Consumer price inflation, UK: May 2023

• The Consumer Prices Index including owner occupiers' housing costs (CPIH) rose by 7.9% in the 12 months to May 2023, up from 7.8% in April.
• On a monthly basis, CPIH rose by 0.6% in May 2023, compared with a rise of 0.6% in May 2022.

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

• On a monthly basis, CPI rose by 0.7% in May 2023, compared with a rise of 0.7% in May 2022.

• Rising prices for air travel, recreational and cultural goods and services, and second-hand cars resulted in the largest upward contributions to the monthly change in both the CPIH and CPI annual rates.

• Falling prices for motor fuel led to the largest downward contribution to the monthly change in CPIH and CPI annual rates, while prices for food and non-alcoholic beverages rose in May 2023 but by less than in May 2022, also leading to an easing in the annual rates.
• Core CPIH (excluding energy, food, alcohol and tobacco) rose by 6.5% in the 12 months to May 2023, up from 6.2% in April, and the highest rate for over 30 years; the CPIH goods annual rate eased from 10.0% to 9.7%, while the CPIH services annual rate rose from 6.0% to 6.3%.
• Core CPI (excluding energy, food, alcohol and tobacco) rose by 7.1% in the 12 months to May 2023, up from 6.8% in April, and the highest rate since March 1992; the CPI goods annual rate eased from 10.0% to 9.7%, while the CPI services annual rate rose from 6.9% to 7.4%.

The Consumer Prices Index including owner occupiers' housing costs (CPIH) rose by 7.9% in the 12 months to May 2023, up from 7.8% in April but down from a recent peak of 9.6% in October 2022. 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 monthly rate in May 2023 was 0.6%, the same as in May last year.

The Consumer Prices Index (CPI) rose by 8.7% in the 12 months to May 2023, unchanged from April but 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 monthly rate in May 2023 was 0.7%, the same as in May last year.

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% 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: Latest movements in CPIH inflation in this bulletin, while Section 5: Latest movements in CPI inflation provides commentary on the CPI. Section 3: Notable movements in prices covers both CPIH and CPI, though the figures reflect CPIH.

The slight rise in the annual CPIH inflation rate in May 2023 broadly reflected offsetting contributions across the different product groups. A large upward effect from recreation and culture was offset by a large downward contribution from food and non-alcoholic beverages. The overall effect from transport masked larger, offsetting underlying contributions from motor fuels (downward), air fares (upward) and second-hand cars (upward).

Recreation and culture

Prices for recreational and cultural goods and services rose, overall, by 6.8% in the year to May 2023, up from 6.4% in April, and the highest rate since August 1991.

The increase in the annual rate between April and May 2023 was the result of small upward effects from a variety of the more detailed classes. The largest came from cultural services (particularly admission fees to live music events); games, toys and hobbies (particularly computer games); and package holidays. Short-term movements in live music fees and computer game prices should be interpreted with a degree of caution as these movements depend upon the acts that are touring and the composition of bestseller charts respectively.

These upward pressures were partially offset by downward effects from data processing equipment, where prices fell this year but rose a year ago, and recording media, where prices of CDs also fell this year but rose a year ago.

Food and non-alcoholic beverages

Food and non-alcoholic beverage prices rose by 18.4% in the year to May 2023, down from 19.1% in April and from 19.2% in March, which was the highest annual rate seen for over 45 years. The latest easing in the annual rate reflects a monthly rise of 0.9% between April and May 2023, compared with a larger 1.5% increase between the same two months a year ago.

The slowing in the annual rate for food and non-alcoholic beverages between April and May 2023 was driven by relatively small price movements from 6 of the 11 detailed classes. The largest downward contribution came from milk, cheese and eggs, with the annual rate easing to 27.4%, from 29.3% in April.

The only food class showing an offsetting rise in the annual rate was fish, where the rate increased from 14.2% in the year to April 2023 to 16.6% in the year to May. This was principally caused by a rise in the price of canned tuna this year, compared with a fall in price a year ago.

Transport

The annual inflation rate for transport eased slightly from 1.6% in April 2023 to 1.3% in May. This continues the broadly downward trend in the rate seen since June 2022. Prices rose by 0.3% between April and May this year, but this was less than the 0.6% between the same two months a year ago, leading to the easing in the annual rate.

The overall slowdown masks larger, partially offsetting movements in some of the more detailed transport categories, with a large downward effect from motor fuels offset by upward effects from air fares and second-hand cars. There were also smaller downward contributions from new cars, and maintenance and repairs.

Overall, motor fuel prices fell by 13.1% in the year to May 2023, compared with a fall of 8.9% in April. Average petrol and diesel prices stood at 144.4 and 154.6 pence per litre respectively in May 2023, compared with 165.9 and 179.7 pence per litre in May 2022. Petrol prices fell by 1.4 pence per litre between April and May 2023, compared with a rise of 4.1 pence per litre between the same two months a year ago. Similarly, diesel prices fell by 7.8 pence per litre this year, compared with a rise of 3.6 pence per litre a year ago.

Air fares rose by 20.0% between April and May this year, compared with a smaller rise of 2.8% between the same two months a year ago. The largest upward effect came from European routes.

The position of Easter may have influenced the movements in fares. This year, April prices were collected after Easter and may have resulted in a relatively low April figure published last month. Last year, April's price collection spanned the Easter period and resulted in a relatively high April figure. In turn, these might partly explain the larger rise between April and May this year relative to a year ago.

Second-hand car prices rose by 0.9% on the month this year, compared with a fall of 1.7% a year ago.

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 6.5% in May 2023, up from 6.2% in April, and the highest rate since November 1991 when it was also 6.5%.

The CPIH all goods index rose by 9.7% in the 12 months to May 2023, down from 10.0% in April. The slowing in the rate has been caused by a downward contribution to the change from energy, where prices rose by 8.1% in the year to May 2023, down from 10.5% in the year to April. This has been partially offset by an upward contribution from non-energy industrial goods, particularly vehicles, spare parts and accessories.

The CPIH all services index rose by 6.3% in the 12 months to May 2023, up from 6.0% in April, and the highest rate since July 1992. The largest contributions to the increase in the rate between April and May 2023 were from recreational and personal services (with the annual rate rising from 9.1% to 9.4% between the two months) and from transport services (with the rate rising from 6.0% to 10.3%). These were partially offset by a small downward effect from services for personal transport equipment.

Figure 6 shows how each of the main groups of goods and services contributed to the change in the annual CPIH inflation rate between April and May 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 April 2023 and the rate in May 2023. These differences sum to the change in the annual CPIH rate between the latest two months, that is, the slight rise from 7.8% to 7.9%.

The rise in the rate into May was driven by upward contributions from five divisions, partially offset by downward contributions from a further five divisions. The largest upward contribution came from recreation and culture, offset by a similar-sized downward contribution from food and non-alcoholic beverages.

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, 7.9% in May 2023.

The largest upward contributions to the annual CPIH inflation rate in May 2023 came from housing and household services (principally from electricity, gas and other fuels), and food and non-alcoholic beverages. The contribution from the former group has fallen from a recent high of 3.70 percentage points in January this year to 2.28 percentage points in May, while the contribution from the latter has eased for a second successive month. Conversely, the contribution from recreation and culture has risen to 0.75 percentage points in May 2023, the largest since the start of the National Statistics series in 2006.

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 May 2023, the contribution of housing and household services in total to the annual CPIH inflation rate was 2.28 percentage points, down slightly from 2.29 percentage points in April.

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 EPG has limited the cost of electricity and gas since October 2022, "keeping a bill for a typical household in Great Britain to around £2,500 (annual equivalent)". The easing in the contribution from this group 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 0.67 to 0.69 percentage points between April and May 2023. Costs rose by 0.5% in the month to May 2023, compared with a smaller rise of 0.3% in the same month a year earlier.

There was also a 0.37 percentage point contribution from actual rentals, unchanged from a month earlier. The contribution to the annual rate from Council Tax was 0.14 percentage points in May 2023, down slightly from 0.15 percentage points in April.

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 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 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 7.1% in the year to May 2023, up from 6.8% in April, and the highest rate since March 1992. The CPI all goods index increased by 9.7% in the year to May 2023, down from 10.0% in April. The CPI all services index increased by 7.4% in the year to May 2023, up from 6.9% in April, and 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 April and May 2023.

The contributions to change between the two months offset, with upward contributions from five divisions and downward contributions from four divisions. The largest upward contribution came from recreation and culture, while the largest downward contribution came from food and non-alcoholic beverages.

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 food and non-alcoholic beverages, and housing and household services.

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 the 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 11.3% in May 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 Tables 54 and 55 in the consumer price inflation dataset has been reduced to two, covering petrol and diesel. 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, and 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.

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; for example, 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

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, the unprecedented events of the last few years meant we adjusted expenditure feeding into the weights update to incorporate some of the larger changes seen in spending patterns, so they were more reflective of the year immediately before use in consumer price inflation. Since consumers' expenditure was affected by the lockdowns that were in place at the start of 2021, we decided to use the same broad approach in the 2023 update.

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, since 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 Harmonised Index of Consumer Prices weighting guidance (PDF, 135KB).

The COICOP classes that were adjusted are detailed in the 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 February 2023 are published in Tables 11 and 25 of the Consumer price inflation dataset. As with last year, we made no changes to the weighting process for the Retail Prices Index.

Alternative data sources for rail fares

We have published our final impact analysis on the transformation of consumer price statistics for rail fares. 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.

Changes to the RPI follow the annual governance process in line with section 21 of the Statistics and Registration Service Act 2007, details of which can be seen on our Correspondence on proposed changes to the Retail Prices Index (RPI) page.

New data and methods for second-hand car indices have not been incorporated at this time. We intend to make further necessary improvements to our methods and systems to ensure their reliability before we are ready to commit to using these data for live production of our consumer price indices.

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 Transformation of consumer price statistics article, that we will update this summer with amended timelines.

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

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.

We announced that the Council Tax rebate and Energy Bills Support Scheme are out of scope of the consumer price indices on 23 March and 31 August 2022, respectively. 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, 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 hence 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 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.

Pre-release access

The Bank of England was granted exceptional pre-release access to an estimate of consumer price inflation data at 9.00am on Monday 19 June 2023 so that the data were available for the Monetary Policy Committee meeting held on that day. The letters requesting and agreeing to pre-release are available in the Exchange of letters between the Bank of England, HM Revenue and Customs, and Office for National Statistics (ONS) for exceptional pre-release access 2023.

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 16 May 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.