The headline rate of inflation remained unchanged for the third month in a row. The Consumer Prices Index (CPI) showed that prices increased by 2.7% in the year ending December 2012, this is the same annual rate as was seen the previous two months and continues the trend of, broadly, flat inflation that has been seen since Spring 2012.
Whilst inflation remained unchanged overall, there were some movements at the more detailed level. Utility bills provided the biggest upwards push on the figures with the anticipated price increases from a number of the utility companies entering the index this month. Counterbalancing this, transport costs (in particular air fares) pushed inflation back down, with the rise in the cost of flights in December only half of what they were a year ago, and fuel prices continuing to fall.
The long-running Retail Prices Index (RPI) – which includes some housing costs not included in the CPI and excludes expenditure by the richest and poorest - showed that prices increased by 3.1% in the year ending December – up from 3.0%. This difference was primarily due to mortgage interest payments and other housing costs which are excluded from the CPI.
Looking ahead, a new measure of consumer price inflation (which will initially be known as CPIH) including owner occupiers’ housing costs will be launched in March 2013. Additionally, a new RPI-based index using a geometric formulation (known as the Jevons formula) will also be launched in March. This index will be known as RPIJ.
Source: Office for National Statistics
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