Consumer price inflation, UK: November 2019

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:
18 December 2019

Cyhoeddiad nesaf:
15 January 2020

1. Main points

  • The Consumer Prices Index including owner occupiers’ housing costs (CPIH) 12-month inflation rate was 1.5% in November 2019, unchanged from October 2019.

  • The largest contribution to the CPIH 12-month inflation rate in November 2019 came from housing, water, electricity, gas and other fuels (+0.36 percentage points).

  • The largest downward contributions to change in the CPIH 12-month inflation rate between October and November 2019 came from accommodation services and tobacco.

  • The largest offsetting upward contributions came from food, and recreation and culture, where prices rose this year by more than a year ago.

  • The Consumer Prices Index (CPI) 12-month rate was 1.5% in November 2019, unchanged from October 2019.

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2. Analysis of consumer price inflation

CPIH 12-month inflation rate

The Consumer Prices Index including owner occupiers’ housing costs (CPIH) 12-month inflation rate was 1.5% in November 2019, unchanged from October 2019.

The Consumer Prices Index (CPI) 12-month inflation rate was 1.5% in November 2019, unchanged from October 2019.

CPIH rose by 0.2% between October and November 2019, compared with 0.2% between October and November 2018.

Given that the OOH component accounts for around 17% of CPIH, it is the main driver for differences between the CPIH and CPI inflation rates.

Contributions to CPIH 12-month 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.

Since November 2018, the largest upward contribution to the CPIH 12-month inflation rate has come from housing and household services. However, its contribution fell continuously from May to October 2019 as a result of falling contributions from electricity, gas and other fuels before rising slightly from 0.34 percentage points in October 2019 to 0.36 percentage points in November 2019.

There was also a large upward contribution of 0.24 percentage points to the CPIH 12-month inflation rate from restaurants and hotels, where prices rose in the year to November 2019 by 2.4%. However, this was down from last month’s 0.31 percentage point contribution because prices for overnight hotel accommodation fell between October and November 2019, compared with a rise between the same two months a year ago.

Transport’s once large upward contribution to the CPIH 12-month inflation rate fell continuously from April to September 2019, resulting in a September contribution about one-eighth the size that was seen in April. This was caused by falling contributions from motor fuels and transport services. Contributions started to increase again from October, reaching 0.11 percentage points in November. However, this remains low in comparison with the general levels seen throughout 2017, 2018 and the first half of 2019.

Also, within transport, the contribution to the inflation rate from motor fuels has been negative for the last four months, with pump prices in November 2019 down by 2.9% on last year. This means that since August 2019, petrol and diesel prices have been consistently lower than for the same month last year.

Contributions to change in the CPIH 12-month inflation rate

Figure 3 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 October and November 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 contributions to change in the CPIH 12-month inflation rate came from restaurants and hotels (0.07 percentage points), and alcohol and tobacco (0.05 percentage points). For these divisions, prices fell between October and November 2019 but rose between the same two months a year ago, with the main effects coming from overnight hotel accommodation and tobacco. The 3.4% average price rise from October to November 2018 for tobacco products reflected an increase in duty on such products announced in the Budget last year. There have been no further duty increases and there is only a small 0.1% increase in price between October and November of this year.

A further small downward contribution (of 0.03 percentage points) came from clothing and footwear, where prices rose between October and November 2019 but by less than a year ago, especially for women’s garments (which rose by 1.3% this year, compared with 2.1% last year). Within this group, the largest individual contributions came from women’s formal trousers and strappy tops.

Offsetting large upward contributions to change in the CPIH 12-month inflation rate came from food and non-alcoholic beverages (0.06 percentage points), and recreation and culture (0.05 percentage points). For these divisions, prices rose between October and November 2019 by more than between the same two months a year ago, especially for sugar, jam, syrups, chocolate and confectionery (which rose by 1.8% this year, compared with a rise of 0.1% last year). Within this group, boxes and cartons of chocolates, and chocolate covered ice cream bars drove the upward movement.

A small overall upward contribution also came from transport (0.02 percentage points), where prices fell between October and November 2019 but by less than a year ago. This was caused by various price movements across the division. Upward effects from second-hand cars and air fares were in part offset by a downward effect from rail fares.

Finally, small upward contributions to change in the inflation rate also came from furniture and household goods, and housing and household services.

Owner occupiers’ housing costs

Figure 4 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 had been on a downward trend from a high in October 2016. However, it has stabilised since early 2018 and was the largest contribution to the CPIH 12-month inflation rate from all the housing and household services categories for most months in 2019, including November.

Electricity, gas and other fuels made a negative contribution during 2015 and 2016, but subsequent rises, most notably in electricity prices, saw the contribution turn positive through 2017 and into 2018. Further electricity and gas price rises in summer and autumn 2018 increased their contribution to the CPIH 12-month rate. The introduction of the Office of Gas and Electricity Markets’ (Ofgem’s) initial energy price cap resulted in reduced contributions to the CPIH 12-month inflation rate for January to March 2019. However, the contribution increased in April 2019 as energy providers responded to Ofgem’s subsequent raising of the price cap. From October 2019 onwards, the contribution to the CPIH annual inflation rate from electricity, gas and other fuels has been negative. Ofgem lowered the price cap for the six-month period in effect from 1 October because of recent reductions in costs paid by suppliers, mainly wholesale energy costs. This was reflected in the 4.4% fall in average prices for electricity, gas and other fuels in total between September and October 2019.

Increases in Council Tax starting in 2016 mean that its contribution has risen over recent years, though there was little change in the contribution when the 2019 increases were introduced in April this year. 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 inflation rate.

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3. Data

Consumer price inflation tables
Dataset | Released 18 December 2019
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 18 December 2019
Comprehensive database of time series covering measures of inflation data for the UK including CPIH, CPI and RPI.

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4. 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 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)

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

Consumer Prices Index (CPI)

CPI is a measure of consumer price inflation produced to international standards and in line with European regulations. First published in 1997 as the Harmonised Index of Consumer Prices (HICP), the CPI is the inflation measure used in the government’s target for inflation.

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

Retail Prices Index (RPI)

RPI does not meet the required standard for designation as a National Statistic. In recognition that it continues to be widely used in contracts, we continue to publish the RPI, its subcomponents and RPI excluding mortgage interest payments (RPIX). To view the all-items RPI 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.

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5. Measuring the data

The consumer price indices are based on prices collected from outlets around the country, supplemented by information collected centrally over the internet and by phone.

Consumer price indices, a brief guide gives an overview of consumer price statistics.

The Consumer Price Indices Technical Manual covers the concepts and methodologies underpinning the indices in more detail. The manual has been updated and a new version published on 18 September 2019.

The Consumer Prices Index including owner occupiers' housing costs (CPIH) Compendium provides a comprehensive source of information on CPIH, with a focus on the approach to measuring owner occupiers’ housing costs (OOH).

More quality and methodology information on strengths, limitations, appropriate uses, and how the data were created is available in the Consumer Price Inflation Quality and Methodology Information report.

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

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6. 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 that we currently publish and those that are under development. Specifically, they 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 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.

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7. More about consumer price inflation

Consultation on the use made of data on the formula effect in the Retail Prices Index: Table 35 of the consumer price inflation dataset.

Table 35 of the consumer price inflation dataset illustrates the effect of using the Jevons formula instead of the Carli formula in compiling the Retail Prices Index (RPI). The table was first published in March 2017 and shows the effect on the index, the 12-month rate and the one-month rate. The same data are also published as part of the consumer price inflation time series dataset with series identifiers CRFT, CRFU and CRFV. We are now considering stopping publication of these three series but before taking a final decision, we would welcome hearing about any ways in which the data are currently used. In short:

  • How is the formula effect published in Table 35 of the consumer price inflation tables used?
  • Would it cause you significant problems if we were to discontinue publishing the three series?

Responses should be emailed to cpi@ons.gov.uk.

These are not the formula effect series, which are published as part of the reconciliation of CPIH with RPI and CPI with RPI in Table 5 of the consumer price inflation dataset. Those series will continue to be published.

Correspondence with the Bank of England about pre-release access
Letters | Released February 2018 to December 2019
Exchange of letters requesting exceptional pre-release access so that data are available for discussion at the Monetary Policy Committee (MPC). The Bank of England was granted exceptional pre-release access to an estimate of consumer price inflation data at 8:30am on Monday 16 December 2019 so that the data were available for the MPC meeting held on that day.

Consumer price inflation detailed briefing note
Article | Released 18 December 2019
Background briefing to the statistical bulletin.

Prices economic commentary
Article | Released 18 December 2019
Presents further analysis of producer prices, house prices and rental prices in addition to CPIH.

Users and uses of consumer price inflation statistics
Article | Released 25 July 2018
Information about the users and uses of consumer price inflation statistics and user experiences of these statistics. Additionally, information on the characteristics of the different measures of consumer price inflation in relation to potential use.

Consumer price inflation, updating weights: 2019
Article | Released 18 March 2019
An overview of the latest annual update of the relative weights of items used in compiling the UK consumer price inflation indices.

Consumer price inflation basket of goods and services: 2019
Article | Released 11 March 2019
The review process for the items making up the inflation basket used to calculate the UK consumer price inflation indices and the changes in the latest year.

Explaining the contribution to change in the 12-month rate (PDF, 38KB)
Infographic | Released 2013
An explanation of 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 depend 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 inflation rate even if it fell, provided that it fell by less than it did between the same two months a year ago.

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8. You might also be interested in

Producer price inflation, UK
Bulletin | Released 18 December 2019
Changes in the prices of goods bought and sold by UK manufacturers including price indices of materials and fuels purchased (input prices) and factory gate prices (output prices).

UK House Price index
Bulletin | Released 18 December 2019
Monthly house price inflation in the UK, calculated using data from HM Land Registry, Registers of Scotland, and Land and Property Services Northern Ireland.

Index of Private Housing Rental Prices
Bulletin | Released 18 December 2019
An experimental price index tracking the prices paid for renting property from private landlords in the UK.

Advisory panels for Consumer Price Statistics
Reports, papers and minutes | 2015 to 2019
Reports, papers and minutes of the two independent advisory panels on consumer price statistics: a technical panel to advise the National Statistician on technical aspects of the statistics; and a stakeholder panel to provide advice on the uses and applications of price indices.

Consumer price inflation item indices and price quotes
Dataset | Released 18 December 2019
The individual price quotes (for locally collected items only) and item indices that underpin the consumer price statistics.

Harmonised Index of Consumer Prices
Dataset | Released 18 December 2019
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.

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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 9.45am on release day): + 44 (0)800 0113703