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

Released: 15 July 2014 Download PDF

Key points

  • The Consumer Prices Index (CPI) grew by 1.9% in the year to June 2014, up from 1.5% in May.
  • The largest contributions to the rise in the rate came from the clothing, food & non-alcoholic drinks and air transport sectors.
  • CPIH grew by 1.8% in the year to June 2014, up from 1.4% in May. RPIJ grew by 2.0%, up from 1.7% in May.

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 June 2014, so the 12-month rate measures changes in prices between June 2013 and June 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 June 2013 and June 2014 stood at 1.9%. This means that a basket of goods and services that cost £100.00 in June 2013 would have cost £101.90 in June 2014. The latest information continues the trend of below 2.0% inflation during 2014. This is only the second time since June 2013 that the inflation rate has risen compared with the previous month and it is the largest increase between two months since the rise from 2.2% to 2.7% between September and October 2012.

Over the last five years, the three main contributors to the 12-month inflation rate have been food & non-alcoholic beverages, housing, water, electricity, gas & other fuels 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 were little changed on the year and made a negligible contribution to the overall rate of inflation of 1.9%. This is the smallest contribution of any broad product group for June 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: June 2004 to June 2014

United Kingdom

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

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

United Kingdom

  Index1 (UK, 2005 = 100) 1-month rate 12-month rate
2013 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
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

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 May and June 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 diagram explaining the calculation.

The CPI rose by 0.2% between May and June 2014, compared with a fall of 0.2% between the same two months in 2013. The 1-month movement was therefore 0.4 percentage points higher this year compared with last year. This led to the CPI 12-month rate rising from 1.5% in May to 1.9% in June.

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

  • clothing & footwear: prices, overall, rose by 0.6% between May and June this year compared with a fall of 1.9% a year ago. Prices usually fall between May and June as the summer sales begin but this year the average prices of a number of products have risen. The main upward effect came from garments, particularly women’s outerwear where there were upward contributions from nearly all items, the largest from trousers and skirts.

  • food & non-alcoholic beverages: prices, overall, rose between May and June this year but fell between the same two months a year ago. The upward effect came principally from vegetables, bread & cereals, sugar, jam, syrups, chocolate & confectionery and mineral waters, soft drinks & juices.

  • transport: prices, overall, rose by 0.6% between May and June 2014, compared with a rise of 0.1% between the same two months a year earlier. The largest upward contribution came from air transport, with average fares rising this year but falling in 2013, particularly on European routes. There was also a smaller upward effect from sea transport. Partially offsetting these movements was a small downward contribution from motor fuels with prices, overall, rising this year by less than a year ago.

  • furniture, household equipment & maintenance: prices, overall, rose by 0.2% between May and June this year but fell by 0.5% a year ago. The main upward effect came from furniture & furnishings where prices rose by more than a year ago.

There were no large downward contributions to the change in the CPI 12-month rate between May and June 2014. The only, relatively small, downward effect came from miscellaneous goods & services. This came principally from appliances & products for personal care where there were price reductions on products such as perfume this year.

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: June 2014

United Kingdom

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

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 June 2014, the 12-month rate (the rate at which prices increased between June 2013 and June 2014) for CPIH stood at 1.8%, up from 1.4% in May.

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

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 June 2014, the 12-month rate for RPIJ stood at 2.0%, up from 1.7% in May. CPIH and RPIJ broadly continue to track each other as they have done for the last two years.

The RPI 12-month rate for June 2014 stood at 2.6%, meaning that it was 0.6 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 37.2% over the 10 year period, compared with 30.4% as measured by the RPIJ. The use of the Carli formula has therefore added 6.8 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: June 2004 to June 2014

United Kingdom

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

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 June 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
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

    A new web page for Consumer Price Inflation methodology was launched on 14 July 2014. The new page brings together details of the methodology used to construct the indices, articles, videos and infographics on various aspects of the CPI, CPIH, RPI and RPIJ.

  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.

    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.

    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 (1.47 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 releases figures for the Harmonised Index of Consumer Prices (HICP) for the month of June 2014 for EU Member States, together with an EU average, on 17 July 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.

    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 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 June 2014 data, collected on 10 June 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.

    In line with the Consumer Price Inflation Pre-Release arrangements, an advanced estimate of the CPI was provided to the Governor of the Bank of England and the Chancellor of the Exchequer 3.5 working days ahead of publication. The Governor shared this information with the MPC, and officials present at the MPC meeting, on Thursday 10 July 2014.

    Consumer price inflation for July 2013 to July 2014 will be published on 19 August 2014.

    Follow us on Twitter or join us at Facebook. View the latest podcasts on YouTube.

    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:  Philip Gooding +44 (0) 1633 455896
    Email: philip.gooding@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
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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