CPI annual inflation stands at 4.4 per cent, up from 4.2 per cent in June.
The main upward pressures to annual inflation came from financial services, clothing & footwear, furniture, household equipment & maintenance and housing rent.
The main downward pressure to annual inflation came from food & non-alcoholic beverages.
Annual inflation as recorded by the retail prices index (RPI) stands at 5.0 per cent in July, unchanged from June.
|Index1 (UK, 2005 = 100)||% change over 1 month||% change over 12 months|
|Food & non-alcoholic beverages||0.3|
|Alcohol & tobacco||0.6|
|Clothing & footwear||-3.5|
|Housing & household services||0.4|
|Furniture & household goods||-1.1|
|Recreation & culture||0.0|
|Restaurants & hotels||0.1|
|Miscell. goods & service||0.3|
|CPI All Items||0.0|
The CPI was unchanged between June and July this year compared with a fall of 0.2 per cent a year ago. These 1-month changes are both within the normal range for a June to July period; since 1996, the monthly movements between these two months have varied between a fall of 0.8 per cent and an increase of 0.1 per cent.
The most significant upward contributions to the 1-month change in the CPI between June and July 2011 came from:
transport: prices, overall, rose by 0.6 per cent between June and July. By far the largest upward effect came from air transport, where fares rose by 9.8 per cent. It is usual for air fares to rise sharply in July due to the start of the summer holiday period,
housing & household services: prices, overall, rose by 0.4 per cent. The largest upward effects came from increases in housing rent (particularly for social housing provided by registered social landlords) and in the costs to maintain and repair dwellings.
The most significant downward contributions to the 1-month change in the CPI between June and July 2011 came from:
clothing & footwear: prices, overall, fell by 3.5 per cent. It is usual for clothing & footwear prices to fall in July due to the summer sales season. The most significant sales this year were in women’s outerwear,
furniture, household equipment & maintenance: prices, overall, fell by 1.1 per cent between June and July. This was driven by a 4.3 per cent fall in prices for furniture & furnishings. It is usual for prices of furniture & furnishings to fall between June and July due to the sales season.
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. This year the CPI was unchanged between June and July compared with a fall of 0.2 per cent between the same two months a year ago. The 1-month movement was therefore 0.2 percentage points higher this year and this led to the CPI 12-month rate increasing from 4.2 per cent in June to 4.4 per cent in July 2011.
The most significant upward contributions to the change in the CPI 12-month rate between June and July 2011 came from:
miscellaneous goods & services: prices, overall, increased by 0.3 per cent between June and July this year compared with a fall of 0.5 per cent between the same two months a year ago. The upward effect came from a wide variety of goods and services but by far the largest contribution came from financial services where, overall, fees rose this year but fell a year ago, particularly for arranging mortgages,
clothing & footwear: prices, overall, fell by 3.5 per cent between June and July this year compared with a fall of 4.9 per cent between the same two months a year ago. The upward effects came from men’s and children’s outerwear where prices, overall, fell by less than a year ago. These upward effects were partially offset by a downward contribution from women's outerwear,
furniture, household equipment & maintenance: prices, overall, fell by 1.1 per cent between June and July this year compared with a fall of 1.9 per cent a year ago. The most notable upward effects came from most types of furniture & furnishings and household textiles,
housing & household services: charges, overall, rose by 0.4 per cent between June and July this year but were unchanged between the same two months a year ago. The upward effect was driven by increases in housing rent, particularly for social housing provided by registered social landlords,
recreation & culture: prices, overall, were unchanged between June and July this year compared with a fall of 0.3 per cent a year ago. The largest upward effects came from recording media (particularly DVDs), equipment for the reception & reproduction of sound & pictures (where prices, overall, unusually rose between June and July although this did follow price discounting between May and June) and newspapers, books & stationery (particularly books).
The only significant downward contribution to the change in the CPI 12-month rate between June and July 2011 came from:
food & non-alcoholic beverages: prices, overall, rose by 0.3 per cent between June and July this year compared with a rise of 1.0 per cent between the same two months a year ago. The downward effects came from a wide range of product groups, most notably from fish, fruit, and mineral waters, soft drinks & juices. A partially offsetting upward effect came from bread & cereals where prices continue to be volatile and increased by a further 1.5 per cent between June and July this year compared with a rise of 0.4 per cent between the same two months a year ago.
|Food & non-alcoholic beverages||6.2|
|Alcohol & tobacco||10.3|
|Clothing & footwear||3.1|
|Housing & household services||4.6|
|Furniture & household goods||4.8|
|Recreation & culture||-0.2|
|Restaurants & hotels||4.4|
|Miscell. goods & services||2.7|
|CPI All Items||4.4|
The most significant upward contributions to the CPI 12-month rate to July 2011 came from:
transport which contributed 1.3 percentage points. The largest effects came from fuels & lubricants where prices, overall, rose by 15.1 per cent over the 12 months to July and air transport where fares rose by 12.5 per cent over the same period,
food & non-alcoholic beverages which contributed 0.7 percentage points with prices, overall, rising by 6.2 per cent over the year. The largest upward contributions came from bread & cereals where prices rose by 9.7 per cent over the 12 months to July, meat, where there was a 6.6 per cent rise, sugar, jam, honey, syrups, chocolate & confectionery with a 7.5 per cent rise and mineral waters, soft drinks & juices where prices rose by 7.9 per cent,
housing & household services which contributed 0.6 percentage points with upward effects coming from a range of categories, the largest being domestic heating costs and housing rents,
restaurants & hotels which contributed 0.5 percentage points. Here, restaurant and cafe prices, overall, rose by 4.8 per cent over the year.
This section provides briefing on other measures of consumer price inflation. Firstly, briefing is provided on the different CPI measures. The RPI is then compared with the CPI and finally, commentary is provided on the different RPI measures of inflation. Background note 18 summarises the main differences between the different measures and also provides details of the main purposes and uses of each measure.
A longer time series of the measures, including index numbers, can be found in the CPI July 2011 Edition Release.
The CPIY is the same as the all items CPI except that it excludes price changes which are directly due to changes in indirect taxation (such as VAT).
In the year to July, the CPIY rose by 2.9 per cent, up from 2.7 per cent in June. The CPIY and CPI 12-month rates have therefore both increased by 0.2 percentage points between June and July. The only change in indirect taxation that impacts on the July 2011 CPI was the reduction last year in excise duty of cider to a level of 2 per cent above inflation from a level of 10 per cent above inflation. This change first had an impact on the CPI in July 2010 so is part of the 12-month rate (July 2010 to July 2011) calculation. However, this reduction in excise duty is not sufficient to cause a difference between the changes in the CPI and CPIY 12-month rates between June and July.
The CPI-CT is the same as the CPI except that tax rates are kept constant at the rates they were in the base period (currently January 2011).
In the year to July, CPI-CT rose by 2.8 per cent, up from 2.6 per cent in June. The CPI-CT and CPI 12-month rates have therefore both increased by 0.2 percentage points between June and July. The impact of the change in excise duty on cider in 2010 detailed above in the briefing on the CPIY was therefore not sufficient to cause a difference between the changes in the CPI and CPI-CT 12-month rates between these two months.
In the year to July the all items RPI rose by 5.0 per cent, unchanged from June. This unchanged position in the RPI 12-month rate between June and July compares with an increase of 0.2 percentage points in the CPI 12-month rate between the same two months.
The main reasons for these different movements in the RPI and CPI 12-month rates between June and July are:
items related to the provision of financial services: have lower weights in the RPI than the CPI so the upward effects from these items had a smaller impact on the RPI,
mortgage interest payments: had a downward impact on the RPI but is excluded from the CPI,
petrol and oil: have higher weights in the RPI than the CPI so the downward effect from this component had a larger impact on the RPI.
The RPIX is the same as the all items RPI except for mortgage interest payments, which is excluded from RPIX.
In the year to July, the RPIX rose by 5.0 per cent, unchanged from June. Therefore the RPIX and RPI 12-month rates both remain unchanged between June and July.
Mortgage interest payments had a small downward effect on the change in the RPI 12-month rate between June and July but this impact was not sufficient to cause a difference between the changes in the RPIX and RPI 12-month rates between these two months.
The RPIY is the same as the all items RPI except that it excludes price changes which are directly due to changes in indirect taxation (such as VAT) and mortgage interest payments.
In the year to July, the RPIY rose by 3.8 per cent, up from 3.7 per cent in June. The RPIY 12-month rate has therefore increased by a 0.1 percentage point between June and July compared with an unchanged position for the RPI 12-month rate between these two months.
The impact of rounding is the main reason for the small difference in the changes in the RPIY and RPI 12-month rates between June and July. In addition, mortgage interest payments had a small downward effect on the RPI but this component is excluded from the RPIY.
Finally, the impact of the change in excise duty on cider in 2010 detailed above in the briefing on the CPIY had only a negligible impact on the differences between the change in the RPIY and RPI 12-month rates between June and July.
|All items CPI||Annual rate +4.4%, up from +4.2% last month|
|Alcoholic beverages & tobacco||Annual rate +10.3%, up from +9.6% last month|
|Never higher since official records began in January 1997|
|Clothing & footwear||Annual rate +3.1%, up from +1.5% last month|
|Never higher since official records began in January 1997|
|Housing & household services||Annual rate +4.6%, up from +4.3% last month|
|Last higher in July 2009 (+5.2%)|
|All goods||Annual rate +4.5%, up from +4.2% last month|
|Last higher in October 2008 (+4.6%)|
|All items RPI||Annual rate +5.0%, unchanged from last month|
|Last higher in May 2011 (+5.2%)|
|Last lower in December 2010 (+4.8%)|
|All items RPI exc MIPS (RPIX)||Annual rate +5.0%, unchanged from last month|
|Last higher in May 2011 (+5.3%)|
|Last lower in December 2010 (+4.7%)|
|Alcoholic drink||Annual rate +6.5%, up from +6.1% last month|
|Last higher in March 1992 (+10.4%)|
|Tobacco||Annual rate +12.0%, up from +11.6% last month|
|Last higher in November 1999 (+13.1%)|
|Leisure services||Annual rate +3.8%, down from +3.9% last month|
|Last lower in April 2008 (+3.7%)|
New this month
UK Statistics Authority Assessment of Consumer Price Indices
During 2010, an assessment team from the UK Statistics Authority conducted a review of the Office for National Statistics’ Consumer Price Indices. Their remit was to assess compliance with the Code of Practice for Official Statistics. In December 2010, the team published their conclusions as Assessment Report 79.
While carrying out the assessment, the team also researched and published Monitoring Brief 7/2010 – Communicating Inflation.
In response to some of the requirements and suggestions included in these reports, ONS is publishing two further articles alongside this bulletin:
Inflation for August 2010 to August 2011 will be published on 13 September 2011. CPI and RPI inflation rates between August 2010 and July 2011 were 3.9 per cent and 4.5 per cent respectively. Inflation rates for August 2010 to August 2011 will take account of price changes between July 2011 and August 2011.
The launch of the new ONS website on 27 August 2011 has brought changes to the design and format of statistical bulletins. The bulletin main body is available in html and pdf format with the detailed data tables available as Excel spreadsheets to help make it easier for users to manipulate the data. Time Series datasets continue to be made available in their current format. The new website improves the way users can access our statistics but many existing bookmarks and links no longer work and users will need to update them.
The most efficient way to access the latest CPI and RPI data and briefing on the new website is via the key figures on the ONS homepage.
Further information on the CPI and RPI, including details of the methodology used to construct the indices, articles, historic data etc. is available on the Consumer Price Index web page.
Further improvements to the services provided to users of consumer price indices
The following improvements will be provided to users of consumer price indices when the August 2011 CPI and RPI are published on 13 September:
Data available earlier and one stop shop for CPI and RPI data: the data previously published in the focus on consumer price indices publication will be made available to users a week earlier than previously, that is, at the same time as the CPI and RPI publication. In addition, all data published as part of the consumer price indices statistical bulletin, in the consumer price indices briefing tables on the Consumer Price Index web page and in the focus on consumer price indices Taxonomy web page. It will be published electronically via one Excel file the ONS taxonomy page. This means, of course, that a separate Focus on consumer price indices publication will no longer be required and therefore the July 2011 edition will be the last one published.
Publication of detailed CPI data: the individual price quote data and item indices that underpin the CPI will be published for the first time. Please note that the data that are published will be at a level which will mean that no individual retailer or service provider will be able to be identified. The data published will cover January 1996 to March 2011. Going forward, these data will then be updated once a quarter with around a three month lag compared to the latest CPI publication, for example, the data will next be updated when the November CPI is published on 13 December 2011, at which point the detailed data published will be extended to August 2011.
The CPI is the main UK domestic measure of consumer price inflation for macroeconomic purposes. It forms the basis for the Government’s target for inflation that the Bank of England’s Monetary Policy Committee (MPC) is required to achieve. From April 2011 the CPI is also being used for the indexation of benefits, tax credits and public service pensions. The uprating is based on the 12-month change in the September CPI.
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 Eurostat in conjunction with the EU Member States. HICPs are used to compare inflation rates across the European Union. Since January 1999, the HICP has also been used by the European Central Bank (ECB) as the measure of price stability across the euro area.
The CPI and the RPI are compiled using the same underlying price data, based on a large and representative selection of around 650 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 the CPI and RPI is reviewed annually. The contents of the 2011 basket are described in an article published on the ONS website on the Consumer Price Index RPI basket web page. The expenditure weights used to compile the indices are also updated each year. Additional details of the updated CPI and RPI weights for 2011 are available from the ONS website in an article published on 19 April 2011 entitled Consumer Prices Index and Retail Prices Index: Updating Weights for 2011.
Rates of change for the CPI 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 are available on request. By contrast, rates of change for the RPI are calculated from the published rounded indices.
Once the RPI indices are published they are never revised. 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.
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 on the ONS 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.
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 CPI Technical Manual.
Other measures of inflation – main uses and methodological details
Detailed explanations on the main uses and methodology used to construct the ‘other measures of inflation’ included within this statistical bulletin and how they differ from the CPI can be found in Chapter 10 of the CPI Technical Manual in summary.
All items Retail Prices Index (RPI): the RPI is the most long-standing general purpose measure of inflation in the UK. Historically the uses of the RPI include the indexation of various prices and incomes and the uprating of pensions, state benefits and index-linked gilts, as well as the revalorisation of excise duties. Please note, though, that from April 2011 the CPI is being used to uprate benefits, tax credits and public service pensions.
The main differences between the CPI and RPI are:
population base: CPI includes all UK private and institutional households and foreign visitors to the UK. The RPI includes private households only and excludes the highest income households and pensioner households mainly dependent on state benefits; these excluded private households account for around 13 per cent of all UK household expenditure,
item coverage: the most significant difference is that the CPI excludes a number of items relating to housing costs (such as mortgage interest payments, house depreciation and council tax) that are included in the RPI,
index methodology – formula: the CPI mainly uses the geometric mean whereas the RPI uses the arithmetic mean to combine individual prices at the first stage of aggregation,
item coding: the CPI uses a standard international classification system whereas the RPI uses a system unique to itself and not used elsewhere. The different approaches reflect the fact that the CPI is used to compare inflation rates across Europe so a standard framework is required; the RPI is mainly used within the UK only.
A breakdown of the differences between the CPI and RPI annual inflation rates (62.9 Kb Pdf)
can be found on the ONS website.
Also available here in the Taxonomy Index is an explanation on the increased impact that the different formula used to construct the CPI and RPI had on the indices during 2010.
All items Retail Prices Index excluding mortgage interest payments (RPIX): this index is the same as the all items RPI but it excludes the mortgage interest payments component.
All items Retail Prices Index excluding mortgage interest payments and indirect taxes (RPIY): is an index designed to measure movements in ‘core’ prices as the index excludes price changes which are directly due to changes in indirect taxation (for example VAT; excise duties on tobacco, alcohol and petrol; local authority taxation; and vehicle excise duties) and mortgage interest payments. The purpose of the index is to obtain a better indication of inflationary pressures at times when prices are directly influenced by Government-driven changes.
Consumer Prices Index excluding indirect taxes (CPIY): is an index designed to measure movements in ‘underlying prices’ as it excludes price changes which are directly due to changes in indirect taxation (for example VAT, excise duties on tobacco, alcohol and petrol). As with the RPIY, its main purpose is to obtain a better indication of inflationary pressures at times when prices are directly influenced by Government-driven changes.
Consumer Prices Index at constant tax rates (CPI-CT): is an index where tax rates are kept constant at the rates as they were in the base period (currently January 2011). The analytical value of the CPI-CT is when it is compared with the CPI; differences in the monthly and annual rates of change between the two indices provide an indication of the impact of tax changes on the CPI.
This bulletin includes the July 2011 data, collected on 12 July 2011. Future publication dates are 13 September, 18 October, 15 November, 13 December, 17 January and 14 February. The European Commission (Eurostat) released figures for the harmonised index of consumer prices (HICP) for the month of July 2011 for EU Member States, together with an EU average, on 17 August 2011. Further information on HICP for the European Union, Eurozone and other EU Member States is available from Eurostat's HICP web page.
A more detailed quality report for this statistical bulletin (141.9 Kb Pdf) is available on the ONS website. The report assesses the CPI and RPI against standard dimensions of quality such as relevance, accuracy and accessibility. The report was last updated in November 2009.
The mini Triennial Review of the CPI and RPI Central Collection of Prices (151.4 Kb Pdf) is also available.
A full description of how the CPI and RPI are compiled is given in the Consumer Price Indices Technical Manual.
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-publication access to the contents of this release (33.7 Kb Pdf)
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