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

Released: 19 August 2014 Download PDF

Key points

  • The Consumer Prices Index (CPI) grew by 1.6% in the year to July 2014, down from 1.9% in June.
  • Falls in clothing prices provided the largest contribution to the fall in the rate. Other large downward effects came from the alcohol, financial services and food product groups.
  • The largest, partially offsetting, upward effect came from the transport group.
  • CPIH (not a National Statistic) grew by 1.5% in the year to July 2014, down from 1.8% in June. RPIJ grew by 1.8%, down from 2.0% in June.
  • The National Statistics status of CPIH has been discontinued pending work by ONS to investigate and improve the method for measuring owner occupiers' housing costs in this index. Full details can be found on the UK Statistics Authority website and an explanatory note on the ONS website.

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.

ONS has published a video and an infographic that explain how consumer price inflation is calculated.

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 July 2014, so the 12-month rate measures changes in prices between July 2013 and July 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 (100.5 Kb Pdf) .

Latest figure and long-term trend

The CPI 12-month rate (the amount prices change over a year) between July 2013 and July 2014 stood at 1.6%. This means that a basket of goods and services that cost £100.00 in July 2013 would have cost £101.60 in July 2014. The latest information continues the trend of below 2.0% inflation during 2014 although there has been some volatility in the rate over recent months.

Over the last five years, the three main contributors to the 12-month inflation rate have been housing, water, electricity, gas & other fuels, restaurants & hotels and transport (including motor fuels). Combined, these three sectors have, on average, accounted for almost half of the 12-month inflation rate each month.

In the latest month, prices of food & non-alcoholic beverages fell by 0.4% on the year and had a downward pull on the overall rate of inflation. This division provides the largest downward contribution of any broad product group to the 12-month rate for July and compares with housing, water, electricity, gas & other fuels which accounted for around a quarter of inflation.

Figure A shows the CPI 12-month rate over the last 10 years. Table A shows the CPI 1-month rate (the amount prices change between two consecutive months), 12-month rate 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: July 2004 to July 2014

United Kingdom

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

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

United Kingdom

  Index1 (UK, 2005 = 100) 1-month rate 12-month rate
2013 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
Feb 127.4 0.5 1.7
Mar 127.7 0.2 1.6
Apr 128.1 0.4 1.8
May 128.0 -0.1 1.5
Jun 128.3 0.2 1.9
Jul 127.8 -0.3 1.6

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 June and July 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 (37.1 Kb Pdf) is a diagram explaining the calculation.

The CPI fell by 0.3% between June and July 2014, compared with a negligible change between the same two months in 2013. The 1-month movement was therefore 0.3 percentage points lower this year compared with last year. This led to the CPI 12-month rate falling from 1.9% in June to 1.6% in July.

By far the largest downward contribution to the change in the CPI 12-month rate between June and July 2014 came from:

  • clothing & footwear: prices, overall, fell by 5.7% between June and July this year compared with a smaller fall of 3.2% between the same two months a year earlier. Overall, prices of clothing & footwear always fall between June and July due to the summer sales season but this year the fall is larger than in recent years. This follows a June period when overall prices rose on the month and comes amidst some reports which imply a shift in the timing of summer sales compared with last year. The main downward effect came from a wide range of men’s, women’s and children’s outerwear, for example trousers, coats and jumpers.

Other notable downward contributions to the change in the CPI 12-month rate between June and July 2014 came from:

  • alcohol & tobacco: prices, overall, fell by 0.7% between June and July this year but rose by 0.6% a year ago. The downward effect came from a range of alcohol products, principally spirits and wine. For both groups, prices fell this year but rose a year ago.

  • miscellaneous goods & services: prices, overall, fell between June and July this year but rose a year ago. The largest downward contribution came from financial services, particularly bank overdraft charges and fees for bankers’ drafts.

  • food & non-alcoholic beverages: prices, overall, fell between June and July this year but rose between the same two months a year ago. There were small downward effects from a number of product groupings including bread & cereals and sugar, jam, syrups, chocolate & confectionery.

The largest upward contribution to the change in the CPI 12-month rate between June and July 2014 came from:

  • transport: prices, overall, rose by 1.3% between June and July 2014, compared with a rise of 0.9% between the same two months a year earlier. The upward contributions came from second-hand cars and sea transport.

Figure B 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: July 2014

United Kingdom

Figure B: Contributions to the change in the CPI 12-month rate: July 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 in the accompanying consumer price inflation reference tables.

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CPIH

The National Statistics status of CPIH has been discontinued pending work by ONS to investigate and improve the method for measuring owner occupiers' housing costs in this index. Full details can be found on the UK Statistics Authority website and an explanatory note (313.9 Kb Pdf) on the ONS website.

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 would make the index less suitable for a measure of consumption. OOH currently accounts for just over 15% 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 July 2014, the 12-month rate (the rate at which prices increased between July 2013 and July 2014) for CPIH stood at 1.5%, down from 1.8% in June.

The difference between the CPI and CPIH 12-month rates in July 2014 was 0.1 percentage points, unchanged from the difference in June. Owner occupiers’ housing costs increased by 0.1% between June and July 2014, the same as between these months a year earlier. This meant it had little impact on the change in the CPIH 12-month rate between the two months.

Figure C 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 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 National Statistics status of CPIH has been discontinued pending work by ONS to investigate and improve the method for measuring owner occupiers' housing costs in this index.
  2. 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 Index1 (UK, 2005 = 100) OOH Index (UK, 2005 = 100) CPIH 1-month1 rate OOH 1-month1 rate CPIH 12-month1 rate OOH 12-month1 rate
2013 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
Feb 125.2 108.2 0.4 0.0 1.6 0.9
Mar 125.5 108.2 0.2 0.0 1.5 0.9
Apr 125.8 108.2 0.3 0.1 1.6 0.9
May 125.8 108.3 0.0 0.1 1.4 0.9
Jun 126.0 108.4 0.2 0.1 1.8 0.9
Jul 125.7 108.6 -0.3 0.1 1.5 0.9

Table source: Office for National Statistics

Table notes:

  1. The National Statistics status of CPIH has been discontinued pending work by ONS to investigate and improve the method for measuring owner occupiers' housing costs in this index.

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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 (100.5 Kb Pdf) .

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 July 2014, the 12-month rate for RPIJ stood at 1.8%, down from 2.0% in June. CPIH and RPIJ broadly continue to track each other as they have done for the last two years.

The RPI 12-month rate for July 2014 stood at 2.5%, meaning that it was 0.7 percentage points higher than it would have been had it used formulae that meet international standards.

Figure D 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 but the difference has increased to an average of 0.7 percentage points over the last 3 years. Cumulatively, inflation as measured by the RPI is 37.0% over the 10-year period, compared with 30.4% as measured by the RPIJ. The use of the Carli formula has therefore added 6.6 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: July 2004 to July 2014

United Kingdom

Figure D: RPI and RPIJ 12-month rates for the last 10 years: July 2004 to July 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 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
Feb 254.2 236.3 2.7 2.0 0.6 0.4
Mar 254.8 236.7 2.5 1.8 0.2 0.2
Apr 255.7 237.4 2.5 1.8 0.4 0.3
May 255.9 237.5 2.4 1.7 0.1 0.0
Jun 256.3 237.8 2.6 2.0 0.2 0.1
Jul 256.0 237.5 2.5 1.8 -0.1 -0.1

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 July 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
CPIH1 H, T, D H H, T, D T, D
CPIHY1 : H H, T T
RPIJ H, T H H, T T
RPI1 H, T H, D H, T, D T, D
RPIX1 : H H, T T
RPIY1 : H H, T T
TPI1 : H H, T T
RPI Pensioner Indices1 : : 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

    The National Statistics status of CPIH has been discontinued pending work by ONS to investigate and improve the method for measuring owner occupiers' housing costs in this index. Full details can be found on the UK Statistics Authority website and an explanatory note (313.9 Kb Pdf) on the ONS website. 

  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 (674.4 Kb Pdf) . This is supplemented by video, infographics and textual information available from the guidance and methodology section of the ONS website. 

    A more detailed quality report (141.9 Kb Pdf) 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.

    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 (1.49 Mb Excel sheet) are provided via an Excel file.

    To help users further, very detailed CPI data are now available including the individual price quotes and item indices that underpin the CPI. Please note, the data that are published are at a level which means that no individual retailer or service provider will be able to be identified. The data published covers January 1996 to March 2014. 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 August CPI is published on 16 September 2014, at which point the detailed data published will be extended to June 2014. 

    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 released figures for the Harmonised Index of Consumer Prices (HICP) for the month of July 2014 for EU Member States, together with an EU average, on 14 August 2014. A summary of the latest European data is available from Eurostat’s database tables. Further information on HICP for the European Union, Euro area 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 140 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 2014 basket are described in an article Consumer Price Inflation: The 2014 Basket of Goods and Services (138.6 Kb Pdf) . The expenditure weights used to compile the indices are also updated each year. Additional details of the updated weights for 2014 are available from the National Statistics website in an article published on 25 April 2014 entitled Consumer Price Inflation Statistics - Updating Weights for 2014 (123.7 Kb Pdf) .

    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 (674.4 Kb Pdf) . Users and uses of consumer price inflation statistics (100.5 Kb Pdf) provides further details of how consumer price statistics are used more generally.

  4. Revisions Policy

    On 15 October 2013, ONS published a revisions policy (49.6 Kb Pdf) for its suite of consumer price inflation statistics. The policy reaffirms 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 July 2014 data, collected on 15 July 2014. Future publication dates for this statistical bulletin are available to January 2017 (the publication of the December 2016 inflation figures). Publication dates from February 2016 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 August 2013 to August 2014 will be published on 16 September 2014.

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    Media contact:

    Tel:  Luke Croydon   +44 (0) 845 6041858
    Out of hours media line:   +44 (0) 7867 906553
    Email:  media.relations@ons.gsi.gov.uk

    Statistical contact:
    Tel:  Richard Campbell +44 (0) 1633 651536
    Email: richard.campbell@ons.gsi.gov.uk 
    Email: cpi@ons.gsi.gov.uk

    Consumer Price Inflation recorded message (available after 9.45am on release day):
    Tel: +44 (0) 800 0113703

    Consumer Price Inflation Enquiries:
    Tel: +44 (0) 1633 456900

  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
Get all the tables for this publication in the data section of this publication .
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