Consumer price inflation, UK: September 2019

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

• The largest downward contributions to change in the CPIH 12-month inflation rate, between August and September 2019, came from motor fuels, second-hand cars, and electricity, gas and other fuels.

• These downward movements were offset by upward movements from furniture, household appliances, hotel overnight stays, and from recreation and culture items.

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

CPIH 12-month inflation rate

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

The Consumer Prices Index (CPI) 12-month rate was 1.7% in September 2019, unchanged from August 2019.

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

Figure 1 compares the 12-month inflation rates for the CPIH, CPI and OOH component of CPIH. Given that OOH accounts 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 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, with prices rising by 1.7% in the year to September 2019. Within the group, which contributed 0.52 percentage points to the overall rate, the largest contributions were from owner occupiers’ housing costs (a 0.18 percentage point contribution); electricity, gas and other fuels (a 0.13 percentage point contribution); and Council Tax and rates (a 0.12 percentage point contribution). The size of the contribution to the CPIH 12-month inflation rate from housing and household services has fallen since May 2019 as a result of smaller contributions from electricity, gas and other fuels. In April 2019, the Office of Gas and Electricity Markets (Ofgem) changed the energy price cap, which meant that energy prices have changed little since April 2019 but rose during the corresponding months of 2018.

There was also a large upward contribution to the CPIH 12-month inflation rate from restaurants and hotels, where prices rose in the year to September 2019 by 3.2%.

The contribution from transport has fallen since April 2019 meaning it no longer provides one of the larger contributions to the CPIH 12-month inflation rate. Having fallen to 0.07 percentage points, the contribution in September 2019 is practically one-tenth of the 0.68 percentage point contribution transport had in September 2018. Within transport, the contribution from motor fuels in September is negative for the second month in a row, reflecting a fall in price of 2.1% on the year.

Clothing and footwear is the only division producing a downward contribution to the CPIH 12-month inflation rate. Except for a small upward contribution in July 2019, clothing and footwear has continued to have a negative effect on the CPIH 12-month inflation rate 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 CPIH 12-month inflation rate between August and September 2019. The corresponding figures for the CPI can be found in column F of Table 26 in the consumer price inflation dataset.

The largest downward contribution (of 0.09 percentage points) to change in the CPIH 12-month inflation rate came from transport. There was a downward contribution from motor fuels, where petrol prices fell by 1.0 pence per litre between August and September 2019 to stand at 127.3 pence per litre while diesel prices fell to 131.8 pence per litre – a fall of 0.8 pence per litre. Last year, petrol and diesel prices had risen by 1.7 and 1.5 pence per litre, respectively, between the same two months. There was a further large downward contribution from second-hand cars, where prices fell by 1.4% between August and September compared with a rise of 1.4% a year ago.

Within the transport division, transport services had no contribution to change in the CPIH 12-month inflation rate. However, the large upward contribution from sea fares, which fell in price between August and September 2019 but by less than a year ago, was entirely offset by air fares, whose seasonal price fall between August and September was larger this year than in 2018, and, to a lesser extent, international rail fares.

Domestic fuels provided a further large downward contribution in September 2019 despite prices being little changed since April 2019, under Ofgem’s energy price cap. Between August and September 2018, prices of electricity and gas had risen by 1.8% and 1.2%, respectively, resulting in this month’s downward contribution to change in the CPIH 12-month inflation rate.

These downward movements were entirely offset by upward movements, with the largest upward contribution (0.06 percentage points) coming from furniture, household equipment and maintenance. Prices overall for both furniture and furnishings, and major (household) appliances and small electric goods rose between August and September 2019 compared with prices falling between the same two months a year ago. There were upward movements from bedroom furniture, leather settees, vacuum cleaners and washing machines.

There was also a large upward contribution from restaurants and hotels. Within this category, the main effects came from accommodation services, with prices overall rising between August and September 2019 by more than they did a year ago.

Finally, there was a small upward movement from recreation and culture, with upward contributions coming from theatre and concert tickets and, to a lesser extent, from computer games, CDs, eBooks and foreign self-catering holidays. These were partially offset by downward movements across data processing equipment (including computers and their associated software and peripherals), where prices overall fell by 4.4% between August and September this year but rose by 1.5% between the same two months a year ago.

Owner occupiers’ housing costs

Figure 4 shows the contribution of OOH and Council Tax to the 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 inflation rate. The introduction of 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. Since then, the contribution has fallen back slightly as price rises observed during 2018 have not been repeated this year.

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 on 16 October 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 on 16 October 2019
Comprehensive database of time series covering measures of inflation data for the UK including 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: 2017 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 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 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, 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: 2017 gives an overview of consumer price statistics.

The Consumer Prices Indices Technical Manual, 2019 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 CPIH Compendium provides a comprehensive source of information on the Consumer Prices Index including owner occupiers’ housing costs (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 10 September 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 (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 Retail Prices Index 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 RPI: 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 1-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 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 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 the Retail Prices Index (RPI) and the Consumer Prices Index (CPI) with the 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 16 October 2019
Background briefing to the statistical bulletin.

Prices economic commentary
Article | Released 16 October 2019
Further analysis of producer prices, house prices and rental prices in addition to the CPIH.

Users and uses of consumer price inflation statistics: July 2018 update
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 inflation rate (PDF, 37.1KB)
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.