Consumer price inflation, UK: October 2019

• The Consumer Prices Index including owner occupiers’ housing costs (CPIH) 12-month inflation rate was 1.5% in October 2019, down from 1.7% in September 2019.

• The largest downward contribution to change in the CPIH 12-month inflation rate, between September and October 2019, came from electricity, gas and other fuels as a result of changes to the energy price cap.

• Further downward contributions from furniture, household equipment and maintenance; and recreation and culture, were partially offset by rises in clothing and footwear prices.

• The Consumer Prices Index (CPI) 12-month inflation rate was 1.5% in October 2019, down from 1.7% in September 2019.

CPIH 12-month inflation rate

The Consumer Prices Index including owner occupiers’ housing costs (CPIH) 12-month inflation rate was 1.5% in October 2019, down from 1.7% in September 2019.

The Consumer Prices Index (CPI) 12-month inflation rate was 1.5% in October 2019, down from 1.7% in September 2019.

Table 1 presents the index numbers and inflation rates for the CPIH, CPI and owner occupiers’ housing costs (OOH) component of the CPIH.

Figure 1 compares the 12-month inflation rates for the CPIH, CPI and OOH component of the CPIH. Given that OOH account for around 17% of the 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, the prices of electricity, gas and other fuels fell by 2.0% in the year to October 2019 and made a negative contribution of 0.05 percentage points to the headline rate. In October 2019, the Office of Gas and Electricity Markets (Ofgem) changed the energy price cap, which meant that energy prices fell by 4.4% between September and October 2019 but increased by 2.3% between the same two months a year ago. However, this was more than offset by positive contributions from owner occupiers’ housing costs (OOH) (a 0.19 percentage point contribution), and Council Tax and rates (a 0.12 percentage point contribution), resulting in the contribution from housing and household services to the overall rate falling to 0.34 percentage points, from 0.52 percentage points in September. The size of the contribution to the CPIH 12-month inflation rate from the division has fallen since May 2019 as a result of fluctuating contributions from electricity, gas and other fuels.

There was also a large upward contribution (of 0.31 percentage points) to the CPIH 12-month inflation rate from restaurants and hotels, where prices rose in the year to October 2019 by 3.2%.

The contribution to the CPIH 12-month inflation rate from transport increased for the first time since April 2019. Since April, transport’s contribution to the 12-month inflation rate has reduced from 0.56 percentage points as a result of falling contributions from fuels and lubricants; and transport services. Its contribution fell to 0.07 percentage points in September 2019 before rising to 0.09 percentage points in October 2019. This month’s increase in contribution was a result of larger contributions from transport services (in particular from air, sea and rail fares), where prices overall increased by 3.6% in the year to October 2019. The contribution from motor fuels in October 2019 was negative for the third month in a row and increased in magnitude, reflecting a 3.3% fall on the year in pump prices.

In October 2019, clothing and footwear produced a small upward contribution (of 0.03 percentage points) with prices rising by 0.5% in the year. This means that all divisions produced upward contributions to the CPIH 12-month inflation rate. However, its contribution has been negative for most months since September 2018.

Contributions to change in 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 September and October 2019. The corresponding figures for the Consumer Prices Index (CPI) can be found in column F of Table 26 in the Consumer price inflation dataset.

The largest downward contribution (of 0.18 percentage points) to the change in the CPIH 12-month inflation rate came from housing and household services. This can be fully attributed to gas and electricity prices, which fell by 8.7% and 2.2%, respectively, between September and October 2019. This month’s downward movement partially reflected the response from energy providers to the Office of Gas and Electricity Markets’ (Ofgem’s) six-month energy price cap, which came into effect from 1 October 2019. Gas and electricity prices had both risen by 2.0% between the same two months a year ago.

There was a large downward contribution (of 0.06 percentage points) to the change in the annual rate from furniture, household equipment and maintenance. This reverses the upward contribution of 0.06 percentage points seen between August and September 2019. Prices overall for furniture, household equipment and maintenance fell by 1.1% between September and October this year compared with a fall of 0.1% a year ago.

Overall, there was a large downward contribution (of 0.04 percentage points) from recreation and culture, where prices rose between September and October 2019 but by less than a year ago. The main downward contribution came from games, toys and hobbies (specifically from computer game consoles and toy vehicles); books; and cultural services, which were partially offset by a small upward contribution from late-booked package holidays, where prices rose by more than a year ago.

There was a small downward contribution from food and non-alcoholic beverages. Most of this downward movement came from vegetables (including potatoes) and fruit where prices fell this year but rose a year ago. There were small, partially offsetting upward movements across the food division and from non-alcoholic beverages, where prices overall fell by less than a year ago.

The largest upward contribution to the change in the CPIH 12-month inflation rate came from clothing and footwear, which contributed 0.08 percentage points. Across the division, the largest movements came from ladies’ clothes and footwear, where prices rose this year compared with falls a year ago. The only two standout items were ladies’ formal trousers and branded trainers.

Overall, there was a small upward contribution (of 0.02 percentage points) from transport, where upward movements from air, sea and rail fares and new cars were partially offset by a downward movement from fuels and lubricants. Petrol prices fell by 0.8 pence per litre, between September and October 2019, to stand at 126.5 pence per litre while diesel prices fell to 131.4 pence per litre – a fall of 0.4 pence per litre. Last year, petrol and diesel prices had risen by 0.4 and 1.8 pence per litre, respectively, between the same two months.

Finally, there was a small upward movement from alcoholic beverages with upward contributions coming from bottles of whisky, vodka and lager, where prices rose this year but fell a year ago. These movements were partially offset by a small downward movement from sparkling wine, where prices fell this year but rose a year ago.  

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 over the last year and was the largest contribution to the CPIH 12-month inflation rate from all the housing and household services categories for the majority of months of 2019, including September.

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 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 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, but the contribution increased in April 2019 as energy providers responded to the latest change in the price cap. This month, the contribution to the CPIH annual inflation rate from electricity, gas and other fuels became negative reflecting the response from energy providers to Ofgem’s six-month energy price cap, which came into effect from 1 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.

Consumer price inflation tables
Dataset | Released 13 November 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 13 November 2019
Comprehensive database of time series covering measures of inflation data for the UK including the CPIH, CPI and RPI.

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 inflation 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 of these 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. 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.

The CPI is produced at the same level of detail as the CPIH, in the accompanying dataset and 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 and an at-a-glance comparison with other measures, please see the time series section of the inflation and price indices area of our website.

The 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 Prices 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 the CPIH, with a focus on the approach to measuring owner occupiers’ housing costs (OOH).

The Consumer Price Inflation Quality and Methodology Information (QMI) report contains important information on:

• the strengths and limitations of the data and how it compares with related data
• the users and uses of the data
• how the output was created
• the quality of the output including the accuracy of the data

The figures in this publication use data collected on or around 8 October 2019.

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 RPI as a measure of inflation, released on 8 March 2018, describes the issues with the RPI.

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

Table 35 of the consumer price inflation tables 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 inflation rate and the one1-month inflation 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 sent emailed to cpi@ons.gov.uk.

These are not the formula effect series, which are published as part of the reconciliation of the Consumer Prices Index including owner occupiers’ housing costs (CPIH) with RPI and the Consumer Prices Index (CPI) with RPI in Table 5 of the consumer price inflation tables. Those series will continue to be published.

Consumer price inflation detailed briefing note
Article | Released 13 November 2019
Background briefing to the statistical bulletin.

Prices economic commentary
Article | Released 13 November 2019
Further analysis of producer prices, house prices and rental prices in addition to the 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
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
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 depends on how prices changed between both the latest two months this year and the same two months last year. For example, the price of a product could make an upward contribution to the change in the rate even if it fell, provided that it fell by less than it did between the same two months a year ago.