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Statistical bulletin: Consumer Price Inflation, February 2013 This product is designated as National Statistics

Released: 19 March 2013 Download PDF

Key points

  • As pre-announced by the National Statistician, ONS is launching two new measures of consumer price inflation alongside the Consumer Prices Index (CPI) for the first time this month; CPIH includes owner occupiers’ housing costs and RPIJ is an improved variant of the Retail Prices Index (RPI) calculated using formulae that meet international standards. CPIH and RPIJ are currently designated as experimental statistics and are being assessed for National Statistics status.
  • While ONS will continue to publish the RPI every month, its designation as a National Statistic has been cancelled. Please see background note 1 for more details.
  • The Consumer Prices Index (CPI) grew by 2.8% in the year to February 2013, up from 2.7% in January 2013. The change in the rate follows four consecutive months when it stood at 2.7%.
  • The largest upward contributions to the CPI came from the expected increases in many gas and electricity bills and from price changes for some recreational goods, motor fuels and air transport.
  • The largest downward contributions came from smaller price increases for food and soft drinks than a year ago and price falls for alcohol compared with price rises a year ago.
  • CPIH, the new measure of consumer price inflation including owner occupiers’ housing costs, grew by 2.6% in the year to February 2013, up from 2.5% in January.
  • The format of this bulletin has changed. Please see the ‘Guide to Data’ section of the bulletin for further information on where to find all ONS consumer price statistics. ONS welcomes user comments on the new format and the new CPIH and RPIJ measures.

A brief description of Consumer Price Inflation

Consumer price inflation is the speed at which the prices of the goods and services bought by households rise or fall. Consumer price inflation is estimated by using price indices. One way to understand a price index is to think of a very large shopping basket containing all the goods and services bought by households. The price index estimates changes to the total cost of this basket. Most ONS price indices are published monthly.

A price index can be used to measure inflation in a number of ways. The most common is to look at how the index has changed over a year. This is calculated by comparing the price index for the latest month with the same month a year ago. This is known as the 12-month inflation rate. This bulletin measures inflation to February 2013, so the 12-month rate measures changes in prices between February 2012 and February 2013.

ONS publishes a range of measures of consumer price inflation. For further information see this article.

Consumer Prices Index (CPI)

What is the 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 also used for purposes such as uprating pensions, wages and benefits and can aid in the understanding of inflation on family budgets. For more information on the uses of the CPI see this article.

Latest Figure and Long-Term Trend

The CPI 12-month rate (the amount prices change over a year) between February 2012 and February 2013 stood at 2.8%. This means that a basket of goods and services that cost £100.00 in February 2012 would have cost £102.80 in February 2013.

This rate is slightly higher than the 2.7% recorded for four consecutive months from October 2012 to January 2013. Looking over the longer term, the CPI 12-month rate has remained broadly level since spring 2012. This follows four years during which the rate of inflation fluctuated considerably.

Figure A below shows the CPI 12-month rate over the last ten years. Table A below shows the CPI 1-month (the amount prices change between two consecutive months) and 12-month rates and index values for the last year.

Figure A: CPI 12-month rate for the last ten years: February 2003 to February 2013

United Kingdom

This chart shows the percentage changes over 12 months from February 2003 to February 2013
Source: Office for National Statistics

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Table A: CPI index values, 1-month and 12-month inflation rates: February 2012 to February 2013

United Kingdom

 
    Index 1 (UK, 2005 = 100) 1-month rate 12-month rate
2012 Feb 121.8 0.6 3.4
Mar 122.2 0.3 3.5
Apr 122.9 0.6 3.0
May 122.8 -0.1 2.8
Jun 122.3 -0.4 2.4
Jul 122.5 0.1 2.6
Aug 123.1 0.5 2.5
Sep 123.5 0.4 2.2
Oct 124.2 0.5 2.7
Nov 124.4 0.2 2.7
Dec 125.0 0.5 2.7
2013 Jan 124.4 -0.5 2.7
  Feb 125.2 0.7 2.8

Table source: Office for National Statistics

Table notes:

  1. All items Consumer Prices Index.

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Consumer Prices Index (CPI): What are the main movements?

This section explains which goods and services had the biggest impact on the change to the 12-month rate between January and February 2013.

The change in the CPI 12-month rate is calculated by comparing the price changes between the latest two months and the same two months a year ago. For an explanation of the calculation see this diagram.

The CPI rose by 0.7% between January and February 2013 compared with a rise of 0.6% between the same two months in 2012. The 1-month movement was therefore 0.1 percentage points higher this year and this led to the CPI 12-month rate rising from 2.7% in January to 2.8% in February.

The largest upward contributions to the change in the CPI 12-month rate between January and February 2013 came from price movements for:

  • housing & household services: prices, overall, rose by 0.5% between January and February 2013, compared with a fall of 0.3% between the same two months in 2012. Most of the upward contribution came from the anticipated rises in many gas and electricity bills in February 2013 compared with price reductions in February 2012.

  • recreation & culture: prices, overall, rose by 0.5% compared with a fall of 0.2% a year ago. The main upward contributions came from rises in the prices of games, toys & hobbies (particularly computer games) and photographic equipment. This compares with price falls a year ago.

  • transport: prices, overall, rose by 1.2% compared with a smaller rise of 0.6% a year ago. The upward effect came predominantly from air fares and rises in the price of motor fuels. Air fares rose by 9.2% this year compared with a 1.6% fall a year ago with the main upward contribution coming from European routes. Petrol prices rose by 4.0 pence per litre between January and February 2013 compared with a rise of 1.9 pence per litre a year earlier. Diesel prices rose by 3.7 pence per litre in 2013 compared with a rise of 1.4 pence per litre a year earlier.

The largest downward contributions to the change in the CPI 12-month rate between January and February 2013 came from price movements for:

  • food & non-alcoholic beverages: prices, overall, rose by 0.7% between January and February compared with a larger rise of 1.2% between the same two months in 2012. A downward contribution came from sugar, jam, syrups, chocolate & confectionery, where prices fell this year but rose a year ago, particularly for bags of sweets and chocolate. There was also a downward effect from mineral waters, soft drinks & juices where prices rose by less in 2013 than 2012 due to sales of fruit squash and fruit drink in February 2013.

  • alcoholic beverages & tobacco: prices, overall, fell by 0.5% compared with a rise of 0.8% a year ago. The downward effect came from wines and spirits, where there were price reductions on whisky and vodka in many shops in February 2013 compared with recoveries in February 2012 following sales periods.

  • miscellaneous goods & services: prices, overall, rose by 0.1%, less than the 0.6% rise between January and February 2012. The downward contribution came from a number of categories, the most significant being jewellery, clocks & watches.

Figure B below shows the contributions to change from each part of the CPI basket of goods and services.

Figure B: Contributions to the change in the CPI 12-month rate: February 2013

United Kingdom

This chart shows the contributions that attribute to the one month change
Source: Office for National Statistics

Notes:

  1. Individual contributions may not sum to the total due to rounding.

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Other measures of Consumer Price Inflation

CPIH

CPIH is a new measure of UK consumer price inflation that includes owner occupiers’ housing costs (OOH). These are the costs associated with owning, maintaining and living in one’s own home. CPIH uses an approach called rental equivalence to measure OOH. Rental equivalence uses the rent paid for an equivalent house as a proxy for the costs faced by an owner occupier. In other words this answers the question “how much would I have to pay in rent to live in a home like mine?” for an owner occupier. OOH currently accounts for just over 12% of the expenditure weight of CPIH. This is slightly higher than its estimated weight in previous years.

Currently, the method of calculation, the population coverage and the basket of goods and services are the same as the Consumer Prices Index (CPI), with the exception of OOH. The method of deriving the weights for CPIH and the data used for these are also the same as for CPI, with the exception of OOH. This can result in some differences from the CPI.

CPIH is currently designated as an experimental statistic and is being assessed for National Statistics status. The assessment is expected to be completed by the summer of 2013. For further information on CPIH see this article.

In February 2013 the 12-month rate (the rate at which prices increased between February 2012 and February 2013) for CPIH stood at 2.6%, up from 2.5% in January 2013.

The difference between the CPI and CPIH annual rates in February 2013 was 0.2 percentage points, the same as in January. Owner occupiers' housing costs were little changed between January and February 2013, and also between January and February 2012. Thus they had a negligible impact on the change in the overall CPIH figure between the two months.

Figure C below shows the CPIH and OOH component 12-month rates since January 2006 (the earliest date for which CPIH inflation can be calculated). The CPI 12-month rate has been included for comparative purposes. Table B below shows the CPIH and OOH component 12-month rates and index numbers for the last year.

Figure C: CPI, OOH component and CPI 12-month rates since January 2006

United Kingdom

This chart shows the contributions to the 12 month rate.
Source: Office for National Statistics

Notes:

  1. The time series for this chart will be gradually increased up to a time span of ten years as more periods of data become available.

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Table B: CPIH and OOH component index values, 1-month and 12-month rates

United Kingdom

    CPIH Index 1 (UK, 2005 = 100) OOH Index 1 (UK, 2005 = 100) CPIH 1-month rate OOH 1-month rate CPIH 12-month rate OOH 12-month rate
2012 Feb 120.1 106.1 0.5 0.0 3.2 1.3
Mar 120.5 106.2 0.3 0.1 3.3 1.3
Apr 121.1 106.2 0.5 0.1 2.9 1.2
May 121.1 106.3 0.0 0.1 2.6 1.2
Jun 120.6 106.4 -0.4 0.1 2.4 1.2
Jul 120.8 106.5 0.1 0.1 2.5 1.1
Aug 121.3 106.6 0.5 0.1 2.4 1.1
Sep 121.7 106.6 0.3 0.1 2.1 1.1
Oct 122.3 106.7 0.5 0.1 2.5 1.0
Nov 122.5 106.9 0.2 0.1 2.5 1.0
Dec 123.0 107.0 0.4 0.1 2.5 1.0
2013 Jan 122.5 107.2 -0.4 0.2 2.5 1.0
Feb 123.2 107.2 0.6 0.0 2.6 1.0
               

Table source: Office for National Statistics

Table notes:

  1. CPIH is currently designated as an experimental statistic.

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Retail Prices Index (RPI) and RPIJ

In accordance with the Statistics and Registration Service Act 2007, the Retail Prices Index and its derivatives have been assessed against the Code of Practice for Official Statistics and found not to meet the required standard for designation as National Statistics. A full report can be found on the UK Statistics Authority website.


The RPI is a long-standing measure of UK inflation that has historically been used for a wide range of purposes such as the indexation of pensions and rents and index-linked gilts. For further information on current and historic uses of the RPI please see this article.


RPIJ is an improved variant of the Retail Prices Index (RPI) which is calculated using formulae that meet international standards. The primary purpose of RPIJ is to enable users of the RPI to understand the impact the use of the Carli formula (which does not meet international standards) has on the RPI inflation rate.


RPIJ is currently designated as an experimental statistic and is being assessed for National Statistics status. The assessment is expected to be completed by the summer of 2013. For further information on RPIJ please see this article.


In February 2013, the 12-month rate (the rate at which prices increased between February 2012 and February 2013) for RPIJ stood at 2.6%, down from 2.7% in January 2013. The RPI 12-month rate for February stood at 3.2%, meaning that it was 0.6 percentage points higher than it would have been had it used formulae that meet international standards.


Figure D below shows the RPI and RPIJ 12-month rates for the last ten years. Over this period the RPIJ 12-month rate has been on average 0.4 percentage points lower than the RPI. Cumulatively, inflation as measured by the RPI is 38.1% over this period, compared with 31.9% as measured by the RPIJ. The use of the Carli formula has therefore added 6.2 percentage points to the change in prices over the last ten years.


Table C shows the RPI and RPIJ 12-month rates and index numbers over the last year.

Figure D: RPI and RPIJ 12-month rates for the last ten years: February 2003 to February 2013

United Kingdom

chart
Source: Office for National Statistics

Notes:

  1. The contents of this chart fall outside the scope of National Statistics. The RPI has been de-designated as a National Statistic and RPIJ is currently designated as an experimental statistic.

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Table C: RPI and RPIJ 12-month rates and index values

United Kingdom

    RPI Index 1 (UK, 1987 = 100) RPIJ Index 1 (UK, 1987 = 100) RPI 12-month rate RPIJ 12-month rate
2012 Feb 239.9 225.8 3.7 3.1
Mar 240.8 226.5 3.6 3.0
Apr 242.5 227.9 3.5 2.8
May 242.4 227.8 3.1 2.4
Jun 241.8 227.1 2.8 2.2
Jul 242.1 227.4 3.2 2.5
Aug 243.0 228.2 2.9 2.3
Sep 244.2 229.2 2.6 2.0
Oct 245.6 230.5 3.2 2.6
Nov 245.6 230.5 3.0 2.4
Dec 246.8 231.5 3.1 2.5
2013 Jan 245.8 230.6 3.3 2.7
Feb 247.6 231.7 3.2 2.6
           

Table source: Office for National Statistics

Table notes:

  1. The contents of this table fall outside the scope of National Statistics. The RPI has been de-designated as a National Statistic and RPIJ is currently designated as an experimental statistic.

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For users who want to understand the causes of the difference between the CPI and RPI, please see Table 5 in the Consumer Price Inflation Reference Tables of the February Release on the ONS website.

Guide to Data

The table below outlines where data for all Consumer Price Inflation statistics can be found.

Table D: Guide to Data

  Statistical Bulletin Detailed Briefing Note Reference Tables (Excel Format) Time Series Dataset
CPI H, T, D H, D H, T, D T, D
CPIY   H H, T T
CPI-CT   H H, T T
CPIH1 H, T, D H H, T, D T, D
CPIHY1   H H, T T
RPIJ1 H, T H H, T T
RPI2 H, T H, D H, T, D T, D
RPIX2   H H, T T
RPIY2   H H, T T
SARPIY2   H H, T T
TPI2   H H, T T
RPI Pensioner Indices2     H, T T
International Comparisons     H, T T

Table source: Office for National Statistics

Table notes:

  1. H = Latest Headline figues.

    D = Detailed data (including disaggregations).

    T = Time series data.

    1 = These statistics are currently designated as experimental statistics.

    2 = These statistics are not national statistics.

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Background notes

  1. Launch of new CPIH and RPIJ measures of consumer price inflation and the de-designation of RPI as a national statistic

    Following a number of years of development, ONS is launching a new measure of consumer price inflation, to be known as CPIH, incorporating owner occupiers’ housing costs (OOH). OOH are the costs associated with owning, maintaining and living in one’s own home. CPIH uses an approach called rental equivalence to measure OOH. Rental equivalence uses the rent paid for an equivalent house as a proxy for the costs faced by an owner occupier. In other words this answers the question “how much would I have to pay in rent to live in a home like mine?” for an owner occupier. Currently, the method of calculation, the population coverage and the basket of goods and services are the same as the Consumer Prices Index (CPI), with the exception of OOH. The method of deriving the weights for CPIH and the data used for these are also the same as for CPI, with the exception of OOH. This can result in some differences from the CPI.

    CPIH is currently designated as an experimental statistic and is being assessed for National Statistics status. The assessment is expected to be completed by the summer of 2013. For further information on CPIH see this article.

    Following a research programme conducted by ONS and a public consultation in late 2012, the National Statistician concluded that one of the formulae (known as the Carli) used to calculate the RPI does not meet international standards. Therefore an improved variant of the RPI called RPIJ will be published where the use of the Carli has been replaced by the use of the geometric mean (also known as the Jevons formula). This will aid current users of the RPI in understanding the impact of the Carli formula on the RPI inflation rate.

    RPIJ is currently designated as an experimental statistic and is being assessed for National Statistics status. The assessment is expected to be completed by the summer of 2013. For further information on RPIJ please see this article.

    In developing her recommendations, the National Statistician also noted that there is significant value to users in maintaining the continuity of the existing RPI’s long time series, without any major change, so that it may continue to be used for long-term indexation and for index-linked gilts and bonds in line with user expectations. The UK Statistics Authority accepted this recommendation.

    In accordance with the Statistics and Registration Service Act 2007, the Retail Prices Index and its derivatives have been assessed against the Code of Practice for Official Statistics and found not to meet the required standard for designation as National Statistics. A full report can be found on the UK Statistics Authority website.

  2. Weights

    In line with usual practice, the February 2013 indices include the planned updates to the higher level RPI weights, and to the CPI and RPI item weights. CPIH and RPIJ also use equivalent updated weights.

  3. Next month

    Inflation for March 2012 to March 2013 will be published on 16 April 2013.

  4. Methodology

    The CPI, CPIH, RPIJ and RPI are compiled using the same underlying price data, based on a large and representative selection of almost 700 individual goods and services for which price movements are measured in around 150 randomly selected areas throughout the UK. Around 180,000 separate price quotations are used every month to compile the indices. The outlets in which the prices are collected are selected randomly. Expenditure weights are held constant for one year at a time.


    The selection of goods and services that are priced to compile these indices is reviewed annually. The contents of the 2013 basket are described in an article Consumer Prices Index and Retail Prices Index: the 2013 Basket of Goods and Services. The expenditure weights used to compile the indices are also updated each year. Additional details of the updated weights for 2012 are available from the National Statistics website in an article published on 24 April 2012 entitled Consumer Prices Index and Retail Prices Index: Updating Weights for 2012. More information on the weights for 2013 will be published in April 2013.


    Rates of change for the CPI and CPIH are calculated from unrounded index levels, rather than from the published indices, which are rounded to one decimal place. The use of unrounded indices increases the accuracy of the calculation. The unrounded index levels for the CPI are available on request. By contrast, rates of change for the RPI and RPIJ are calculated from the published rounded indices.

  5. Reliability

    CPI indices are revisable although the only time the CPI all items index has been revised was when the index was re-referenced to 2005=100, which took place with the publication of the January 2006 indices.


    This is the first month for which CPIH and RPIJ indices have been published.

    Once the RPI indices are published they are never revised.

  6. Comparability

    The CPI’s coverage of goods and services was extended in stages in the areas of health, education, childcare and insurance, with effect from the January 2000, 2001 and 2002 indices. In 2000, there was also a change to the population basis for the weights which was broadened from private households to include expenditure by foreign visitors and residents of institutional households. Further details can be found in a series of articles in the CPI methodology section of the Office for National Statistics website.

    The official CPI series starts in 1996 but estimates for earlier periods are available back to 1988.These estimates are broadly consistent with data from 1996 but should be treated with some caution. An article about historical estimates provides more detail.

    The CPIH’s coverage of goods and services is currently the same as the CPI’s, with the addition of a measure of owner occupiers’ housing costs. A historical backseries is available back to 2005. Further details can be found in this article.

    RPI data are available back to 1947 but have been re-referenced on several occasions since then, generally accompanied by changes to the coverage and/or structure of the detailed sub-components. Details of these changes are given in Appendices 1 and 2 of the Consumer Price Indices Technical Manual.

    RPIJ data are available back to 1997. Further details can be found in this article.

  7. Other measures of inflation – main uses and methodological details

    Detailed explanations of the main uses and methodology used to construct the RPI and how it differs from the CPI can be found in Chapter 9 of the Consumer Price Indices Technical Manual. More information on CPIH and RPIJ can be found in the articles linked above. Information on those measures will be added to the Technical Manual when it is next updated. This article 'How ONS consumer price statistics are used' provides further details of how consumer price statistics are used more generally.

  8. Accessibility

    The most efficient way to access the latest consumer price inflation data and briefing on the ONS website is via the CPI key figure on the homepage.

    In response to user feedback, all consumer price inflation data is available in one location. These Reference Tables are provided via an excel file.

    To further help users, very detailed CPI data are now available including the individual price quotes and item indices that underpin the CPI. Please note that the data that are published are at a level which means that no individual retailer or service provider will be able to be identified. Previously the data published covered January 1996 to September 2012. The data for October to December 2012 are also now available. These data are updated once a quarter with around a two month lag with the latest CPI publication. For example, the data will next be updated when the May CPI is published on 18 June 2013, at which point the detailed data published will be extended to March 2013.

    This bulletin includes the February 2013 data, collected on 12 February 2013. Future publication dates (43.6 Kb Pdf) for this Statistical Bulletin are available to January 2014.

    The European Commission (Eurostat) released figures for the Harmonised Index of Consumer Prices (HICP) for the month of February 2013 for EU Member States, together with an EU average, on 15 March 2013. Further information on HICP for the European Union, Eurozone and other EU Member States is available from Eurostat's HICP web page.

  9.  Further information

    A more detailed quality report for this statistical bulletin is available. The report assesses consumer price inflation statistics against standard dimensions of quality such as relevance, accuracy and accessibility. The report was last updated in December 2011.


    The mini Triennial Review of the CPI and RPI Central Collection of Prices is available.

    A full description of how consumer price indices are compiled is given in the Consumer Price Indices Technical Manual.

    Further information on consumer price inflation statistics, including details of the methodology used to construct the indices, articles, historic data etc. is available on the Consumer Price Indices Taxonomy page.

  10. General

    Details of the policy governing the release of new data are available from the Media Relations Office. Also available is a list of the names of those given pre-release access (407.3 Kb Pdf) to the contents of this release.


    Bank and Treasury officials were informed at 5pm on the Friday before publication that an open letter was not needed this month between the Governor of the Bank of England and the Chancellor of the Exchequer.

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    Andrew Dilnot, Chair of the UK Statistics Authority, reported to the House of Commons Public Administration Select Committee in September 2012 that, once the current price indices work programme had concluded, the Authority would undertake a wider review of the governance arrangements and structures supporting the production of price indices to ensure that these statistics best meet user needs in the future.

    Accordingly, once the National Statistician’s recommendations have been implemented in March 2013, the Authority will appoint an independent expert to lead this broader review, and to report to the Board of the Authority. The Authority will publish a further statement about the review in due course.

    As with all National and candidate National Statistics, the new suite of inflation statistics (CPIH, its derivatives and RPIJ) will be subject to independent assessment by the Authority under the supervision of the Authority’s Head of Assessment. The Board of the Authority has asked for this statutory assessment to be completed by summer 2013.

    Once statistics have been designated as National Statistics it is a statutory requirement that the Code of Practice shall continue to be observed.

  11. Media contact:
    Tel:  Luke Croydon   + 44 (0) 845 6041858
    Emergency on-call    + 44 (0) 7867 906553
    Email:  media.relations@ons.gsi.gov.uk

    Statistical contact:
    Tel:  Philip Gooding +44 (0) 1633 455896
    Email:  philip.gooding@ons.gsi.gov.uk 
    Email:  cpi@ons.gsi.gov.uk

    CPI/RPI recorded message (available after 9.45am on release day): 
    Tel: + 44 (0) 1633 456961

    CPI/RPI Enquiries:
    Tel: + 44 (0) 1633 456900

  12. Details of the policy governing the release of new data are available by visiting www.statisticsauthority.gov.uk/assessment/code-of-practice/index.html or from the Media Relations Office email: media.relations@ons.gsi.gov.uk

    These National Statistics are produced to high professional standards and released according to the arrangements approved by the UK Statistics Authority.

Statistical contacts

Name Phone Department Email
Philip Gooding +44 (0)1633 455896 Prices, ONS cpi@ons.gsi.gov.uk
Get all the tables for this publication in the data section of this publication .
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