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Statistical bulletin: Consumer Price Inflation, January 2014 This product is designated as National Statistics

Released: 18 February 2014 Download PDF

Key points

  • 1.9% growth in Consumer Prices Index (CPI) in the year to January 2014, down from 2.0% in December 2013.
  • The fall in the rate resulted from price movements for recreational goods & services, furniture & household goods and alcoholic beverages & tobacco. These were partially offset by price movements for miscellaneous goods & services.
  • 1.8% growth in CPIH in the year to January 2014, down from 1.9% in December 2013. RPIJ grew by 2.1%, up from 2.0% in December 2013.

A brief description of Consumer Price Inflation

Consumer price inflation is the speed at which the prices of 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. ONS consumer 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 January 2014, so the 12-month rate measures changes in prices between January 2013 and January 2014.

ONS publishes a range of measures of consumer price and other price inflation. A tale of many price indices summarises information on the different measures. 

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 see 'Users and uses of consumer price inflation statistics'.

Latest Figure and Long-Term Trend

The CPI 12-month rate (the amount prices change over a year) between January 2013 and January 2014 stood at 1.9%. This means that a basket of goods and services that cost £100.00 in January 2013 would have cost £101.90 in January 2014. The latest CPI 12-month rate continues the recent trend which has seen inflation in the region of 2%. Inflation was last below the Government’s target of 2% in 2009 when the rate of growth fell as low as 1.1%.

Over the last five years, the three main contributors to the 12-month inflation rate have been food & non-alcoholic beverages, housing, water, electricity and gas & other fuels and transport (including motor fuels). Combined, these three sectors have, on average, accounted for over half of the 12-month inflation rate each month. While having a negligible impact on the change in the CPI 12-month rate in the year to January 2014, prices for Housing, Water, Electricity, Gas & Other Fuels accounted for around a quarter of inflation.

Figure A below shows the CPI 12-month rate over the last 10 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. A larger version of the chart can be viewed by clicking on it (HTML version only).

Figure A: CPI 12-month inflation rate for the last 10 years: January 2004 to January 2014

United Kingdom

Figure A: CPI 12-month inflation rate for the last 10 years: January 2004 to January 2014
Source: Office for National Statistics

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Table A: CPI index values, 1-month and 12-month inflation rates: January 2013 to January 2014

United Kingdom

  Index1 (UK, 2005 = 100) 1-month rate 12-month rate
2013 Jan 124.4 -0.5 2.7
Feb 125.2 0.7 2.8
Mar 125.6 0.3 2.8
Apr 125.9 0.2 2.4
May 126.1 0.2 2.7
Jun 125.9 -0.2 2.9
Jul 125.8 0.0 2.8
Aug 126.4 0.4 2.7
Sep 126.8 0.4 2.7
Oct 126.9 0.1 2.2
Nov 127.0 0.1 2.1
Dec 127.5 0.4 2.0
2014 Jan 126.7 -0.6 1.9

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 December 2013 and January 2014 and, where relevant, considers the longer-term inflationary trends for these goods and services.

The change in the CPI 12-month rate can be calculated by comparing the 12-month rates for two consecutive months. An alternative, and equally valid approach, is to calculate it by comparing the price change between the latest two months and the price change between the same two months a year ago. Explaining the contribution to change in the 12-month rate is a diagrammatic explanation of the calculation.

The CPI fell by 0.6% between December 2013 and January 2014, compared with a smaller fall of 0.5% between the same two months a year earlier. The 1-month movement was therefore 0.1 percentage points lower this year compared with last year. This led to the CPI 12-month rate falling from 2.0% in December 2013 to 1.9% in January 2014.

Compared to many months, the contributions to the change in the CPI 12-month rate between December 2013 and January 2014 were relatively small.

The largest downward contributions came from price movements for:

  • Recreation & culture: prices, overall, fell by more between December 2013 and January 2014 than between the same two months a year earlier. The downward contribution mainly came from price movements for recording media (notably DVD films) and recreational and cultural services. In the case of the latter, there was a notable contribution from admissions to cultural events – with decreases to the winter off-peak admission rates at a range of attractions. With the exception of a brief period in 2009-2010, inflation in the recreation & culture sector has been lower than overall consumer inflation over the last 10 years.

  • Furniture, household equipment & routine maintenance: prices, overall, fell by more between December 2013 and January 2014 than between the same two months a year earlier. The downward contribution came from price movements for a broad range of products across the sector.

  • Alcoholic beverages & tobacco: prices, overall, rose by less than a year ago, most notably for whisky where price recoveries following the Christmas period were smaller than a year ago.

The largest and only notable upward contribution came from price movements for:

  • Miscellaneous goods & services: prices, overall, fell by less between December 2013 and January 2014 than between the same two months a year earlier. The upward contribution mainly came from price movements for a range of personal care products (notably toothbrushes and baby wipes) and a range of insurance products.

Gas and electricity prices made very little contribution to the change in the CPI 12-month rate, with price rises and reductions resulting from the Energy Companies Obligation scheme largely cancelling each other out.

Figure B below shows the contributions from each part of the CPI basket of goods and services. A larger version of the chart can be viewed by clicking on it (HTML version only).

Figure B: Contributions to the change in the CPI 12-month rate: January 2014

United Kingdom

Figure B: Contributions to the change in the CPI 12-month rate: January 2014
Source: Office for National Statistics

Notes:

  1. Individual contributions may not sum to the total due to rounding.
  2. More information on the contents of each group can be found in table 3 at the end of the bulletin.

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CPIH

CPIH is a measure of UK consumer price inflation that includes owner occupiers’ housing costs (OOH). These are the costs of housing services associated with owning, maintaining and living in one’s own home. OOH does not include costs such as utility bills, minor repairs and maintenance which are already included in the index. 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 does not seek to capture increases in house prices. Although, this may be inconsistent with some users’ expectations of measures of OOH, the inclusion of an asset price and therefore capital gains makes the measure less suitable for a measure of consumption. OOH currently accounts for just over 16% of the expenditure weight of CPIH. This has increased notably from a weight of 10% in 2005.

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.

In January 2014, the 12-month rate (the rate at which prices increased between January 2013 and January 2014) for CPIH stood at 1.8%, down from 1.9% in December 2013.

The difference between the CPI and CPIH annual rates in January 2014 was 0.1 percentage points, unchanged from the difference in December 2013. Owner occupiers’ housing costs rose by 0.1% between December 2013 and January 2014, compared with a larger rise of 0.2% between the same two months a year earlier. The difference in one-month movements was not big enough for owner occupiers’ housing costs to contribute to the change in the CPIH 12-month rate.

Figure C below shows the CPIH and OOH component 12-month rates since January 2006 (the earliest date for which the CPIH 12-month rate can be calculated). The CPI 12-month rate has been included for comparative purposes. Table B below shows the CPIH and OOH component 1-month and 12-month rates and index values for the last year. A larger version of the chart can be viewed by clicking on it (HTML version only).

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

United Kingdom

Figure C: CPIH, OOH component and CPI 12-month rates since January 2006
Source: Office for National Statistics

Notes:

  1. The time series for this chart will be gradually increased up to a time span of 10 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    (UK, 2005 = 100) OOH Index   (UK, 2005 = 100) CPIH 1-month rate OOH 1-month rate CPIH 12-month rate OOH 12-month rate
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
Mar 123.6 107.2 0.3 0.1 2.6 1.0
Apr 123.8 107.3 0.2 0.1 2.2 1.0
May 124.0 107.4 0.2 0.1 2.5 1.0
Jun 123.8 107.5 -0.2 0.1 2.7 1.0
Jul 123.8 107.6 0.0 0.1 2.5 1.0
Aug 124.3 107.6 0.4 0.1 2.5 1.0
Sep 124.7 107.7 0.3 0.1 2.5 1.0
Oct 124.8 107.8 0.1 0.1 2.0 1.0
Nov 124.8 107.9 0.1 0.1 1.9 1.0
Dec 125.3 108.0 0.4 0.1 1.9 1.0
2014 Jan 124.7 108.2 -0.5 0.1 1.8 0.9

Table source: Office for National Statistics

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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. The full assessment 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, rents and index-linked gilts. For further information see 'Users and uses of consumer price inflation statistics'.

RPIJ is an improved variant of the Retail Prices Index, which is calculated using formulae that meet international standards. The rationale for creating RPIJ was to give users a better alternative to the RPI if their needs were for a measure of inflation based on the same population, classifications, weights etc as the RPI. Currently, RPIJ also acts as an analytical series, in that it allows users to see the impact of using the Jevons (which meets international standards) in place of the Carli formula (which does not meet international standards) in the RPI. The use of the different formulae at the elementary aggregate level is currently the only difference between the two indices. ONS does not produce detailed goods and services indices for RPIJ.

In January 2014, the 12-month rate for RPIJ stood at 2.1%, up from 2.0% in December 2013 and notably lower than the rate seen through the first three quarters of 2013. Although their inflation rates have diverged slightly this month CPIH and RPIJ continue to track each other closely as they have done for the last two years.

The RPI 12-month rate for January 2014 stood at 2.8%, meaning that it was 0.7 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 10 years. Over this period the RPIJ 12-month rate has been, on average, 0.5 percentage points lower than the RPI. Cumulatively, inflation as measured by the RPI is 38.0% over this period, compared with 31.5% as measured by the RPIJ. The use of the Carli formula has therefore added 6.5 percentage points to the change in prices over the last 10 years. A larger version of the chart can be viewed by clicking on it (HTML version only).

Table C shows the RPI and RPIJ 1-month and 12-month rates and index values for the last year.  

Figure D: RPI and RPIJ 12-month rates for the last 10 years: January 2004 to January 2014

United Kingdom

Figure D: RPI and RPIJ 12-month rates for the last 10 years: January 2004 to January 2014
Source: Office for National Statistics

Notes:

  1. The RPI has been de-designated as a National Statistic.

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Table C: RPI and RPIJ index values, 1-month and 12-month rates

United Kingdom

  RPI Index 1 (UK, 1987 = 100) RPIJ Index     (UK, 1987 = 100) RPI 12-month1 rate RPIJ 12-month rate RPI 1-month1 rate RPIJ 1-month rate
2013 Jan 245.8 230.6 3.3 2.7 -0.4 -0.4
Feb 247.6 231.7 3.2 2.6 0.7 0.5
Mar 248.7 232.6 3.3 2.7 0.4 0.4
Apr 249.5 233.2 2.9 2.3 0.3 0.3
May 250.0 233.5 3.1 2.5 0.2 0.1
Jun 249.7 233.2 3.3 2.7 -0.1 -0.1
Jul 249.7 233.2 3.1 2.6 0.0 0.0
Aug 251.0 234.2 3.3 2.6 0.5 0.4
Sep 251.9 235.0 3.2 2.5 0.4 0.3
Oct 251.9 234.9 2.6 1.9 0.0 0.0
Nov 252.1 235.1 2.6 2.0 0.1 0.1
Dec 253.4 236.2 2.7 2.0 0.5 0.5
2014 Jan 252.6 235.4 2.8 2.1 -0.3 -0.3

Table source: Office for National Statistics

Table notes:

  1. The RPI has been de-designated as a National 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 January Release on the ONS website. 

Guide to Data

Table D 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, D2 H, D H, T, D T, D
CPIY : H H, T T
CPI-CT : H H, T T
CPIH H, T, D H H, T, D T, D
CPIHY : H H, T T
RPIJ H, T H H, T T
RPI 1 H, T H, D H, T, D T, D
RPIX 1 : H H, T T
RPIY 1 : H H, T T
SARPIY 1 : H H, T T
TPI 1 : H H, T T
RPI Pensioner Indices 1 : : H, T T
International Comparisons : : H, T T

Table source: Office for National Statistics

Table notes:

  1. These statistics are not National Statistics.

  2. H = Latest headline figures, D = Detailed data (including disaggregations), T = Time series data.

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Background notes

  1. News

    Review of Governance of Price Statistics

    On 12 February 2014, the UK Statistics Authority published a report on the Review of Governance of Price Statistics. The review report recommends the creation of two advisory panels on consumer prices; a stakeholder panel to advise the National Statistician on the uses and application of price indices, and a technical panel to provide advice on the technical aspects of the statistics. The Board of the UK Statistics Authority welcomed the report and has asked the Authority Chief Executive to implement the report’s recommendations. For further information please see the following statement from the Statistics Authority.

    Consumer Price Inflation Weights

    In line with usual practice, the January 2014 indices include the planned updates to the higher level CPI and CPIH weights. The February 2014 indices will include the planned updates to the higher level RPIJ and RPI weights, and to the CPI, CPIH, RPIJ and RPI item weights.

    Update to the Consumer Price Inflation Basket of Goods and Services

    The goods and services that are priced to construct the consumer price inflation indices (CPI, CPIH, RPIJ & RPI) are reviewed annually to ensure that the indices reflect the latest spending patterns by customers in the UK. Changes to the basket of goods and services this year, effective from the February indices, will be described in an article to be published on the National Statistics website on 13 March 2014. This has been changed from 18 March 2014.  

    Review of hedonic quality adjustment in UK consumer price statistics and internationally

    On 13 March 2014 (this has been changed from 18 March 2014) ONS will publish an article summarising the use of hedonic quality adjustment (a method of ensuring inflation indices compare like for like prices) in the UK and internationally. The article also details changes to the method of quality adjustment used for some items in the 2014 consumer price inflation basket of goods and services.

  2. Understanding and accessing the data

    A full description of how consumer price indices are compiled is given in the Consumer Price Indices Technical Manual. This is supplemented by other technical articles available from the guidance and methodology section of the ONS website. 

    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 October 2013.

    The mini Triennial Review (1.75 Mb Pdf) of the CPI and RPI Central Collection of Prices is available.

    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.

    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 are available in one location. The Consumer Price Inflation Reference Tables (1.3 Mb Excel sheet) 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 June 2013. The data for July to September 2013 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 February 2014 CPI is published on 25 March 2014, at which point the detailed data published will be extended to December 2013.

    Internationally, the CPI is known as the Harmonised Index of Consumer Prices (HICP). HICPs are calculated in each Member State of the European Union according to rules specified in a series of European regulations developed by the European Commission (Eurostat) in conjunction with the EU Member States. Eurostat releases figures for the Harmonised Index of Consumer Prices (HICP) for the month of January 2014 for EU Member States, together with an EU average, on 24 February 2014. A summary of the latest European data is available from Eurostat’s database tables. Further information on HICP for the European Union, Eurozone and other EU Member States is available from Eurostat's HICP web page

  3. Methods - CPI and other measures of inflation

    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 (354.4 Kb Pdf) . An article describing the 2014 basket of goods and services is due to be published on 18 March 2014. The expenditure weights used to compile the indices are also updated each year. Additional details of the updated weights for 2013 are available from the National Statistics website in an article published on 26 April 2013 entitled Consumer Prices Index and Retail Prices Index: Updating Weights for 2013. An article detailing the updated weights for 2014 is due to be published in late April 2014.

    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 and CPIH are available on request. By contrast, rates of change for the RPI and RPIJ are calculated from the published rounded indices.

    Further information on the methods used to construct the CPI, CPIH, RPI and RPIJ, including differences in the methods used for each index can be found in the Consumer Price Indices Technical Manual. 'Users and uses of consumer price inflation statistics' provides further details of how consumer price statistics are used more generally.

  4. Revisions Policy

    On 15 October 2013, ONS published a revisions policy for its suite of consumer price inflation statistics. The policy re-affirms the existing practices for CPI and RPI and sets out the policies for the new CPIH and RPIJ measures.

    In summary; CPI, CPIH and RPIJ are revisable in theory though revisions only occur under exceptional circumstances. The RPI is never revised once published.

  5. Publication Policy

    This bulletin includes the January 2014 data, collected on 14 January 2014. Future publication dates for this statistical bulletin are available to January 2016 (the publication of the December 2015 inflation figures). Publication dates from February 2015 onwards are provisional.

    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 to the contents of this release.

    Consumer price inflation for February 2013 to February 2014 will be published on 25 March 2014.

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  6. 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
Richard Campbell +44 (0)1633 651536 Prices, ONS cpi@ons.gsi.gov.uk
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