Consumer price inflation, UK: June 2023

• The Consumer Prices Index including owner occupiers' housing costs (CPIH) rose by 7.3% in the 12 months to June 2023, down from 7.9% in May.

• On a monthly basis, CPIH rose by 0.2% in June 2023, compared with a rise of 0.7% in June 2022.

• The Consumer Prices Index (CPI) rose by 7.9% in the 12 months to June 2023, down from 8.7% in May.

• On a monthly basis, CPI rose by 0.1% in June 2023, compared with a rise of 0.8% in June 2022.

• Falling prices for motor fuel led to the largest downward contribution to the monthly change in CPIH and CPI annual rates, while food prices rose in June 2023 but by less than in June 2022, also leading to an easing in the rates.

• There were no large offsetting upward contributions to the change in the rate.

• Core CPIH (excluding energy, food, alcohol and tobacco) rose by 6.4% in the 12 months to June 2023, down from 6.5% in May, which was the highest rate for over 30 years; the CPIH goods annual rate slowed from 9.7% to 8.5%, while the CPIH services annual rate was 6.3%, unchanged from May.

• Core CPI (excluding energy, food, alcohol and tobacco) rose by 6.9% in the 12 months to June 2023, down from 7.1% in May, which was the highest rate since March 1992; the CPI goods annual rate slowed from 9.7% to 8.5%, while the CPI services annual rate eased from 7.4% to 7.2%.

The Consumer Prices Index including owner occupiers' housing costs (CPIH) rose by 7.3% in the 12 months to June 2023, down from 7.9% in May, and down from a recent peak of 9.6% in October 2022. Our Indicative modelled consumer price inflation estimates suggest that the October 2022 rate was the highest in over 40 years (the CPIH National Statistic series begins in January 2006). The rate in June 2023 was the lowest since March 2022.

The slowdown in the annual rate between May and June 2023 was a result of prices rising by 0.2% on the month compared with a rise of 0.7% a year earlier.

The Consumer Prices Index (CPI) rose by 7.9% in the 12 months to June 2023, down from 8.7% in May, and down from a recent peak of 11.1% in October 2022. Our indicative modelled consumer price inflation estimates suggest that the October 2022 peak was the highest annual inflation rate since 1981 (the CPI National Statistic series begins in January 1997). The rate in June 2023 was the lowest since March 2022.

The easing in the CPI annual rate between May and June 2023 was a result of prices rising by 0.1% on the month compared with a rise of 0.8% 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 16.0% 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. We cover this in more detail in Section 4: Latest movements in CPIH inflation of this bulletin, and provide a commentary on the CPI in Section 5: Latest movements in CPI inflation. We also cover both CPIH and CPI in Section 3: Notable movements in prices, though the figures reflect CPIH.

The easing in the annual inflation rates in June 2023 principally reflected price changes in the transport division, particularly for motor fuels. There were also notable downward effects from food and non-alcoholic beverages, furniture and household goods, and restaurants and hotels. There were no large offsetting upward effects.

Transport

Overall prices in the transport division fell by 1.7% in the year to June 2023, compared with a rise of 1.3% in May. This continues the broadly downward trend in the annual rate since June 2022 and it is the first time that the rate has turned negative since August 2020. Prices fell by 0.7% between May and June this year, compared with a rise of 2.4% between the same two months a year ago.

The easing in the annual rate for transport was almost entirely because of changes in the price of motor fuels.

Overall, motor fuel prices fell by 22.7% in the year to June 2023, compared with a fall of 13.1% in May. Average petrol and diesel prices stood at 143.0 and 145.7 pence per litre respectively in June 2023, compared with 184.0 and 192.4 pence per litre in June 2022. Petrol prices fell by 1.4 pence per litre between May and June 2023, compared with a rise of 18.1 pence per litre between the same two months a year ago. Similarly, diesel prices fell by 8.9 pence per litre this year, compared with a rise of 12.7 pence per litre a year ago.

Food and non-alcoholic beverages

Food and non-alcoholic beverage prices rose by 0.4% between May and June 2023, compared with a rise of 1.2% between the same two months a year ago. This resulted in an easing in the annual rate to 17.4% in June 2023. This is down from 18.4% in May 2023 and from a recent high of 19.2% in March 2023, which was the highest annual rate seen for over 45 years.

The slowing in the annual rate for food and non-alcoholic beverages between May and June 2023 was driven by relatively small price movements from 7 of the 11 detailed classes. The largest downward contribution came from the milk, cheese and eggs category, with the annual rate easing to 22.8%, from 27.4% in May. There were other, smaller downward effects from meat (mostly from pork products), and bread and cereals.

Two small, partially offsetting upward effects came from sugar, jam, syrups, chocolate and confectionery (particularly chocolate), and mineral waters, soft drinks and juices.

Furniture and household goods

Prices of furniture and household goods were little changed between May and June this year, but they rose by 0.9% between the same two months a year ago. This resulted in an annual inflation rate of 6.6% in June 2023, down from 7.5% in May, and the lowest rate recorded since November 2021.

The easing in the annual rate principally reflected a downward effect from furniture and furnishings, where prices rose between May and June 2023, but by less than between the same two months in 2022. Within this category, there were small downward effects from a wide range of lounge, bedroom, kitchen and dining room furniture.

Restaurants and hotels

The annual inflation rate for restaurants and hotels was 9.5% in June 2023, down from 10.3% in May. On a monthly basis, prices rose by 0.5% between May and June 2023 compared with 1.2% between the same two months in 2022. The main driver behind the easing in the rate came from accommodation services, where prices rose by 11.3% in the year to June 2023, down from 14.4% in May.

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 core CPIH annual inflation rate was 6.4% in June 2023. This is down from 6.5% in May 2023, which was the highest rate since November 1991, when it was also 6.5%.

Owner occupiers’ housing costs (OOH) rose by 4.4% in the 12 months to June 2023, up from an annual rate of 4.2% last month and 3.2% a year ago. This is the highest annual rate in OOH since November 1996.

The CPIH all goods index rose by 8.5% in the 12 months to June 2023, down from 9.7% in May. The slowing in the rate has been caused by a downward contribution to the change from energy, where prices rose by 2.9% in the year to June 2023, down from 8.1% in the year to May. There were other smaller downward effects from non-energy industrial goods (particularly housing goods) and food, alcoholic beverages and tobacco (particularly non-processed food).

The CPIH all services index rose by 6.3% in the 12 months to June 2023, unchanged from May. These rates are the highest since July 1992.

Figure 6 shows how each of the main groups of goods and services contributed to the change in the annual CPIH inflation rate between May and June 2023. 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 May 2023 and the rate in June 2023. These differences sum to the change in the annual CPIH rate between the latest two months, that is, the easing from 7.9% to 7.3%.

The slowing in the rate into June 2023 was driven by downward contributions from five divisions, partially offset by small upward contributions from two divisions. These were led by a large downward contribution from transport, where prices of motor fuels fell by 2.7% between May and June this year, but rose by 9.3% between the same two months a year earlier.

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 explain 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, 7.3% in June 2023.

The largest upward contributions to the annual CPIH inflation rate in June 2023 came from housing and household services (principally from electricity, gas and other fuels, and owner occupiers’ housing costs), and food and non-alcoholic beverages. The contribution from the former group was 2.27 percentage points, marginally down from 2.28 percentage points in May, and down from a recent high of 3.70 percentage points in January this year. The contribution from the latter group has eased for a third successive month.

Although smaller, the contributions to the annual rate in June 2023 from communication, and health were each the largest or joint largest from those divisions since the start of the National Statistics series in 2006.

The contribution from transport turned negative in June 2023, the first negative contribution from the division since August 2020.

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 June 2023, the contribution of housing and household services in total to the annual CPIH inflation rate was 2.27 percentage points, down slightly from 2.28 percentage points in May.

The relatively high contribution to the rate since April 2022 came mainly from electricity, gas, and other fuels. The contribution from this group reflects price rises for gas and electricity in April and October 2022, following increases in the Office of Gas and Electricity Markets (Ofgem) cap on energy prices, offset partly by the government's Energy Price Guarantee (EPG). The subsequent easing in the contribution between March and April 2023 resulted principally from the price of electricity and gas falling slightly between these months in 2023 but rising sharply in 2022.

OOH's contribution to the CPIH annual inflation rate rose from 0.69 to 0.72 percentage points between May and June 2023. Costs rose by 0.5% in the month to June 2023, compared with a smaller rise of 0.3% in the same month a year earlier.

There was also a 0.36 percentage point contribution from actual rentals in June 2023, down slightly from 0.37 percentage points a month earlier. The contribution to the annual rate from Council Tax was 0.14 percentage points in June 2023, unchanged from May.

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 shows CPI inflation against the EU and Group of Seven (G7) countries that produce a comparable measure. Further information on international comparisons can be found in our Food and energy price inflation, UK: 2023 article, released on 23 May 2023.

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).

Annual core CPI rose by 6.9% in the year to June 2023, down from 7.1% in May. The rate in May was the highest since March 1992. The CPI all goods index increased by 8.5% in the year to June 2023, down from 9.7% in May. The CPI all services index increased by 7.2% in the year to June 2023, down from 7.4% in May, which was the highest rate since March 1992.

As with the all-items annual inflation rates, the drivers of CPIH and CPI goods and services inflation are the same (with the exception of owner occupiers’ housing costs and Council Tax, which are excluded from CPI). The drivers are discussed in more detail in Section 4: Latest movements in CPIH inflation.

Figure 11 shows how each of the main groups of goods and services contributed to the change in the annual CPI inflation rate between May and June 2023.

The slowdown in the annual CPI rate into June 2023 was driven by downward contributions to change from 6 of the 12 divisions, with the largest downward contribution coming from transport. Within this division, the downward effect came from motor fuels.

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.

The CPIH includes extra housing components not included in the CPI. However, the largest contributions to the annual CPI inflation rate were from the same divisions that made the largest contributions to the annual CPIH rate, particularly food and non-alcoholic beverages, and housing and household services. Equally, the negative contribution from transport is present in both CPIH and CPI.

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.

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 our accompanying dataset and accompanying data 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, please see the data time series section of the inflation and price indices area of our website. The annual RPI inflation rate was 10.7% in June 2023.

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.

Households and the cost of living

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.

Our shopping prices comparison tool shows how the average prices of items have changed over time. As a result, the number of average price series in Table 55 in our Consumer price inflation dataset has been reduced to two, covering petrol and diesel, and Table 54 has been discontinued. The average price data originally presented in these tables are currently still available as time series on our website and can be found using the four-character identifiers in Table 55.

Update on the Household Costs Indices and CPIH-consistent subgroups, UK

In our statement in June 2022, we set out our ambitions to move our annual experimental estimates of Household Costs Indices (HCIs) onto a regular quarterly publication basis in 2023. The HCIs reflect how different types of households experience changing prices, and differ from the Consumer Prices Index including owner occupiers' housing costs (CPIH) and the Consumer Prices Index (CPI), which are based on recognised economic principles. Moving the HCIs to a quarterly publication will better support users' understanding of how rising prices and the cost of living affect different types of households. It also recognises the HCIs' unique role in our range of consumer price inflation measures.

In order to meet our objective of beginning our quarterly HCIs publication in 2023, we have temporarily suspended our publication of CPIH-consistent subgroup data, which show the CPIH and CPI rates of inflation for different household subgroups. However, we recognise that there is a current user need for these measures and, while the CPIH-consistent subgroup publication is suspended, we will publish provisional estimates for selected sub-groups based on the previous year's weights (updated for changes in total UK spending). The provisional estimates for January to March 2023 are available in Provisional CPIH and CPI-consistent inflation rate estimates for UK household groups: January to March 2023.  Provisional data for April to June 2023 will be released next month.

We are committed to an ongoing quarterly publication of the HCIs. However, in light of wider prioritisation, we will be focussing our ongoing efforts on transforming and improving our entire range of consumer price inflation measures, including the HCIs, such as through alternative data sources.

We will update our publication plans in due course and will continue to discuss these matters with our Advisory Panels for Consumer Prices (APCPs) and other stakeholders.

Weights for consumer price inflation statistics, 2023

In line with usual practice at the start of each year, the expenditure weights used in compiling the Consumer Prices Index including owner occupiers' housing costs (CPIH) and the Consumer Prices Index (CPI) were calculated using updated spending information. Normally, this would be national accounts household final consumption expenditure (HHFCE) data lagged by two years. However, because of the unprecedented events of the last few years and the larger changes seen in spending patterns, we adjusted the data so that the resulting weights were more reflective of the year immediately before use in consumer price inflation. This is in line with the procedures adopted in 2021 and 2022. More information is available in our Consumer price inflation, updating weights articles.

Alternative data sources for rail fares

We published our final Impact analysis on the transformation of consumer price statistics for rail fares on 7 February 2023. The new data and methods have been included in CPIH, CPI and RPI from the publication of the February 2023 indices on 22 March 2023. While the headline impact of new rail fares data on CPIH, CPI and RPI is negligible, these new data enable us to produce more granular statistics, offering important insights into the components driving inflation in the UK.

On 11 June 2023, a change was made to how return tickets are sold on some routes. As a result of this, we have made some necessary adjustments to our data. This is to ensure that our indices continue to reflect price changes as experienced by consumers, and not changes that arise because of changes in ticketing structures.

The technology and processes we have developed lay the foundation for our future transformation work. More information about the project and our ongoing transformation plans can be found in our updated Transformation of consumer price statistics article, released on 6 July 2023.

As usual, we welcome your feedback on our work by email to cpi@ons.gov.uk.

Treatment of the Energy Price Guarantee in consumer price inflation

On 31 October 2022, we published the conclusion of our 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 therefore lower while the schemes are in operation than if the EPG had not been introduced.

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 our 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 June 2023.

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 for 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.