Consumer price inflation, UK: August 2019

• The Consumer Prices Index including owner occupiers’ housing costs (CPIH) 12-month inflation rate was 1.7% in August 2019, down from 2.0% in July 2019.

• The largest downward contributions to the change in the CPIH 12-month rate between July and August 2019 came from a range of recreational and cultural goods and services (principally games, toys and hobbies, and cultural services), clothing and sea fares.

• Rises in air fares resulted in the largest, offsetting, upward contribution to change.

• The Consumer Prices Index (CPI) 12-month rate was 1.7% in August 2019, down from 2.1% in July 2019.

CPIH 12-month inflation rate

The Consumer Prices Index including owner occupiers’ housing costs (CPIH) 12-month inflation rate was 1.7% in August 2019, down from 2.0% in July 2019.

The Consumer Prices Index (CPI) 12-month rate was 1.7% in August 2019, down from 2.1% in July 2019.

Table 1 presents the index numbers and inflation rates for CPIH, CPI and the owner occupiers’ housing costs (OOH) component of CPIH.

Figure 1 compares the 12-month inflation rates for CPIH, CPI and the OOH component of CPIH. Given that OOH accounts for around 17% of CPIH, it is the main driver for differences between the CPIH and CPI inflation rates.

Contributions to CPIH 12-month inflation rate

Figure 2 shows the extent to which the different categories of goods and services have contributed to the overall CPIH 12-month rate over the last two years.

Since November 2018, the largest upward contribution to the CPIH 12-month rate has come from housing and household services, with prices rising by 1.9% in the year to August 2019. Within the group (which contributed 0.56 percentage points to the overall rate), the largest contributions were from owner occupiers’ housing costs (a 0.19 percentage point contribution), electricity, gas and other fuels (a 0.18 percentage point contribution), and Council Tax and rates (a 0.12 percentage point contribution). While the contributions from owner occupiers’ housing costs and Council Tax have changed little during 2019, that from electricity, gas and other fuels has fluctuated more. It fell in January with the introduction of the Office of Gas and Electricity Markets’ (Ofgem) energy price cap but then rose in April when the price cap changed. From there, the contribution has fallen slightly as prices are little changed since April 2019 but rose during the corresponding months of 2018.

There was also a large upward contribution to the CPIH 12-month rate from restaurants and hotels, where prices rose in the year to August 2019 by 2.8%.

The contribution from transport, while still one of the largest from the broad groupings of CPIH, has fallen over recent months. At 0.16 percentage points, the contribution in August 2019 is less than a third seen in April this year, and down from 0.75 percentage points in August 2018. Within transport, the contribution from motor fuels in August is negative, reflecting a small fall in price of 0.1% on the year. This is the first negative 12-month rate for motor fuels since August 2016.

Clothing and footwear also produced a small downward contribution to the CPIH 12-month rate. This continues the negative contributions seen between September 2018 and June 2019, a pattern broken by a small upward contribution in July 2019.

Contributions to change in CPIH 12-month inflation rate

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 rate between July and August 2019. The corresponding figures for the Consumer Prices Index (CPI) can be found in column F of Table 26 in the Consumer price inflation dataset.

Most broad groups made a negative contribution to the change in the CPIH 12-month rate between July and August with only food and non-alcoholic beverages producing an offsetting upward effect.

The largest downward contribution (of 0.15 percentage points) to the change in the CPIH 12-month rate came from recreation and culture. This more than reverses the upward contribution of 0.08 percentage points seen between June and July this year. Within the group, the largest effect (of 0.09 percentage points) came from games, toys and hobbies (particularly computer games including downloads), where prices overall fell by 5.0% between July and August 2019 compared with a smaller fall of 0.1% between the same two months a year ago. Price movements for games can often be relatively large depending on the composition of bestseller charts and the downward contribution between the latest two months follows a large upward contribution to the change between June and July 2019. There was also a downward effect from cultural services, with prices rising by 0.2% between July and August this year compared with a larger rise of 2.9% between the same two months a year ago. The largest contributions came from admissions to live music events and theatres.

There was also a large downward contribution from clothing and footwear, where prices rose by 1.8% this year compared with a larger rise of 3.1% a year ago. The main effect came from clothing, particularly children’s clothing. Prices of clothing and footwear usually rise between July and August as autumn ranges start to enter the shops following the summer sales season. The rise was smaller this year and may have been influenced by the proportion of items on sale, which fell by less between July and August this year than between the same two months a year ago.

Smaller downward contributions came from restaurants and hotels, housing and household services, and alcohol and tobacco. Within these categories, the main effects came from accommodation services, with prices falling by more between July and August 2019 than a year ago, and owner occupiers’ housing costs and alcohol, with prices in both categories rising this year but by less than in 2018.

The largest, offsetting, upward contribution (0.03 percentage points) to the change in the CPIH 12-month rate came from food and non-alcoholic beverages, with prices rising by more between July and August 2019 than between the same two months of 2018. The effects were relatively small from all categories within this heading, with the largest upward ones coming from bread and cereals (from products such as dried potted snacks, breakfast cereal and packs of individual cakes), and meat (principally cooked ham).

There was a very small downward contribution (of 0.01 percentage points) from transport but within this category, there were large offsetting effects from air and sea fares. Air fares rose by more in 2019 than in 2018, whereas sea fares rose by less this year than in 2018, particularly for passengers on international ferries.

Owner occupiers’ housing costs

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) 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 over the last year and was the largest contribution to the CPIH 12-month rate from all the housing and household services categories for the majority of months of 2019, including August.

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 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 Ofgem’s initial energy price cap resulted in reduced contributions to the CPIH 12-month rate for January to March 2019, but the contribution increased in April 2019 as energy providers responded to the latest change in the price cap. Since then, the contribution has fallen back slightly as price rises observed during summer 2018 have not been repeated this year.

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

Consumer price inflation tables
Dataset | Released on 18 September 2019
Measures of monthly UK inflation data including 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 on 18 September 2019
Comprehensive database of time series covering measures of inflation data for the UK including CPIH, CPI and RPI.

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)

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)

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.

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

Retail Prices Index (RPI)

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 and an at-a-glance comparison with other measures, please see the time series section of the inflation and price indices area of our website.

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.

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

The Consumer Price Indices Technical Manual covers the concepts and methodologies underpinning the indices in more detail. The manual has been updated and a new version published on 18 September 2019.

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

The Consumer Price Inflation Quality and Methodology Information report contains important information on:

• the strengths and limitations of the data and how it compares with related data

• users and uses of the data

• how the output was created

• the quality of the output including the accuracy of the data

The figures in this publication use data collected on or around 13 August 2019.

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. Specifically, they refer to the 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.

Consultation on the use made of data on the formula effect in the Retail Prices Index: Table 35 of the consumer price inflation tables

Table 35 of the consumer price inflation tables illustrates the effect of using the Jevons formula instead of the Carli formula in compiling the Retail Prices Index. The table was first published in March 2017 and shows the effect on the index, the 12-month rate and the one-month rate. The same data are also published as part of the consumer price inflation time series dataset with series identifiers CRFT, CRFU and CRFV. We are now considering stopping publication of these three series but, before taking a final decision, we would welcome hearing about any ways in which the data are currently used. In short:

• How is the formula effect published in Table 35 of the consumer price inflation tables used?

• Would it cause you significant problems if we were to discontinue publishing the three series?

Responses should be sent to cpi@ons.gov.uk.

These are 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 tables. Those series will continue to be published.

Correspondence with the Bank of England about pre-release access Exchange of letters requesting exceptional pre-release access so that data are available for discussion at the Monetary Policy Committee (MPC). The Bank of England were granted exceptional pre-release access to an estimate of the Consumer Prices Index (CPI) at 9:30am on Monday 16 September 2019 so that the data were available for the MPC meeting held on that day.

Consumer price inflation detailed briefing note
Article | Released 18 September 2019
Background briefing to the statistical bulletin.

Users and uses of consumer price inflation statistics
Article | Released 25 July 2018
Information about the users and uses of consumer price inflation statistics and user experiences of these statistics. Additionally, information on the characteristics of the different measures of consumer price inflation in relation to potential use.

Consumer price inflation, updating weights: 2019
Article | Released 18 March 2019
An overview of the latest annual update of the relative weights of items used in compiling the UK consumer price inflation indices.

Consumer price inflation basket of goods and services: 2019
Article | Released 11 March 2019
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
Infographic | Released 2013
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 depends 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.

Producer price inflation, UK
Bulletin | Released 18 September 2019
Changes in the prices of goods bought and sold by UK manufacturers including price indices of materials and fuels purchased (input prices) and factory gate prices (output prices).

UK House Price index
Bulletin | Released 18 September 2019
Monthly house price inflation in the UK, calculated using data from HM Land Registry, Registers of Scotland and Land and Property Services Northern Ireland.

Index of Private Housing Rental Prices
Bulletin | Released 18 September 2019
An experimental price index tracking the prices paid for renting property from private landlords in the UK.

Prices economic commentary
Article | Released 18 September 2019
Presents further analysis of producer prices, house prices and rental prices in addition to the Consumer Prices Index including owner occupiers’ housing costs (CPIH).

Advisory panels for Consumer Price Statistics
Reports, papers and minutes of the two independent advisory panels on consumer price statistics: a technical panel to advise the National Statistician on technical aspects of the statistics; and a stakeholder panel to provide advice on the uses and applications of price indices.

Consumer price inflation item indices and price quotes
Dataset | Released 18 September 2019
The individual price quotes (for locally-collected items only) and item indices that underpin the consumer price statistics.

Harmonised Index of Consumer Prices
Dataset | Released 18 September 2019
The Harmonised Index of Consumer Prices (HICP) provides a comparable measure of inflation for each member state of the EU. The UK HICP is identical to the UK Consumer Prices Index (CPI). Further information is available on the Eurostat website.