Consumer price inflation, UK: April 2020

• The Consumer Prices Index including owner occupiers’ housing costs (CPIH) 12-month inflation rate was 0.9% in April 2020, down from 1.5% in March 2020.
• The largest contribution to the CPIH 12-month inflation rate in April 2020 came from recreation and culture (0.31 percentage points).
• Falling energy and fuel pump prices resulted in the largest downward contributions to the change in the CPIH 12-month inflation rate between March and April 2020.
• Rising prices for recreational goods resulted in a partially offsetting upward contribution to change.
• As a result of the ongoing coronavirus (COVID-19) pandemic, we identified 90 CPIH items (or 16.3% of the CPIH basket by weight) that were unavailable to consumers in the UK, as detailed in Coronavirus and the effects on UK prices; compared with the February 2020 index (the most recent “normal” collection), we have collected a weighted total of 77.8% (excluding unavailable items) of the number of price quotes for the April 2020 index, although the coverage varies across the range of items.
• The Consumer Prices Index (CPI) 12-month rate was 0.8% in April 2020, down from 1.5% in March.

The Consumer Prices Index including owner occupiers’ housing costs (CPIH) 12-month inflation rate was 0.9% in April 2020, down from 1.5% in March.

The CPIH 1-month inflation rate was 0.0% in April 2020, compared with 0.6% in April 2019.

The Consumer Prices Index (CPI) 12-month inflation rate was 0.8% in April 2020, down from 1.5% in March. The CPI 1-month inflation rate was negative 0.2% in April 2020, compared with 0.6% in April 2019.

Given that the owner occupiers’ housing costs (OOH) component accounts for around 16% of the CPIH, it is the main driver for differences between the CPIH and Consumer Prices Index (CPI) inflation rates.

Figure 2 shows the extent to which the different categories of goods and services have contributed to the overall Consumer Prices Index including owner occupiers’ housing costs (CPIH) 12-month inflation rate over the last two years.

Since November 2018, the largest upward contribution to the CPIH inflation rate has come from housing and household services. However, reductions to household utility prices in April 2020 saw the group’s contribution to the headline rate fall to 0.16 percentage points, from 0.51 percentage points in March 2020. This is the lowest contribution the group has made to the headline CPIH rate since November 2010.

Following this month’s reduction in contribution from housing and household services, the largest contribution to the April 2020 headline inflation rate comes from recreational and cultural goods and services, which contributed 0.31 percentage points to the headline rate. Recreation and culture has been one of the main contributors to the headline inflation rate since 2017.

Over the last two years, the contribution from transport has shown more variation than any other group, ranging from 0.75 percentage points in August 2018 to 0.07 percentage points in September 2019. Much of the movement comes from changes in the price of motor fuels, though contributions from air fares and second-hand cars have also changed noticeably over the period. This month, the group had a downward contribution of 0.11 percentage points principally following reduced petrol and diesel prices. Average petrol prices fell by 10.4 pence per litre between March and April 2020, which was the largest monthly fall since the current ultra-low sulphur or unleaded petrol series began in 1990.

There was a further downward contribution to the CPIH inflation rate in April 2020 from clothing and footwear. Prices in this category fell by 2.8% in the year to April 2020, resulting in the downward contribution of 0.14 percentage points. The contribution from clothing and footwear has varied between positive and negative over the last two years.

Figure 3 shows how each of the main groups of goods and services contributed to the change in the Consumer Prices Index including owner occupiers’ housing costs (CPIH) 12-month inflation rate between March and April 2020. The corresponding figures for the Consumer Prices Index (CPI) can be found in column F of Table 26 in the Consumer price inflation tables.

The largest downward contribution (of 0.35 percentage points) to the change in the CPIH 12-month inflation rate came from housing, water, electricity, gas and other fuels. This contribution was a result of a 0.2% rise in the price of electricity and a 3.5% reduction in the price of gas between March and April 2020, compared with price rises of 10.9% and 9.3% for electricity and gas, respectively, over the same period last year. The cost of water supply and sewerage collection fell by 1.7% and 4.6%, respectively, between March and April 2020 to contribute a further 0.06 percentage point reduction to the CPIH 12-month inflation rate.

The Office of Gas and Electricity Markets (Ofgem) introduced energy price caps to limit the price energy suppliers can charge the estimated 15 million households that use a prepayment meter or are on the “standard variable” energy (or default) tariff. As the energy regulator, Ofgem update the energy price caps twice a year in April and October to ensure that they reflect changes in the cost of supplying energy. On 7 February 2020, Ofgem published the cap levels for the period from 1 April 2020 to 30 September 2020. They reported that the cost of energy for a typical default tariff user will fall by 1% per year because of a combination of “record-breaking liquefied natural gas (LNG) deliveries in 2019 and healthy gas stock inventories”, which have reduced wholesale energy costs.

The second largest downward contribution (of 0.27 percentage points) came from transport. The downward effect came largely from motor fuels. Petrol prices fell by 10.4 pence per litre between March and April 2020, to stand at 109.0 pence per litre, and diesel prices fell by 7.8 pence per litre, to stand at 116.0 pence per litre. In comparison, between March and April 2019, petrol and diesel prices increased by 3.8 and 2.3 pence per litre to stand at 124.1 and 133.0 pence per litre, respectively. Petrol prices were last lower in May 2016 (when a litre cost 108.7 pence), and the 10.4 pence per litre drop in petrol prices is the largest monthly fall since the current ultra-low sulphur or unleaded petrol series began in 1990.

Prices for motor fuels tend to move broadly in line with global prices for crude oil, but the effect is generally muted as consumer prices for motor fuels also include other costs such as transport, duty and retail costs, including operating costs that must be met even when sales are low. Global prices for crude oil have fallen sharply since the start of the year to reach a 21-year low in part because of consumption levels falling by an estimated 70% as a result of the global coronavirus (COVID-19) related work and travel restrictions.

Within the transport category, there was also a large downward contribution from transport services, where prices overall were estimated to have increased by 5.9% compared with an increase of 8.1% between March and April 2019. As a result of the travel restrictions in place in the UK since 23 March 2020, the movement between March and April 2020 for some items has been imputed with the all-item annual growth rate (for available items) being used for air, sea and international rail fares as outlined in Coronavirus and the effects on UK prices. The timing of the price collection days in relation to Easter 2019 may also have been a factor for the larger price increase last year.

There was a further large downward movement (of 0.09 percentage points) from miscellaneous goods and services, where prices overall fell between March and April this year but rose between the same two months a year ago. The movements came from other personal effects, where there were increased sales for travel goods (including luggage) and jewellery items, and from reductions to banking services not elsewhere covered.

Clothing and footwear also had a large downward contribution of 0.08 percentage points. The movement came almost entirely from garments, although there was a large offsetting upward contribution from other clothing and accessories. For garments, prices overall fell by 2.3% between March and April 2020 compared with a small increase of 0.4% a year ago. There were a greater number of items recorded as being discounted this year, when compared with April 2019, with reductions across a range of women’s and men’s clothing items. The larger number of items recorded as being on sale could reflect retailers’ efforts to encourage online purchases or potential difficulties as a result of the current economic situation. For other clothing and accessories, most of the upward movement came from balls of knitting wool, where there were recoveries from sales and higher price comparable items as a result of stock shortages in some stores.

There was a large partially offsetting upward movement (of 0.15 percentage points) from recreation and culture where prices overall rose by 0.4% between March and April this year but fell by 0.8% a year ago. There was an upward contribution (of 0.11 percentage points) from games, toys and hobbies where prices for items like computer games consoles, preschool activity toys, craft kits, dolls, construction toys, and sit and ride toys overall rose by 0.5% in the month compared with a fall of 5.8% a year ago. There were further upward contributions of 0.07 percentage points from data processing equipment, principally computer software, and 0.05 percentage points from recording media, including CDs and DVDs purchased online and music downloads. These movements were partially offset by a large downward contribution of 0.05 percentage points from books with prices falling by 14.3% between March and April 2020, as a result of sales, but rising by 1.4% between the same two months a year ago.

The second largest upward contribution (of 0.04 percentage points) came from alcoholic beverages and tobacco. Prices for whisky increased by more than a year ago and prices for packs of bottled and canned lager, and cigarettes increased this year but fell in price a year ago.

For restaurants and hotels, there was a small upward contribution (of 0.03 percentage points) where prices overall were estimated to have increased by 0.7% between March and April this year compared with a smaller increase of 0.4% between the same two months a year ago. For fast food and takeaway services, where some were available to consumers this month, we saw price rises across a range of items with the largest monthly price increases of 7.3% and 4.6% coming from takeaway or delivery pizzas and takeaway burgers, respectively.

Food prices overall fell by 0.1% between March and April this year compared with a fall of 0.3% between the same two months a year ago, which resulted in a small upward contribution of 0.02 percentage points. The largest upward contribution came from vegetables (including potatoes and tubers), where prices rose between March and April this year but fell between the same two months a year ago. This month’s price movements for vegetables could be a consequence of switching from internationally to domestically grown produce. This month, there were also price rises for food items with a long shelf life like frozen fish, frozen chips and jars of cook-in sauce. The upward movements were partially offset by a downward contribution from bread and cereals, in particular from packs of individual cakes and breakfast cereals. There was evidence of an easing of prices for dried pasta and potted snacks which had risen significantly in price in March and started to fall back in April.  

Figure 4 shows the contribution of owner occupiers’ housing costs (OOH) and Council Tax to the Consumer Prices Index including owner occupiers’ housing costs (CPIH) 12-month inflation rate in the context of wider housing-related costs. The contribution from OOH had been on a downward trend from a high in October 2016. However, it has stabilised since early 2018 and made the largest contribution to the CPIH 12-month inflation rate from all the housing and household services categories throughout most of 2019 and into 2020.

In April 2020, the contributions of housing components to the CPIH 12-month inflation rate fell to their lowest level since November 2010, following reduced contributions from electricity, gas, liquid fuels, water supply and sewerage collection. These five items had a combined downward contribution to the CPIH 12-month rate of 0.23 percentage points.

The contribution from electricity, gas and other fuels made a negative contribution during 2015 and 2016, but subsequent rises, most notably in electricity prices, saw the contribution turn positive through 2017 and into 2018. Further electricity and gas price rises in summer and autumn 2018 increased their contribution to the CPIH 12-month rate.

The introduction of the Office of Gas and Electricity Markets’ (Ofgem’s) initial energy price cap resulted in reduced contributions to the CPIH 12-month inflation rate for January to March 2019. However, the contribution increased in April 2019 as energy providers responded to Ofgem’s subsequent raising of the price cap. There was a negative contribution from electricity, gas and other fuels between October 2019 and December 2019, before it became an upward contribution as the price reductions in January 2019 unwound. The latest price cap, introduced on 1 April 2020, saw prices of electricity rise slightly (by 0.2% in the month) and gas prices fall by 3.5% compared with larger electricity and gas price rises of 10.9% and 9.3%, respectively, in April 2019. The reduction in water and sewerage bills came as a result of the Water Services Regulation Authority (Ofwat) encouraging suppliers to reduce household bills.

The increases in Council Tax that started in 2016 have meant that its contribution has risen over recent years, but there was little change in its contribution when the 2019 increases were introduced in April last year. Conversely, the reduction in the contribution from rents between 2016 and 2018 is likely to be a result of a policy to reduce social housing rent. The contribution from rent in total, though, has risen slightly since early 2018. Other housing costs (namely, regular maintenance and repair, along with water and sewerage services) tend to make small contributions to the 12-month inflation rate.  

Consumer price inflation

Consumer price inflation is the rate at which the prices of goods and services bought by households rise or fall. It is estimated by using price indices. Consumer price indices, a brief guide gives an overview of the indices and their uses.

12-month inflation rate

The most common approach to measuring inflation is the 12-month inflation rate, which compares prices for the latest month with the same month a year ago. In any given month, the 12-month rate is determined by the balance between upward and downward price movements of the range of goods and services included in the index.

Consumer Prices Index including owner occupiers’ housing costs (CPIH)

The CPIH is the most comprehensive measure of inflation. It extends the Consumer Prices Index (CPI) to include a measure of the costs associated with owning, maintaining and living in one’s own home, known as owner occupiers’ housing costs (OOH), along with Council Tax. Both of these are significant expenses for many households and are not included in the CPI.

Consumer Prices Index (CPI)

The CPI is a measure of consumer price inflation produced to international standards and in line with European regulations. First published in 1997 as the Harmonised Index of Consumer Prices (HICP), the CPI is the inflation measure used in the government’s target for inflation.

The CPI is produced at the same level of detail as the CPIH in the accompanying dataset and time series.

Retail Prices Index (RPI)

The RPI does not meet the required standard for designation as a National Statistic. In recognition that it continues to be widely used in contracts, we continue to publish the RPI, its subcomponents and RPI excluding mortgage interest payments (RPIX). To view the all-items RPI and 12-month inflation rate, please see the time series section of the inflation and price indices area of our website.

The UK Statistics Authority recommended in 2019 that the publication of the RPI should be stopped at a point in the future and that in the interim, the shortcomings of the RPI should be addressed by introducing CPIH data sources and methods into its production. The Authority and HM Treasury have launched a consultation on the Authority’s proposal to address the shortcomings of the RPI. HM Treasury is consulting on the appropriate timing for the proposed changes to the RPI to take place. The Authority is consulting on how to make its proposed methodological changes to the RPI in a way that follows best statistical practice. The consultation was originally intended to run until 22 April 2020 but, because of the coronavirus (COVID-19) pandemic, the period has been extended to 21 August 2020. The Authority and HM Treasury have agreed that they cannot conclude a meaningful consultation with businesses and individuals focused on mitigating the challenges that this public health and economic emergency has created.

Alongside the consultation on the future of the RPI, we have published proposed updates to our article on the three “use cases” for our consumer inflation measures in Measuring changing prices and costs for consumers and households, proposed updates: March 2020.

Coronavirus (COVID-19)

In response to the coronavirus (COVID-19) pandemic, we are working to ensure that we continue to publish our consumer price statistics. In line with the current government guidelines, we are encouraging Office for National Statistics (ONS) staff to work from home and to avoid unnecessary travel and social contact. We have an established infrastructure, and these changes will not impact on our ability to produce our Consumer Prices Index including owner occupiers’ housing costs (CPIH), Consumer Prices Index (CPI) and Retail Prices Index (RPI) statistics.

For April 2020, there were challenges around some of our collection activities, as approximately 80% of the price quotes (45% by weight) for the CPIH basket are physically collected in stores across 140 locations in the UK. The remainder is collected by ONS staff from online sources and administrative data provided by external suppliers.

In preparing to collect the prices for this publication, we identified 90 goods or services (accounting for 16.3% of the CPIH basket by weight) across the CPIH basket of goods and services which were unavailable for consumers. The Coronavirus and the effects on UK prices article describes the approach we have taken for imputing price movements for items that are currently unavailable to consumers to purchase. For unavailable items in RPI we have imputed price movements based on the all-available-items price movement of RPI (annual or monthly, depending on whether the series is seasonal or not), and for CPIH and CPI we have imputed price movements based on the all-available-items price movement of CPI. It is necessary to use the CPI price movement for both, so that both indices are constructed from the same set of item indices.

Overall, the number of price quotes which are usually collected instore used in constructing the April 2020 indices was 64.1% of the number of price quotes collected in February 2020 (excluding unavailable items). It is not unusual for the proportion of quotes to be below 100% as there are often prices which are either temporarily missing or where the price for a non-comparable replacement item is collected. For this reason, we have compared the coverage in the current month to the February index collected before implementation of social distancing policies and movement restrictions came into effect. The price quotes collected by ONS staff or from administrative data account for approximately 20% of the price quotes in our CPIH sample. Once all price quotes have been weighted together, the overall coverage for goods and services available in April 2020 was 77.8% of the comparable coverage collected in February 2020 (excluding unavailable items).

For April 2020, in addition to the 90 items, we identified a further 15 items where the proportion of price quotes collected were below 20%. For most of these items, we based the price movement on the collected prices. However, for a small number, we made the decision to impute their price movement as the collected prices were uncharacteristic for those items. For detailed categories, where the number of price quotes used in constructing the indices is less than half the number used in February, they have been identified in relevant tables in the accompanying dataset, for example in table 3.

Overall, the 90 imputed items in the CPIH had a downward contribution of 0.17 percentage points to the change in the CPIH 12-month inflation rate. Most imputed items had no overall contribution to the change in the headline CPIH inflation rate. The largest downward contribution (of 0.04 percentage points) came from air fares with other small downward contributions coming from coach fares (0.03 percentage points) and part-time leisure classes, playgroup fees, dental charges and international rail fares (all having a 0.01 percentage points downward contribution). There was an offsetting upward contribution from hotel overnight accommodation (of 0.02 percentage points). Overall, foreign holidays had no contribution to the change in the CPIH 12-month inflation rate. There were small upward movements from self-catering, hotel and city break holidays which we offset by a small downward movement from late booked holidays.

As the collection issues are likely to continue in subsequent months, we are continuing to monitor the resumption of services stopped during the lockdown period and we will carefully consider how we will reintroduce items in the coming months.

We continue to engage with other National Statistics Institutes and international organisations to understand how they are responding to similar issues. Under Section 21 of the Statistics and Registration Services Act 2007, the Bank of England must make a determination on any changes to the coverage or basic calculation of the RPI that we propose, to establish whether such a change “constitutes a fundamental change in the index which would be materially detrimental to the interests of the holders of relevant index-linked gilts”. We have shared our plan with the Bank of England, and they have determined that none of the planned temporary changes outlined “were both fundamental changes to the coverage or basic calculation of the RPI, and also materially detrimental to the holders of relevant index-linked gilts”. The correspondence is available.

Coronavirus (COVID-19) supplementary analysis

To further understand the impact of these measures, in our quarterly economic prices’ analysis we explore different methods of dealing with unavailable goods and services in consumer price inflation measurement. We also look at what happens if you adjust the index to account for some observed changes in consumption.

CPIHY, CPIY and CPI-CT series

As a direct result of the challenges that we have encountered this month and our focus on ensuring that we continue to publish our consumer price statistics, we have made the decision to delay the publication of the Consumer Prices Index including owner occupiers’ housing costs and Consumer Price Index excluding indirect taxes supplementary series (CPIHY and CPIY) and Consumer Prices Index at constant tax rates (CPI-CT) supplementary series. These series will be published in the coming weeks and we will notify users in advance of doing so.

Retail Prices Index - Mortgage interest payments

A small error has been identified in the interest rate used in producing the mortgage interest payments series in the Retail Prices Index (RPI) for February and March this year. We have recalculated the series using the most up-to-date information and can confirm, that due to rounding, the all items RPI is unchanged at 2.5% and 2.6% for the two months, respectively. The effect on the mortgage interest payments series would be to raise the published index for February by 2.0 index points (or 0.9%) and lower the March index by 1.3 index points (or 0.6%). The issue has been corrected when calculating the indices for April. As the mortgage interest payments series is not used in the compilation of the Consumer Prices Index including owner occupiers’ housing costs (CPIH) or the Consumer Prices Index (CPI), there is no impact on these indices.

After EU withdrawal

As the UK leaves the EU, it is important that our statistics continue to be of high quality and are internationally comparable. During the transition period, those UK statistics that align with EU practice and rules will continue to do so in the same way as before 31 January 2020.

After the transition period, we will continue to produce our consumer price statistics in line with the UK Statistics Authority’s Code of Practice for Statistics and in accordance with internationally agreed statistical guidance and standards.

These currently include the standard international Classification of Individual Consumption According to Purpose (COICOP) system, developed by the UN Statistical Division, and for the CPI, the rules underlying the construction of the Harmonised Index of Consumer Prices (HICP), developed by Eurostat in conjunction with EU member states and European Economic Area countries.

Methodology information

The consumer price indices are based on prices collected from outlets around the country, supplemented by information collected centrally over the internet and by phone. From April 2020 onwards, as a result of coronavirus (COVID-19) pandemic, we have applied imputations for some goods and services, as outlined in the effect the Coronavirus has on UK prices.

The figures in this publication use data collected on or around 21 April 2020.

Consumer price indices, a brief guide gives an overview of consumer price statistics.

The Consumer Prices Indices Technical Manual covers the concepts and methodologies underpinning the indices in more detail. The latest version was released on 18 September 2019.

The Coronavirus and the effects on UK prices details our plans for data collection, compilation and publication of our various prices statistics following movement restrictions as a result of the coronavirus (COVID-19) pandemic.

The CPIH Compendium provides a comprehensive source of information on the CPIH, with a focus on the approach to measuring owner occupiers’ housing costs (OOH).

More quality and methodology information on strengths, limitations, appropriate uses, and how the data were created is available in the Consumer price inflation QMI.

Consumer price inflation, updating weights: 2020 was released on 19 March 2020 and describes the latest update of the relative weights of items in the consumer price inflation basket to ensure they remain representative of current consumer spending patterns. A new source of information for some of the underlying low-level weights was also introduced with the February index. Impact of introducing a new data source for shop-type weights on consumer price indices, released on 12 February 2020, describes the change of source that has been made.

Consumer price inflation basket of goods and services: 2020, released on 16 March 2020, outlines the review process for the items making up the inflation basket used to calculate the UK consumer price inflation indices and the changes in the latest year.

Explaining the contribution to change in the 12-month rate (PDF, 37KB) gives an explanation of how the various types of goods and services contribute to the change in the 12-month inflation rate between the latest two months. The size and direction of these contributions depend on how prices changed between both the latest two months this year and the same two months last year. For example, the price of a product could make an upward contribution to the change in the rate even if it fell, provided that it fell by less than it did between the same two months a year ago.

Users and uses of consumer price inflation statistics provides information about the users and uses of consumer price inflation statistics and user experiences of these statistics. It also provides information on the characteristics of the different measures of consumer price inflation in relation to potential use.

Use of Retail Price Index Jevons (RPIJ) series

Having reviewed the responses to the consultation on the use made of data on the formula effect in the RPI, we made the decision to cease the publication of these series from the February 2020 consumer price inflation publication (released on 25 March 2020).

The RPI formula effect series (CDID: CRFT, CRFU and CRFV) were published as experimental series and were not the formula effect series, which are published as part of the reconciliation of CPIH with RPI and CPI with RPI in Table 5 of the consumer price inflation dataset. The series in Table 5 will continue to be published.

We have illustrated our future approach to measuring changing prices and costs faced by consumers and households using three “use cases”, along with how they relate to the measures that we currently publish and those that are under development. We have also published proposed updates to the article in Measuring changing prices and costs for consumers and households, proposed updates: March 2020. Specifically, the three cases refer to the Consumer Prices Index including owner occupiers’ housing costs (CPIH) as our lead measure of inflation based on economic principles, the Household Costs Indices as a set of measures to reflect the change in costs as experienced by households, and the Retail Prices Index (RPI) as a legacy measure that is required to meet existing user needs. Shortcomings of the Retail Prices Index as a measure of inflation, released on 8 March 2018, describes the issues with the RPI.