dlm_uploads/Fuel-duty-supplementary-release_receipts-by-vehicle-type.pdf
+
   consumer_price_index_ahc:
     description: Consumer price index year-on-year growth, modified to remove housing costs.
     values:

policyengine_uk/tests/test_road_fuel_volume_uprating.py

@@ -0,0 +1,57 @@
+import pandas as pd
+import pytest
+
+from policyengine_uk.data.dataset_schema import UKSingleYearDataset
+from policyengine_uk.data.economic_assumptions import extend_single_year_dataset
+from policyengine_uk.system import system
+
+
+def test_petrol_and_diesel_spending_use_road_fuel_volume_not_cpi():
+    parameters = system.parameters
+    road_fuel_volume = (
+        parameters.gov.economic_assumptions.yoy_growth.obr.road_fuel_volume
+    )
+    cpi = parameters.gov.economic_assumptions.yoy_growth.obr.consumer_price_index
+
+    assert road_fuel_volume(2027) < 0
+    assert cpi(2027) > 0
+
+    dataset = UKSingleYearDataset(
+        person=pd.DataFrame(
+            {
+                "person_id": [1],
+                "person_benunit_id": [1],
+                "person_household_id": [1],
+                "age": [40],
+            }
+        ),
+        benunit=pd.DataFrame({"benunit_id": [1]}),
+        household=pd.DataFrame(
+            {
+                "household_id": [1],
+                "region": ["LONDON"],
+                "tenure_type": ["OWNED_OUTRIGHT"],
+                "council_tax": [1_500.0],
+                "rent": [0.0],
+                "petrol_spending": [1_000.0],
+                "diesel_spending": [2_000.0],
+            }
+        ),
+        fiscal_year=2026,
+    )
+
+    extended = extend_single_year_dataset(
+        dataset,
+        tax_benefit_system_parameters=parameters,
+        end_year=2027,
+    )
+    household_2027 = extended[2027].household
+
+    assert household_2027["petrol_spending"].iloc[0] == pytest.approx(
+        1_000 * (1 + road_fuel_volume(2027))
+    )
+    assert household_2027["diesel_spending"].iloc[0] == pytest.approx(
+        2_000 * (1 + road_fuel_volume(2027))
+    )
+    assert household_2027["petrol_spending"].iloc[0] < 1_000
+    assert household_2027["diesel_spending"].iloc[0] < 2_000

policyengine_uk/variables/input/consumption/diesel_spending.py

@@ -10,4 +10,4 @@ class diesel_spending(Variable):
     value_type = float
     unit = GBP
     quantity_type = FLOW
-    uprating = "gov.economic_assumptions.indices.obr.consumer_price_index"
+    uprating = "gov.economic_assumptions.indices.obr.road_fuel_volume"

policyengine_uk/variables/input/consumption/petrol_spending.py

@@ -10,4 +10,4 @@ class petrol_spending(Variable):
     value_type = float
     unit = GBP
     quantity_type = FLOW
-    uprating = "gov.economic_assumptions.indices.obr.consumer_price_index"
+    uprating = "gov.economic_assumptions.indices.obr.road_fuel_volume"