Consumer price inflation, UK: April 2021

Price indices, percentage changes, and weights for the different measures of consumer price inflation.

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Cyswllt:
Email Andy King

Dyddiad y datganiad:
19 May 2021

Cyhoeddiad nesaf:
16 June 2021

1. Main points

  • The Consumer Prices Index including owner occupiers’ housing costs (CPIH) rose by 1.6% in the 12 months to April 2021, up from 1.0% growth to March.

  • The largest upward contributions to the CPIH 12-month inflation rate came from housing and household services (0.57 percentage points), and transport (0.56 percentage points).

  • On a monthly basis, the CPIH rose by 0.7% in April 2021, following a 0.2% increase in March 2021.

  • Rising household utility, clothing, and motor fuel prices made the largest upward contributions to CPIH growth in April 2021; these were partially offset by a large downward contribution from recreation and culture.

  • The Consumer Prices Index (CPI) rose by 1.5% in the 12 months to April 2021, up from 0.7% growth to March; on a monthly basis, the CPI rose by 0.6% in April 2021, following a 0.3% increase in March 2021.

  • As a result of the easing of coronavirus (COVID-19) restrictions, the number of CPIH items identified as unavailable in April 2021 fell to 28, accounting for 3.1% of the basket by weight; we collected a weighted total of 77.2% of comparable coverage collected before the first lockdown (excluding unavailable items).

  • The Office for National Statistics (ONS) has released a public statement on the coronavirus and the production of statistics; Section 8: Measuring the data describes the situation in relation to consumer price statistics.

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2. Annual CPIH inflation rate

The Consumer Prices Index including owner occupiers’ housing costs (CPIH) rose by 1.6% in the 12 months to April 2021, up from 1.0% growth to March. Price movements for household utilities, clothing, and motor fuels are the main reasons for the higher monthly rate this year than a year ago.

The Consumer Prices Index (CPI) rose by 1.5% in the 12 months to April 2021, up from 0.7% growth to March.

On a monthly basis, the CPIH rose by 0.7% in April 2021, following a 0.2 increase in March 2021. Prices for both household utilities and clothing rose between March and April 2021, compared with a fall between the same two months a year ago. More information is provided in Section 4.

On a monthly basis, the CPI rose by 0.6% in April 2021, following a 0.3% increase in March 2021. This compares with a fall of 0.2% in April 2020. Again, price movements for household utilities and clothing are the main reasons for the higher monthly rate this year than a year ago.

Given that the owner occupiers’ housing costs (OOH) component accounts for around 19% of the CPIH, it is the main driver for differences between the CPIH and CPI inflation rates.

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3. Contributions to the annual CPIH inflation rate

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.

Between March and April 2021, there were several large, division-level increases to the contribution to the CPIH 12-month rate, with the largest overall contribution coming from housing and household services.

Housing and household services last provided the largest upward contribution to the CPIH inflation rate in March 2020. Reductions to household utility prices in April 2020 saw the group’s contribution to the CPIH headline rate fall to 0.16 percentage points, which was the lowest since November 2010.

Following this month’s increase to gas and electricity prices, housing and household services provides a contribution of 0.57 percentage points to the CPIH 12-month rate.

The contribution from transport has shown more variation than any other group over the last two years. It has ranged from a downward contribution of 0.20 percentage points in May 2020 during the first lockdown, before gradually increasing to have an upward contribution of 0.56 percentage points in April 2021 – its highest contribution since April 2019.

Within transport, the movements have been caused principally by changes in the price of motor fuels.

Following the contribution from motor fuels becoming positive in March 2021 (having been negative since March 2020), it increased by 0.21 percentage points between March and April 2021 reflecting a 12-month inflation rate for motor fuels of 13.6% – the largest annual increase since March 2017.

There was also a large increase (of 0.22 percentage points) in contribution to the CPIH 12-month rate from clothing and footwear, although this division, along with food and non-alcoholic beverages, continues to have a negative effect.

Throughout 2020, clothing and footwear prices followed a different pattern compared with previous years. Clothing prices fell between December 2020 and January 2021 and, unusually, fell by a further 1.5% into February. The 2.4% rise in clothing and footwear prices between March and April 2021, compounded with the 1.6% rise in March, unwound February’s uncharacteristic fall and takes the index value (on a January of each year = 100 basis) to be similar to its typical, pre-pandemic April level. This is despite the different seasonal pattern experienced so far this year, as reflected in Figure 3.

Figure 3 shows the seasonal price movements for clothing and footwear over the latest six years, setting January equal to 100 in each year. The fall in price into February 2021 contrasts with the price rises in recent years. Similar price falls were evident at the start of previous lockdowns. The subsequent price rises in March and April 2021 reflect a further reduction in the proportion of the sample reported as being discounted and evidence of new season items being collected.

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4. Contributions to change in the annual CPIH inflation rate

Figure 4 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 2021. The corresponding figures for the Consumer Prices Index (CPI) can be found in Column F of Table 26 in the Consumer price inflation dataset.

There were notable upward contributions to the change in the CPIH 12-month inflation rate from five divisions, with the largest coming from housing and household services.

The upward contribution of 0.33 percentage points to the change in the CPIH 12-month inflation rate from housing and household services was a result of price rises of 9.4% and 9.1% for gas and electricity, respectively, between March and April 2021. This is compared with a 0.2% rise in the price of electricity, and a 3.5% reduction in the price of gas over the same period last year.

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 that 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 5 February 2021, Ofgem published the cap levels for the period from 1 April 2021 to 30 September 2021. They reported that the price cap had increased by 9% since October 2020 because of increased global demand for wholesale gas, where “gas prices have increased fivefold since the crash in March/April last year and have now returned to pre-pandemic levels”, and a reduction in available electricity supplies compared with last year.

There were upward contributions from other household services including the cost of water supply and sewerage collection, which rose by 2.5% and 1.0% respectively between March and April 2021, to contribute overall a further 0.05 percentage point increase to the CPIH 12-month inflation rate.

There was also a large upward contribution (of 0.22 percentage points) from clothing and footwear, where prices rose by 2.4% between March and April 2021, compared with a fall of 1.5% between the same two months a year ago.

Throughout 2020, clothing and footwear prices followed a different pattern compared with previous years. Usually, from the start of the year, clothing and footwear prices rise steadily, but, in February 2021, increased discounting meant prices fell. Between February and March 2021, discounting reduced and prices rose by 1.6%.

There were further increases between March and April 2021 with clothing and footwear prices rising by 2.4%, compared with a fall of 1.5% a year ago. As a consequence of the first nationwide lockdown, in April 2020, there were a greater number of items recorded as being discounted (when compared with previous years), which potentially reflected retailers’ efforts to encourage online purchases.

Transport contributed 0.12 percentage points to the change in the CPIH 12-month inflation rate. Within this group, there was substantial offsetting with the upward effect coming almost entirely from motor fuels. Between March and April 2021, petrol prices rose by 1.8 pence per litre, to stand at 125.5 pence per litre, and diesel prices rose by 1.4 pence per litre, to stand at 129.5 pence per litre. In comparison, between March and April 2020, petrol and diesel prices stood at 109.0 and 116.0 pence per litre, respectively, having fallen by 10.4 and 7.8 pence per litre. Last April’s fall in petrol prices was the largest monthly fall since the current ultra-low sulphur or unleaded petrol series began in 1990.

Within transport, there were partially offsetting, downward contributions to the change in the 12-month rate from transport services (0.06 percentage points) and the purchase of vehicles (0.02 percentage points). Across transport services, prices overall rose by less than a year ago with small downward contributions coming from air, sea and rail fares.

Prices for second-hand cars were little changed between March and April 2021 but had risen between the same months in 2020. On the road prices for new petrol and diesel cars rose by 0.5% between March and April 2021, in part because of the increase to Vehicle Excise Duty announced in the Budget, however this was partially offset by a fall in the price of electric and hybrid cars, despite changes to the plug-in grant for low-emission vehicles.

Food prices rose by 0.9% between March and April 2021 but were little changed between the same two months in 2020. This increase contributed 0.07 percentage to the change in the CPIH 12-month inflation rate.

Prices for a variety of bread and cereal items rose this year but fell a year ago, resulting in an upward contribution of 0.04 percentage points. There was a similar upward contribution from across a range of sugar, jam, syrups, chocolate and confectionery items, with standout movements coming from large bars of chocolate and chocolate covered ice-cream bars. Prices for these items rose between March and April 2021 but were being discounted between the same two months in 2020. There was a further small upward contribution from dairy products, from yoghurts and chilled desserts, along with small, offsetting downward contributions from fish, meat, and oils and fats.

A final large upward contribution (of 0.06 percentage points) came from furniture, household equipment and maintenance, where prices fell by 0.4% this year compared with a fall of 1.5% between March and April 2020. Small upward effects came primarily from household textiles, and furniture and furnishings.

There was a large partially offsetting downward movement (of 0.18 percentage points) to the change in the CPIH 12-month inflation rate from recreation and culture where prices overall fell by 1.1% between March and April this year but rose by 0.4% a year ago. There was a downward contribution (of 0.16 percentage points) from games, toys and hobbies, where prices for items like computer games, games consoles, dolls, craft kits, and preschool activity toys overall fell by 7.3% in the month compared with a rise of 0.5% a year ago.

There were further downward contributions of 0.04 percentage points from both recording media, principally from CDs purchased online and music downloads, and data processing equipment, including computer software, PC peripherals, and laptop and tablet computers. These movements were partially offset by a large upward contribution of 0.04 percentage points from books, with prices falling by 0.7% between March and April 2021, compared with a fall of 14.3% between the same two months a year ago, as a result of extensive online sales.

The restaurants and hotels grouping had a downward contribution of 0.02 percentage points in April 2021. Following the easing of lockdown restrictions, many of the cafe, restaurant and pub items were available for the April price collection. Under the current government guidance, we will consider meals served outside to be directly comparable to those served inside. However, there was evidence that some sampled outlets remained closed, especially where they may not have an outdoor seating area.

There are no base prices or associated price movements available for items that have become available for consumption in line with government guidelines in April 2021, as these items were unavailable to consumers in the January 2021 base period. Base prices will be imputed in line with the procedure described in the Coronavirus (COVID-19) and Consumer Price Inflation weights and prices: 2021 article, and will influence the index from May 2021. For April 2021, the indices will be imputed using the all-available-items 12-month growth so that they have a negligible impact on the all-items inflation rate, reflecting the fact that these services are available only as price levels and do not have price growth associated with them (relative to the January base).

As restrictions started to be eased from 12 April 2021, the number of items across the CPIH basket of goods and services that were unavailable to consumers reduced to 28, accounting for 3.1% of the CPIH basket by weight. The changes to the list from previous months, are shown in Table 58 in the Consumer price inflation dataset.

In addition to the 28 unavailable items and those returning to the CPIH basket, we identified three other items where, although available in theory, price collection had proved largely impossible, so we imputed their price movement. The categories where the number of price quotes used in constructing the indices is less than half the number used in February 2020 have been identified in relevant tables in the accompanying dataset, for example, in Table 3.

In total, these unavailable items had a downward contribution of 0.03 percentage points to the change in the CPIH 12-month inflation rate. Most imputed items made no overall contribution to the change in the rate. The largest downward contributions, of 0.03 between 0.01 percentage points, came from air, sea, and international rail fares. These were partially offset by small upward contributions (of 0.01 percentage points) from hotel and self-catering foreign holidays.

Overall, the number of price quotes that are usually collected in store and that are used in constructing the April 2021 indices was 80.5% of the number of price quotes collected in February 2020 (excluding unavailable items). Once all locally and centrally collected price quotes have been weighted together, the overall coverage for goods and services available in April 2021 was 77.2% of the comparable coverage collected before the March 2020 lockdown (excluding unavailable items).

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5. Owner occupiers’ housing costs

Figure 5 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. In April 2021, the contribution of housing components to the CPIH 12-month inflation rate was 0.57 percentage points, its highest contribution since July 2019.

The Office of Gas and Electricity Markets’ (Ofgem’s) price cap, introduced on 1 April 2021, saw prices of gas and electricity rise by over 9%. There were upward contributions from other household services including the cost of water supply and sewerage collection which rose by 2.5% and 1.0%, respectively, between March and April 2021 to contribute a further 0.05 percentage point increase to the CPIH 12-month inflation rate. These large changes to the contributions to change of the 12-month inflation rates mean all sections of the housing and household services division are having a positive contribution to the CPIH 12-month inflation rate.

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6. Consumer price inflation data

Consumer price inflation tables
Dataset | Released 21 April 2021
Measures of monthly UK inflation data including the Consumer Prices Index including owner occupiers’ housing costs (CPIH), Consumer Prices Index (CPI) and Retail Prices Index (RPI). These tables complement the consumer price inflation time series dataset.

Consumer price inflation time series
Dataset | Dataset ID: MM23 | Released 21 April 2021
Comprehensive database of time series covering measures of inflation data for the UK including the CPIH, CPI and RPI.

Consumer price inflation detailed briefing note
Dataset | Released 21 April 2021
Background briefing to the statistical bulletin.

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7. Glossary

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 or annual 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 Consumer Prices Index including owner occupiers’ housing costs (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 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. 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 data time series.

Retail Prices Index (RPI)

The Retail Prices Index (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 data time series section of the inflation and price indices area of our website.

From 2030 (at the earliest), as outlined in the response to the consultation, the CPIH methods and data sources will be introduced in to the RPI, and the supplementary and lower-level indices of the RPI will be discontinued.

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8. Measuring the data

Coronavirus

Since the start of the coronavirus (COVID-19) pandemic, there have been challenges around some of our collection activities, as approximately 80% of the price quotes (45% by weight) for the CPIH basket are usually physically collected in stores across 141 locations in the UK. Since November 2020, we have been unable to collect prices in-store although our price collectors are expected to resume full or partial in-store collections for the May 2021 index (due to be published on 16 June 2021), following the approach detailed in our Consumer price statistics: resuming a field-based price collection article.

The approach for resuming in-store collections was consistent with Eurostat advice, published in their Guidance note on Harmonised Index of Consumer Prices (HICP) issues emerging from the lifting of lockdown measures (PDF, 388KB). Where we were unable to collect prices locally, prices continued to be collected over the internet and by phone and email.

Coronavirus and the effects on UK prices describes the approach we have taken for imputing price movements for items that are currently unavailable to consumers to purchase.

Coronavirus supplementary analysis

In March, we published the Effect of reweighting the consumer prices basket during the coronavirus (COVID-19) pandemic: October to December 2020, which contains experimental consumer price statistics for both CPIH and CPI. By linking the price changes between the latest month and the previous one on to the old series – a process called ”chain-linking” – we are able to change our expenditure weights each month to remove any unavailable items and adjust the weight of remaining items according to our best available evidence of consumption patterns.

Methodology information

The consumer price indices are normally based on prices collected from outlets around the country, supplemented by information collected centrally over the internet and by phone. The central collection continued in April, but our price collectors will resume in-store collections for the May 2021 index.

The figures in this publication use data collected on or around 13 April 2021.

Consumer price indices, a brief guide gives an overview of consumer price statistics, while the Consumer Prices Indices Technical Manual covers the concepts and methodologies underpinning the indices in more detail.

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

View more detail on the Users and uses of consumer price inflation statistics and information on the characteristics of the different measures of inflation in relation to potential use.

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9. Strengths and limitations

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 currently published and those under development. We have also published proposed updates in Measuring changing prices and costs for consumers and households, proposed updates: March 2020.

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 (HCIs) 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. Read more about the Shortcomings of the RPI as a measure of inflation.

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Manylion cyswllt ar gyfer y Bwletin ystadegol

Andy King
cpi@ons.gov.uk
Ffôn: Consumer price inflation enquiries: +44 (0)1633 456900. Consumer price inflation recorded message (available after 8:00 on release day): +44 (0) 800 011 3703