Consumer price inflation, UK: May 2021

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

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Cyswllt:
Email Philip Gooding

Dyddiad y datganiad:
16 June 2021

Cyhoeddiad nesaf:
14 July 2021

1. Main points

  • The Consumer Prices Index including owner occupiers’ housing costs (CPIH) rose by 2.1% in the 12 months to May 2021, up from 1.6% to April.
  • The largest upward contribution to the CPIH 12-month inflation rate came from transport (0.72 percentage points).
  • On a monthly basis, CPIH rose by 0.5% in May 2021, compared with little change in May 2020.
  • Rising prices for clothing, motor fuel, recreational goods (particularly games and recording media), and meals and drinks consumed out resulted in the largest upward contributions to the change in the CPIH 12-month inflation rate between April and May 2021.
  • These were partially offset by a large downward contribution from food and non-alcoholic beverages, where prices fell this year but rose a year ago, particularly for bread and cereals.
  • The Consumer Prices Index (CPI) rose by 2.1% in the 12 months to May 2021, up from 1.5% to April; on a monthly basis, CPI rose by 0.6% in May 2021, compared with little change in May 2020.
  • As a result of the easing of coronavirus (COVID-19) restrictions, the number of CPIH items identified as unavailable in May 2021 fell to 27, accounting for 3.1% of the basket by weight; we collected a weighted total of 77.7% of the comparable coverage collected before the first lockdown (excluding unavailable items).

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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 2.1% in the 12 months to May 2021, up from 1.6% to April. Inflation rates at this time are influenced by the effects of the first coronavirus (COVID-19) lockdown in spring 2020. The Office for National Statistics’ (ONS) blog Beware Base Effects describes how relatively low prices for some items during that period influence current inflation rates.

The Consumer Prices Index (CPI) rose by 2.1% in the 12 months to May 2021, up from 1.5% to April.

On a monthly basis, the CPIH rose by 0.5% in May 2021, compared with little change in May 2020. Prices for clothing rose by more between April and May 2021 than between the same two months a year ago. Additionally, prices for motor fuel, and recreational and cultural goods rose this year but fell a year ago. More information is provided in Section 4.

On a monthly basis, the CPI rose by 0.6% in May 2021, compared with little change in May 2020. Again, price movements for clothing, motor fuel, and recreational and cultural goods 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.

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 to an upward contribution of 0.72 percentage points in May 2021. This is the largest upward contribution from any division this month and the largest contribution from transport since August 2018.

Within transport, the movements have been caused principally by changes in the price of motor fuels. Motor fuels made a downward contribution to the 12-month rate between March 2020 and February 2021, before turning positive in March 2021 and subsequently increasing to 0.36 percentage points in May 2021. This reflects a 12-month inflation rate for motor fuels of 17.9%, the largest rate since February 2017. Average petrol prices stood at 127.2 pence per litre in May 2021, compared with 106.2 pence per litre a year earlier. The UK was in the first national lockdown at this point last year and petrol prices were affected by reduced demand, reaching their lowest price in May 2020 for over four years. The relatively low price in May 2020 affects the current 12-month rate as described in the Office for National Statistics’ (ONS) blog Beware Base Effects.

Other contributions within transport are smaller but have changed over the last year. For example, the contribution from second-hand cars rose across 2020 from a downward effect of 0.07 percentage points in January to an upward pull of 0.15 percentage points in October. With the onset of the coronavirus, there were reports of increased demand as people sought alternatives to public transport. Since October 2020, the contribution to the 12-month rate has gradually fallen back to 0.02 percentage points in May 2021.

The contribution from housing and household services increased slightly between April and May 2021 as owner occupiers’ housing costs rose, but the contributions in both months were significantly above those from April 2020 to March 2021. Reductions to household utility prices in April 2020 saw the group’s contribution to the CPIH headline rate fall to 0.16 percentage points but this fall was reversed in April 2021 with rises in gas and electricity prices.

Clothing and footwear prices have risen in May 2021 and the resulting contribution to the 12-month rate (of 0.11 percentage points) is the largest observed since April 2018. For most months since March 2020, the contribution has been negative. It has turned positive now in part because of the low prices experienced during the first coronavirus (COVID-19) lockdown in 2020. The ONS' blog Beware Base Effects describes the effect of low prices during that first lockdown on current inflation rates.

During 2020, clothing and footwear prices followed a different seasonal pattern compared with previous years, and they were clearly influenced by coronavirus restrictions. Then, in 2021, prices unusually fell between January and February, again potentially caused by the recent coronavirus lockdown, before rising in the three subsequent months. These rises lead to a May index value (on a January of each year = 100 basis) which is above that experienced in most recent years, as reflected in Figure 3. This value is referenced on January 2021 when prices were relatively low, influenced again by the coronavirus lockdown.

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 during previous lockdowns. The subsequent price rises reflect a significant reduction in the proportion of price discounting observed in the sample and evidence of new products entering the collection.

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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 April and May 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 three divisions, partially offset by a downward contribution from food and non-alcoholic beverages.

The largest upward contribution (of 0.16 percentage points) to the change in the CPIH 12-month inflation rate came from transport, where prices rose by 0.3% between April and May 2021, compared with a fall of 1.0% between the same two months of 2020. The effect was principally from motor fuels, with the price of petrol rising by 1.7 pence per litre this year, compared with a fall of 2.8 pence per litre a year ago as prices reached a four year low of 106.2 pence per litre in May 2020. Similarly, diesel prices rose by 1.5 pence per litre this year, compared with a fall of 2.6 pence per litre a year ago. The movements reflect changes in oil prices as demand was affected last year by the coronavirus (COVID-19) pandemic.

Within transport, there was a further upward effect from the maintenance and repair of vehicles, with membership fees for roadside recovery services rising in May 2021 following discounting in April. This compares with a fall in fees between April and May last year.

There was also a large upward contribution of 0.15 percentage points from recreation and culture, where prices rose by 1.2% between April and May 2021, compared with a fall of 0.1% between the same two months a year ago. The two main upward contributions within this group came from games, toys and hobbies (particularly computer game downloads), and recording media (principally music downloads, DVDs and CDs). It is possible that prices in these categories have been influenced by the coronavirus restrictions changing the timing of demand. It is equally likely to be a result of the CDs, DVDs, music downloads and computer game downloads in the relevant bestseller charts. Price movements for these items can often be relatively large depending on the composition of these charts.

Clothing and footwear contributed 0.13 percentage points to the change in the CPIH 12-month inflation rate. Prices, overall, rose by 2.3% between April and May this year, compared with a smaller rise of 0.3% between the same two months a year ago. The rise this year has been influenced by a fall in the amount of discounting recorded in the dataset between April and May, down to slightly below the levels usually seen at this point in the year. In May 2020, the proportion of discounting was relatively high during the first coronavirus lockdown when demand may have been reduced as a result of less browsing in stores, people spending more time at home where they might have been less interested in clothing, and a shift in spending patterns towards other necessities such as food and cleaning products. The upward effects this year came from a broad range of women’s, men’s and children’s clothing and footwear.

Smaller upward contributions came from restaurants and hotels (0.05 percentage points), and miscellaneous goods and services (0.04 percentage points). With the former, prices for restaurant meals and on-sales of alcohol rose between April and May this year as restrictions on movements eased. A year ago, most of these items were unavailable for consumers to purchase and the indices for these items were estimated based on the movement in the index for all available items. This means that the current contribution to change has to be interpreted with a degree of caution. The methodology used to estimate for unavailable items is described in Coronavirus and the effects on UK prices.

With miscellaneous goods and services, prices rose by 0.6% between April and May 2021, compared with a rise of 0.1% between the same two months of 2020. Within this division, the largest effect of 0.02 percentage points came from jewellery, clocks and watches, where prices of gold rings and watches rose this year but fell a year ago.

The largest, partially offsetting, downward contribution (of 0.07 percentage points) to the change in the CPIH 12-month inflation rate came from food and non-alcoholic beverages, where prices fell by 0.3% between April and May 2021, compared with a rise of 0.5% between the same two months a year ago. Prices for a variety of bread and cereal items fell this year but rose a year ago, resulting in a downward contribution of 0.04 percentage points and reversing an upward contribution of 0.04 percentage points observed in April. The items included packs of individual cakes, breakfast cereals and dried potted snacks. Prices of these products can be relatively volatile so movements have to be interpreted with caution.

Within food and non-alcoholic beverages, there was a smaller downward contribution of 0.02 percentage points from meat, particularly cooked ham, where prices fell this year but rose a year ago.

For items that were unavailable in line with government guidelines in the early part of 2021, there were no January base prices. As these items become available again, base prices have been imputed in line with the procedures described in the Coronavirus (COVID-19) and Consumer Price Inflation weights and prices: 2021 article. For the first month in which they become available again, item indices are imputed using either the monthly movement in the all-available-items index or, for a smaller number of seasonal items, the annual movement in the all-available-items index. The aim is that the indices for returning items have a negligible impact on the all-items inflation rate in the first month of return, 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). Collected prices then start to influence the index in the following month.

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 has reduced to 27 in May, accounting for 3.1% of the CPIH basket by weight. Many of these items relate to international travel, for example, air fares and various types of foreign holiday. The changes to the list from previous months, are shown in Table 58 in the Consumer price inflation dataset.

In total, the unavailable items had an upward contribution of 0.04 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 upward contribution, of 0.02 percentage points, came from air fares. The only small downward contribution (of 0.01 percentage points) came from overnight hotel accommodation.

In addition to the 27 unavailable items and those returning to the CPIH basket in May, we identified six 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.

Overall, the number of price quotes that are usually collected in store and that are used in constructing the May 2021 indices was 74.7% 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 May 2021 was 77.7% 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 May 2021, the contribution of housing components to the CPIH 12-month inflation rate was 0.60 percentage points, its highest contribution since June 2019.

There have been only relatively small changes to the contributions from individual components between April and May 2021, principally from owner occupiers’ housing costs. This follows larger changes to gas and electricity prices in April when the Office of Gas and Electricity Markets’ (Ofgem’s) price cap, introduced on 1 April 2021, saw prices of these utilities rise by over 9%. The cost of water supply and sewerage collection also rose by 2.5% and 1.0% respectively between March and April 2021. These price rises in total resulted in all groups within the housing and household services division having a positive contribution to the CPIH 12-month inflation rate from April 2021.

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6. Consumer price inflation data

Consumer price inflation tables
Dataset | Released 16 June 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 16 June 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 16 June 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.

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 response to the consultation, the CPIH methods and data sources will be introduced into the RPI, and the supplementary and lower-level indices of the RPI will be discontinued.

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8. Measuring the data

Office for Statistics Regulation (OSR) publishing review

The Office for Statistics Regulation (OSR) is undertaking a review into whether the 9:30am release time stated in the Code of Practice for Statistics meets the needs of users. During the pandemic, exemptions were granted to allow the release of market sensitive statistics at 7:00am. The OSR welcomes views about the release time of official statistics by Friday 25 June 2021, please send comments to: regulation@statistics.gov.uk.

Coronavirus

Since the start of the coronavirus (COVID-19) pandemic, there have been challenges around our collection activities, as approximately 80% of the price quotes (45% by weight) for the Consumer Prices Index including owner occupiers’ housing costs (CPIH) basket are usually physically collected in stores across 141 locations in the UK. In April 2021, for example, we were unable to collect prices in-store. However, we have resumed in-store collections in May 2021 following the approach detailed in Consumer price statistics: resuming a field-based price collection. Our price collectors were able to complete full collections in 81 of the locations with partial collections in the other 60, supplementing the latter by continuing to collect prices over the internet, by phone and by email.

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).

Coronavirus and the effects on UK prices describes the approach 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 statistics for both CPIH and the Consumer Prices Index (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. As a result of the coronavirus pandemic, we collected all prices centrally in April 2021, but our price collectors have resumed in-store collections in May 2021.

The figures in this publication use data collected on or around 11 May 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).

Users and uses of consumer price inflation statistics includes information on the users and uses of these statistics, and 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. Shortcomings of the RPI as a measure of inflation describes the issues with the RPI.

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Manylion cyswllt ar gyfer y Bwletin ystadegol

Philip Gooding
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