Consumer price inflation, UK: December 2022

• The Consumer Prices Index including owner occupiers' housing costs (CPIH) rose by 9.2% in the 12 months to December 2022, down from 9.3% in November.
• The largest upward contributions to the annual CPIH inflation rate in December 2022 came from housing and household services (principally from electricity, gas, and other fuels), and food and non-alcoholic beverages.
• On a monthly basis, CPIH rose by 0.4% in December 2022, compared with a rise of 0.5% in December 2021.

• The Consumer Prices Index (CPI) rose by 10.5% in the 12 months to December 2022, down from 10.7% in November.

• On a monthly basis, CPI rose by 0.4% in December 2022, compared with a rise of 0.5% in December 2021.

• The largest downward contribution to the change in both the CPIH and CPI annual inflation rates between November and December 2022 came from transport (particularly motor fuels), clothing and footwear, and recreation and culture, with rising prices in restaurants and hotels, and food and non-alcoholic beverages making the largest partially offsetting upward contributions.

The Consumer Prices Index including owner occupiers' housing costs (CPIH) rose by 9.2% in the 12 months to December 2022, down from 9.3% in November and 9.6% in October. Indicative modelled consumer price inflation estimates suggest that the October rate was the highest rate in over 40 years (the CPIH National Statistic series begins in January 2006). In the most recent month however, the CPIH annual rate was equal to the rate recorded just over 30 years earlier, between September and December 1990. The 0.1 percentage point fall in the annual rate between November and December 2022 came as a result of prices rising by less on the month than they did a year earlier: 0.4% in the month to December 2022, compared with 0.5% a year earlier.

The Consumer Prices Index (CPI) rose by 10.5% in the 12 months to December 2022, down from 10.7% in November and 11.1% in October. Indicative modelled consumer price inflation estimates suggest that the CPI rate would have last been higher than the October 2022 figure in 1981 (the CPI National Statistic series begins in January 1989). The slowing in the CPI rate between November and December came as a result of CPI prices rising 0.4% in the month to December 2022, compared with a larger rise of 0.5% a year earlier.

The main drivers of the annual inflation rate for CPIH and CPI are the same where they are common to both measures. However, the owner occupiers' housing costs (OOH) component accounts for around 17% of the CPIH and is the main driver for differences between the CPIH and CPI inflation rates. This makes CPIH our most comprehensive measure of inflation, and it is covered in more detail in Section 4 in this bulletin, while Section 5 provides commentary on the CPI. Section 3 covers both CPIH and CPI, though the figures reflect CPIH.

The easing in the annual inflation rate in December 2022 principally reflected price changes in the transport division, particularly for motor fuels. There were also downward effects from clothing and footwear, and recreation and culture. The largest, partially offsetting, upward effects came from restaurants and hotels, and food and non-alcoholic beverages.

Transport

The annual inflation rate for transport was 6.9% in December 2022, down for a sixth consecutive month from a peak of 15.2% in June 2022, and the lowest rate since May 2021. The main driver behind the easing in the rate between November and December 2022 came from motor fuels, which was partially offset by rising transport services prices.

Overall, fuel prices rose by 11.5% in the year to December 2022, down from 17.2% in the year to November. Average petrol prices were unchanged between November and December last year, but fell by 8.3 pence per litre between the same two months of 2022. Diesel prices also contributed to the change in the rate, falling by 8.8 pence per litre this year, compared with a smaller fall of 0.1 pence per litre a year ago. Average petrol and diesel prices stood at 155.3 and 179.1 pence per litre in December 2022, and were last lower in February 2022 when petrol stood at 147.6 pence per litre, and in April 2022 when diesel stood at 176.1 pence per litre.

Within the transport category, the easing in motor fuels in December 2022 was partially offset by transport services with annual price rises of 11.3% for passenger transport by road (largely because of coach fares) and 44.1% for passenger transport by air. The annual rate of 44.1% is the largest recorded rate for this class since at least January 1989, when our constructed series begins. Earlier in the year, price inflation for passenger transport by air reached an annual rate of 40.3% in August 2022 and had subsequently been falling. However, the annual rate for December 2022 is an increase of 19.8 percentage points from the previous month.

Clothing and footwear

Prices of clothing and footwear rose, overall, by 6.4% in the year to December 2022, down from 7.5% in November. On a monthly basis, prices fell by 0.3% between November and December 2022. However, in the previous year, the increase in the proportion of our clothing sample that was on sale was smaller than is usually observed, and overall prices rose by 0.7% in the month to December 2021. This is therefore primarily a base effect, as prices usually fall into December each year. Prior to the coronavirus (COVID-19) pandemic, clothing and footwear prices on average fell by 1.3% in the month to December (between 2017 and 2019). The downward effect in 2022 was principally from garments.

Recreation and culture

The annual rate for recreation and culture was 4.8% in December 2022, down from 5.3% in November. The easing in the rate came largely from games, toys and hobbies, where prices were down by 4.8% in the year to December, compared with a fall of 0.5% in the year to November. The movements in this category mostly reflect price changes for computer games, which can sometimes be large, in part depending on the composition of bestseller charts. Short-term movements in the annual rate should therefore be interpreted with a degree of caution. There was a partially offsetting effect from audio-visual equipment (for receiving and reproducing sound and picture), where prices were largely unchanged in the year to December 2022, compared with a fall of 5.3% in the year to November. Typically, prices in this spending category fall on the month to December; 1.8% on average between 2017 and 2019. In 2022, however, prices rose 3.1% on the month.

Restaurants and hotels

Partially offsetting some of the easing inflation rates previously noted, the annual rate for restaurants and hotels was 11.4% in December 2022, up from 10.2% in November. The December annual rate was  the highest since the constructed historical estimate of 11.4% in September 1991, and was last higher in August 1991, when it was 11.8%.

The increase in the annual rate reflects price rises of 0.9% between November and December this year, compared with price falls of 0.1% between the same two months in 2021.

The effect came primarily from accommodation services, where prices rose on the month, compared with a fall in the same month a year earlier, particularly for overnight hotel accommodation. Fairly broad-based rises in restaurant and cafe prices averaging 0.7% also contributed to this effect, compared with a smaller rise of 0.5% in the previous year.

Food and non-alcoholic beverages

Food and non-alcoholic beverage prices rose by 16.9% in the 12 months to December 2022, up from 16.5% in November. The annual rate of inflation for this category has risen for 17 consecutive months, from minus 0.6% in July 2021. Indicative modelled estimates suggest that the rate would have last been higher in September 1977, when it was estimated to be 17.6%.

The increase in the annual rate for food and non-alcoholic beverages between November and December 2022 was driven by price movements from 4 of the 11 detailed classes. The largest upward effect came from milk, cheese and eggs, where prices overall rose 4.1% between November and December 2022 compared with a smaller rise of 1.5% between the same two months in 2021. There were further upward effects from sugar, jam, honey, syrups, chocolate and confectionery, and mineral waters, soft drinks and juices that were offset by a small downward effect from bread and cereals. Prices rose in the month to December 2022 for all three categories; however, in the case of bread and cereals, they rose more slowly than in the same month of the previous year.

Figure 5 shows the annual inflation rates for the Consumer Prices Index including owner occupiers' housing costs (CPIH) all goods and all services series, together with CPIH excluding energy, food, alcohol and tobacco (often referred to as core CPIH). The CPIH inflation rate is added for comparison.

The CPIH all goods index rose by 13.4% in the 12 months to December 2022, down from 14.1% in November. The easing in the rate has been led by a downward contribution to the change from motor fuels, with other downward contributions from clothing and footwear, and games, toys and hobbies.

The CPIH all services index rose by 5.8% in the 12 months to December 2022, up from 5.4% in November. It was last equal in September 1992, and is the highest rate since 6.0% was observed in August 1992. The largest upward contribution to the change in the rate between November and December 2022 was from price rises for transport services, and restaurants and hotels.

The core CPIH annual rate increased from 5.7% to 5.8% between November and December 2022. The rate was also at 5.8% in September and October 2022, but was last higher in March 1992, when it was 6.0%.

Figure 6 shows how each of the main groups of goods and services contributed to the change in the annual CPIH inflation rate between November and December 2022. To understand what has changed the inflation rate between these months, we can look at the differences between the contributions each of the 12 divisions made to the rate in November 2022 and to the rate in December 2022. These differences sum to the change to the annual CPIH rate between the latest two months, that is, the easing from 9.3% to 9.2%.

The easing in the annual CPIH rate into December 2022 was driven by downward contributions from 6 of the 12 divisions, led by a notable downward contribution (of 0.07 percentage points) from transport. The majority of this (0.15 percentage points) came from motor fuels, with a partially offsetting upward effect from transport services (0.09 percentage points). There were further large downward contributions from clothing and footwear (0.06 percentage points), and recreation and culture (0.05 percentage points). The largest, partially offsetting, upward contributions came from restaurants and hotels (0.09 percentage points), and food and non-alcoholic beverages (0.05 percentage points).

Figure 7 shows the extent to which the distinct categories of goods and services have contributed to the overall annual CPIH inflation rate over the last two years. The contribution of each category to the annual rate depends on both the price movement in that category as well as its weight. Contributions help to understand what is driving the inflation rate by expressing it as the additive sum of its parts. For any one month, when added together, the contributions from the 12 divisions sum to the overall CPIH inflation rate, for example, 9.2% in December 2022.

The largest upward contributions to the annual CPIH inflation rate in December 2022 came from housing and household services (principally from electricity, gas, and other fuels), and food and non-alcoholic beverages. Contributions from these two divisions accounted for 5.23 percentage points – over half – of the annual CPIH inflation rate. Their combined weight comprises around 41% of the CPIH basket.

The contributions from four of the divisions were the largest since the start of the National Statistics series in 2006. These were food and non-alcoholic beverages (1.56 percentage points), restaurants and hotels (1.03 percentage points), miscellaneous goods and services (0.40 percentage points), and health (0.09 percentage points).

The Consumer Prices Index (CPI) differs from the CPIH in that it does not include owner occupiers' housing costs (OOH) and Council Tax. Figure 8 shows the contribution of these components to the annual CPIH inflation rate in the context of wider housing-related costs. In December 2022, the contribution of housing and household services in total to the annual CPIH inflation rate was 3.67 percentage points, slightly down from 3.68 percentage points in November 2022.

The relatively high contribution to the rate since April 2022 came mainly from electricity, gas, and other fuels (2.53 percentage points in December 2022). This reflects price rises for gas and electricity following the increase in the Office of Gas and Electricity Markets (Ofgem) cap on energy prices on 1 April 2022 and follows an earlier rise in the price cap on 1 October 2021.

From 1 October 2022, the Ofgem energy price cap was replaced with the government's Energy Price Guarantee (EPG). Under the EPG, energy prices increased. However, the rate of increase was reduced by limiting the unit cost of electricity and gas so that a typical household in Great Britain pays, on average, around £2,500 a year on their energy bill.

OOH's contribution to the CPIH annual inflation rate rose slightly from 0.64 to 0.65 percentage points between November and December 2022. Costs increased 3.8% in the year to December 2022, compared with 3.7% in the previous month. There was also a 0.32 percentage point contribution from actual rentals.

The contribution to the annual rate from Council Tax remains unchanged at 0.10 percentage points in December 2022. This reflects an annual rate of 3.4%.

While the Consumer Prices Index including owner occupiers' housing costs (CPIH) is our lead and most comprehensive measure of consumer price inflation, the Consumer Prices Index (CPI) is based on a harmonised methodology developed by Eurostat and allows for international comparisons to be drawn. For more information on the use cases for our consumer price inflation statistics, please refer to our Measuring changing prices and costs for consumers and households, proposed updates: March 2020 article. Figure 9 illustrates CPI inflation against the Group of Seven (G7) countries that produce a comparable measure.

Figure 10 shows the annual inflation rates for the CPI all goods and all services series, together with CPI excluding energy, food, alcohol and tobacco (often referred to as core CPI).

Figure 11 shows how each of the main groups of goods and services contributed to the change in the annual CPI inflation rate between November and December 2022.

The easing in the annual CPI rate into December 2022 was driven by contributions from 7 of the 12 divisions. The largest downward contribution to the change of 0.10 percentage points came from transport, with further large downward conributions from clothing and footwear (0.07 percentage points), and recreation and culture (0.06 percentage points). The largest, partially offsetting, upward contributions to the change in the annual rate came from restaurants and hotels (0.12 percentage points), and food and non-alcoholic beverages (0.06 percentage points). Although the sizes of the contributions differ from CPIH, the main drivers to the change are the same where they are common to both measures.

Figure 12 shows the extent to which the distinct categories of goods and services have contributed to the overall annual CPI inflation rate over the last two years.

While the CPIH includes extra housing components not included in the CPI, the largest contributions to the annual CPI inflation rate were from the same divisions that made the largest contributions to the annual CPIH rate, namely housing and household services (primarily because of electricity, gas and other fuels), and food and non-alcoholic beverages.

Annual 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 annual rate is determined by the balance between upward and downward price movements of the range of goods and services included in the index.

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. For an overview of the indices and their uses, please see our Consumer price indices, a brief guide: 2017 article.

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 are significant expenses for many households and are not included in the CPI.

Consumer Prices Index

The CPI is a measure of consumer price inflation produced to international standards and is based on European regulations for the Harmonised Index of Consumer Prices. 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 accompanying data 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, please see the data time series section of the inflation and price indices area of our website. The annual RPI inflation rate was 13.4% in December 2022.

The UK Statistics Authority and HM Treasury launched a consultation in 2020 on the authority's proposal to address the shortcomings of the RPI. From 2030 (at the earliest), as outlined in the UK Statistics Authority response to the consultation, the CPIH methods and data sources will be introduced into the RPI. Additionally, the supplementary and lower-level indices of the RPI will be discontinued.

Weights for consumer price inflation statistics

In line with usual practice, the expenditure weights used in compiling the Consumer Prices Index including owner occupiers' housing costs (CPIH) and the Consumer Prices index (CPI) will be updated at the start of 2023. Normally, the weights would be updated using the latest Blue Book-consistent household final consumption expenditure (HHFCE) dataset, which is lagged by two years (that is, 2021). The unprecedented events of the last few years have meant we have adjusted expenditure feeding into the weights update to incorporate some of the larger changes seen in spending patterns, so they are more reflective of the year immediately prior to use in consumer price inflation. More information on these adjustments can be found in Section 2 of our Consumer price inflation, updating weights: 2022 article.

Since consumers' expenditure was affected by the lockdowns that were in place at the start of 2021, we have decided to use the same broad approach for the forthcoming 2023 update of expenditure weights. We estimated a 2022 dataset by taking the most up-to-date HHFCE data available (Quarter 1 (Jan to Mar) to Quarter 3 (July to Sept) 2022, second estimate) and imputing the fourth quarter based on the 2021 seasonal growth, given that this is the most recent period with no national movement restrictions in place. We used the same threshold as in the previous year (25%, and also considering cases that fall in the range from 20% to 25%) to identify Classification of Individual Consumption by Purpose (COICOP) classes where there were large changes in spending levels between 2021 and 2022. For these classes, we replaced the usual 2021 data with the 2022 estimate. For some of these classes, we also made some additional changes:

• for energy classes that had experienced high inflation over the year, we adjusted our imputed estimate for Quarter 4 (Oct to Dec) 2022 to account for the general change in prices

• for some passenger transport and cultural services classes, we imputed Quarter 4 2022 using the 2019 growth rather than 2021; this was where 2021 spending may have been affected by ongoing movement restrictions in other countries or where consumer confidence was slower to recover following the end of national movement restrictions across the UK

Our approach is consistent with international guidance (PDF, 135KB).

The COICOP classes that have been adjusted will be detailed in the upcoming 2023 edition of our Consumer price inflation, updating weights article, alongside an explanation of the latest movements. The weights data for CPIH and CPI in January 2023 will be published on 15 February 2023 in Tables 11 and 25 of the Consumer price inflation dataset. As with last year, we have made no changes to the weighting scheme for the Retail Prices Index.

Alternative data sources for rail fares and second-hand cars

We have published an impact analysis of including new alternative data and methods in our headline consumer price statistics for rail fares and second-hand cars. 

We are intending to introduce these changes from February 2023 (published in March 2023). As our highest priorities are improving the quality and upholding the integrity of our statistics, we are currently completing final quality assurance and testing of our systems and processes and, by early February 2023, we will publish an update to our timelines for incorporation of these data.

Although the headline impact is small, with these new data we can produce more granular statistics that offer important insights into the components driving inflation in the UK. We will be publishing six new item-level indices for rail fares by ticket type, and two new item-level indices for second-hand cars by fuel type, detailed in our publication.

For our longer-term plans, please see our article on the Transformation of consumer price statistics: April 2022.

Treatment of the Council Tax rebate, Energy Bills Support Scheme (EBSS) and Energy Price Guarantee in consumer price inflation

On 3 February 2022, the UK government announced an Energy Bills Rebate package to help households to manage rising energy bills. On 26 May 2022, the UK government announced an additional cost of living support package. These packages included:

• a £150 non-repayable Council Tax rebate payment for all households that are liable for Council Tax in Bands A to D in England

• a £400 payment to support households with their energy bills through the Energy Bills Support Scheme (EBSS)

Subsequently, on 8 September 2022, the government announced the Energy Price Guarantee that would limit the unit cost of electricity and gas for households.

Decisions on whether to include rebates, subsidies and discounts in our consumer price inflation statistics are not clear cut and are taken on a case-by-case basis. We aim to be consistent with the national accounts, the public sector finances and other economic statistics. Decisions are based on international statistical guidance and practical considerations. More information on this is provided in Section 9.2 of our Consumer Price Indices Technical Manual.

We have previously announced that the Council Tax rebate and EBSS are out of scope of the consumer price indices. The formal Economic Statistics Classification decisions were that they were both current transfers paid by central government to the households sector. As such, both increased household income rather than reduced expenditure. The implication of the decisions was that they were not part of household expenditure and, as a result, out of scope of the consumer price indices.

On 31 October 2022, the Office for National Statistics (ONS) published the conclusion of its classification review of the Energy Price Guarantee (EPG) for domestic consumers. The payments under this scheme have been classified as subsidies on products, paid by central government to the energy suppliers in the non-financial corporations sector in the UK. The implication for consumer price inflation of the classification decision is that the EPG influences the prices that domestic consumers are charged for a unit of gas or electricity. It is these reduced unit prices that are being used in compiling the CPIH, CPI and RPI, which are hence lower while the schemes are in operation than if the EPG had not been introduced.

CPIH-consistent inflation rate estimates for UK household groups: July to October 2022

Every quarter, we publish experimental estimates of inflation rates for different types of households on a CPIH basis, including for example inflation rates for households in different income deciles, different types of tenure, and retirement status. On 16 November 2022, we published monthly data for Quarter 3 (July to Sept) 2022. For this publication, we additionally extended the time period to incorporate the latest October estimates, as well as producing subgroup estimates on a CPI basis, which brought our analysis from January 2022 up to date. The data release is supported by the Inflation and cost of living for household groups: October 2022 article.

Analysis of lowest-cost grocery items

On 25 October 2022, we published our experimental analysis of price changes for a sample of lowest-cost grocery items, which provided an update to analysis previously published in May 2022. The analysis uses in-house web-scraped data to investigate the price movements for a sample of 30 everyday grocery items (including pasta, rice, milk, and so on), which are commonly bought by households on low incomes.

For each item, we have investigated the change in price of the cheapest product available in online shops up to September 2022.

Personal inflation calculator

To assist individuals in understanding how the rise in inflation affects their expenditure, we have produced a personal inflation calculator. The calculator allows users to enter the amount they spend across either a reduced or a wide range of categories, to produce an estimate of their personal inflation based on those spending patterns.

If you have any questions or comments on the inflation calculator, please email cpi@ons.gov.uk.

Consumer price inflation historical estimates, UK, 1950 to 1988

On 18 May 2022, we published the Consumer price inflation, historical estimates, UK, 1950 to 1988 – methodology. This includes new estimates of CPIH over the period and improved estimates of CPI. These estimates (published in response to user need for a longer series) are indicative and are for analytical purposes only. They are not intended for official use and do not constitute part of the National Statistic series.

Previously, in December 2018, we published a CPIH historical series covering the period from 1989 to 2005 in the Consumer Prices Index including owner occupiers' housing costs (CPIH) historical series: 1988 to 2004 article. This series is an official statistic rather than a National Statistic, reflecting the historical uncertainty around the back casts.

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 figures in this publication use data collected on or around 13 December 2022.

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

Our CPIH Compendium provides a comprehensive source of information on the CPIH, focusing on the approach to measuring owner occupiers' housing costs.

Our Users and uses of consumer price inflation statistics: July 2018 methodology includes information on the users and uses of these statistics, and the characteristics of the different measures of inflation in relation to potential use.

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 our Measuring changing prices and costs for consumers and households, proposed updates: March 2020 article.

The three cases refer firstly to the Consumer Prices Index including owner occupiers' housing costs (CPIH) as our lead measure of inflation based on economic principles. They also refer to the Household Costs Indices (HCIs) as a set of measures to reflect the change in costs as experienced by different households and the Retail Prices Index (RPI) as a legacy measure that is required to meet existing user needs. Our Shortcomings of the RPI as a measure of inflation article describes the issues with the RPI.