Consumer price inflation, UK: February 2019

• The Consumer Prices Index including owner occupiers’ housing costs (CPIH) 12-month inflation rate was 1.8% in February 2019, unchanged from January 2019.

• Rising prices for food, alcohol and tobacco, and across a range of recreational and cultural goods produced the largest upward contributions to change in the rate between January and February 2019.

• The largest, offsetting, downward contribution came from clothing and footwear, with prices rising between January and February 2019 but by less than between the same two months a year ago.

• The Consumer Prices Index (CPI) 12-month rate was 1.9% in February 2019, up from 1.8% in January 2019.

The Bank of England were granted exceptional pre-release access to an estimate of the Consumer Prices Index (CPI) at 9:30am on Monday, 18 March 2019 so that the data were available for the Monetary Policy Committee meeting held on that day. Correspondence with the Bank of England about this pre-release is available.

Consumer price inflation, updating weights: 2019 was released on 18 March 2019 and describes the latest update of the weights of items in the consumer price inflation basket to ensure they remain representative of current consumer spending patterns. Consumer price inflation basket of goods and services: 2019, describing the changes to the basket of goods and services for 2019, was released on 11 March 2019.

The National Statistics status of the Consumer Prices Index including owner occupiers’ housing costs (CPIH) was reinstated on 31 July 2017. A letter from the Director General for Regulation to the National Statistician detailed the actions that were taken to meet the requirements as set out in the CPIH assessment report.

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 (HCIs, currently under development with preliminary estimates published for the first time on 19 December 2017) 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.

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. One way to understand this is to think of a shopping basket containing all the goods and services bought by households. Movements in price indices represent the changing cost of this basket. Consumer price indices – a brief guide gives an overview of the indices and their uses.

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.

This release also examines 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. Explaining the contribution to change in the 12-month rate (2013) covers this concept in more detail.

The CPIH is the most comprehensive measure of inflation. It extends the 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.

Aside from including OOH and Council Tax, CPIH is otherwise identical to CPI. This means that, aside from these two components, the factors contributing to the CPI rate are the same as those contributing to the CPIH. For example, if food is reported as increasing the CPIH rate, it is also acting to increase the CPI rate. The size of the contributions for components other than OOH and Council Tax are exaggerated in the CPI compared with the CPIH because they account for a larger proportion of the overall index.

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

The Retail Prices Index (RPI) does not meet the required standard for designation as National Statistics. In recognition that it continues to be widely used in contracts, we continue to publish the RPI, its sub-components and 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 accompanying dataset and time series provide more detailed information.

The figures in this publication use data collected on or around 12 February 2019.

The Consumer Prices Index including owner occupiers’ housing costs (CPIH) 12-month rate was 1.8% in February 2019, unchanged from January 2019.

Figure 1 compares the 12-month inflation rates for CPIH and the Consumer Prices Index (CPI), along with the rate for the owner occupiers’ housing costs (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.

Figure 2 shows that price movements for most of the broad categories of goods and services had an upward effect on the Consumer Prices Index including owner occupiers’ housing costs (CPIH) 12-month rate in February 2019. The exception was clothing and footwear, which had a small downward pull on the rate, with prices falling by 2.0% in the year to February 2019. This category has had a downward effect on the 12-month rate in each of the latest six months.

The largest upward contribution to the CPIH 12-month rate in February 2019 came from housing and household services, with prices rising by 1.4% on the year, the same as in January 2019. Within this broad group, the largest contributions were from owner occupiers’ housing costs (a 0.19 percentage point contribution to the CPIH 12-month rate), and Council Tax and rates (a 0.12 percentage point contribution).

There were other large upward contributions from recreation and culture, where prices rose by 3.1% on the year, and transport, where they rose by 3.0%. Within these categories, the most notable upward contributions were from package holidays and new cars. The contribution from motor fuels continued to decline, albeit slightly, as prices fell by 0.3% on the month.

Figure 3 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. Transport, and food and non-alcoholic beverages prices have been important factors in driving the changes in the rate. As the overall CPIH rate began to level off from April 2017, the contribution from food and non-alcoholic beverages continued to increase, being offset by a fall in the contribution from transport, particularly motor fuels.

The contributions from most of the categories began to fall back in the early months of 2018, leading to a fall in the 12-month rate. However, the pattern has been more mixed since spring 2018, reflecting the relative stability in the headline rate. For example, the contribution from clothing and footwear has broadly continued to decline through to February this year whereas the contribution from housing and household services rose slowly over 2018 following increases to utility bills but then fell in January this year due to the fall in gas and electricity prices. The contribution from transport has fluctuated, rising between April and August 2018 then gradually falling back. Conversely, the contribution from food and non-alcoholic beverages broadly fell to November 2018 but has since risen slightly.

Figure 4 shows how each of the main groups of goods and services contributed to change in the Consumer Prices Index including owner occupiers’ housing costs (CPIH) 12-month rate between January and February 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.

The largest downward contribution to change in the CPIH 12-month rate came from clothing and footwear. Prices rose as usual in February following the January sales period but they rose by less in 2019 than between the same two months in 2018. The effect came from a range of products but most noticeably from footwear, particularly women’s footwear.

There was also a small downward effect from transport, where again prices rose between January and February this year but by less than in 2018. The effect came from an accumulation of very small contributions from categories such as motor fuels, road passenger transport and sea transport.

The largest, offsetting, upward contribution came from recreational and cultural goods and services, where prices rose between January and February 2019 compared with a smaller rise between the same two months last year. Within this group, the largest upward effect came from games, toys and hobbies (particularly computer games) partially offset by a downward effect from cultural services (principally theatre and live music admissions). Price movements for these three items can often be relatively large depending, for example, on the composition of bestseller charts and the bands that are touring at the time of price collection.

Food and non-alcoholic beverages also produced a small upward contribution, with prices rising by more between January and February this year than between the same two months a year ago. The main upward contributions came from bread and cereals, where prices rose by more than in 2018, and vegetables, where prices rose this year but fell a year ago.

A final small upward contribution came from alcohol and tobacco, particularly tobacco where prices rose by more between January and February 2019 than between the same two months a year ago.

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) inflation rate in the context of wider housing-related costs. The contribution from OOH has been on a downward trend from a high in October 2016. However, OOH provided the largest contribution to the CPIH 12-month rate in February 2019 of all the housing and household services categories.

Utility bills 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 autumn 2018 increased their contribution to the CPIH 12-month rate. However, in January 2019, there was a reduction in the contribution from electricity and gas, which partially reflected the introduction of Ofgem’s energy price cap.

Increases in Council Tax starting in 2016 mean that its contribution has increased over recent years. 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.

Data relating to the Retail Prices Index (RPI) are available in the accompanying dataset and time series. 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.

Other important measures of inflation and prices include Producer price indices, the House Price Index and the Index of Private Housing Rental Prices (IPHRP). Prices economic commentary presents further analysis of these in addition to the Consumer Prices Index including owner occupiers’ housing costs (CPIH).

The individual price quotes (for locally-collected items only) and item indices that underpin the historical consumer price inflation statistics are available. From the publication of the February 2019 results, the latest item indices and price quotes will be released the day after publication of the headline figures, for example, Thursday, 21 March 2019 for the February data. The datasets will also be moving to a new weblink under the “You might also be interested in:” section of the Consumer price inflation release page.

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.

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 Consumer Price 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 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 basket of goods and services: 2019 article details the annual review process for the items making up the inflation basket used to calculate the UK consumer price inflation indices and describes the changes in the latest year.

Consumer price inflation, updating weights: 2019 describes the latest changes to the relative weights of items in the inflation basket to ensure they remain representative of current consumer spending patterns.