Consumer price inflation, UK: January 2022

• The Consumer Prices Index including owner occupiers’ housing costs (CPIH) rose by 4.9% in the 12 months to January 2022, up from 4.8% in the 12 months to December 2021.

• The largest upward contributions to the January 2022 CPIH 12-month inflation rate came from housing and household services (1.37 percentage points) and transport (1.24 percentage points, principally from motor fuels and second-hand cars).

• On a monthly basis, CPIH was unchanged in January 2022, compared with a fall of 0.1% in January 2021.

• The largest upward contributions to the change in the CPIH 12-month inflation rate between December 2021 and January 2022 came from clothing and footwear, housing and household services, and furniture and household goods.

• These were partially offset by large downward contributions to change from restaurants and hotels, and transport.

• The Consumer Prices Index (CPI) rose by 5.5% in the 12 months to January 2022, up from 5.4% in December 2021.

• On a monthly basis, CPI fell by 0.1% in January 2022, compared with a fall of 0.2% in January 2021.

The Consumer Prices Index including owner occupiers’ housing costs (CPIH) rose by 4.9% in the 12 months to January 2022, up from 4.8% to December 2021. This is the highest recorded 12-month inflation rate in the National Statistic series, which begins in January 2006, and the highest rate since CPIH stood at 5.1% in May 1992 in the historical modelled estimates. Inflation rates are currently influenced by the effects of the coronavirus (COVID-19) lockdowns in the previous year. The Office for National Statistics’ (ONS’) blog Beware Base Effects describes how relatively low prices for some items during those periods influence current inflation rates.

The Consumer Prices Index (CPI) rose by 5.5% in the 12 months to January 2022, up from 5.4% to December 2021. This is the highest CPI 12-month inflation rate in the National Statistic series, which began in January 1997, and it was last higher in the historical modelled series in March 1992, when it stood at 7.1%.

On a monthly basis, CPIH was unchanged in January 2022, compared with a fall of 0.1% in the same month a year earlier. Price falls in clothing and footwear, and transport led to the largest downward contributions to the monthly rate in January 2022. The main offsetting upward contributions to the monthly rate came from housing and household services, food and non-alcoholic beverages, and alcohol and tobacco. More information on contributions to change is provided in Section 4.

In January 2022 the CPI fell by 0.1% from the previous month, compared with a fall of 0.2% in the same month the previous year.

Given that the owner occupiers’ housing costs (OOH) component accounts for around 17% of the CPIH, it is the main driver for differences between the CPIH and CPI inflation rates.

Figure 2 shows the extent to which the different categories of goods and services have contributed to the overall Consumer Prices Index including owner occupiers’ housing costs (CPIH) 12-month inflation rate over the last two years.

Housing and household services

Housing and household services contributed 1.37 percentage points to the CPIH 12-month inflation rate in January 2022, which is the largest contribution from any division this month, and is significantly above those from April to September 2021. This was a result of price rises for gas and electricity following the increase in the cap on energy prices, which changed on 1 October 2021. The Office of Gas and Electricity Markets (Ofgem) introduced energy price caps. This was to limit the price energy suppliers can charge the estimated 15 million households that either use a prepayment meter or are on the “standard variable” energy (or default) tariff. As the energy regulator, Ofgem update the energy price caps twice a year, in April and October, to ensure that they reflect changes in the cost of supplying energy.

In April 2020, the energy price cap had been reduced causing a downward contribution from electricity, gas and other fuels of 0.20 percentage points. This fall was reversed in April 2021 with rises in gas and electricity prices. On 6 August 2021, Ofgem published the cap levels for the period from 1 October 2021 to 31 March 2022. They reported that the price cap had increased by 12% since April 2021 because of “a rise of over 50% in energy costs over the last six months with gas prices hitting a record high as the world emerges from lockdown”.

Combined with the April 2021 increases, these latest rises resulted in 12-month inflation rates of 18.8% for electricity and 28.1% for gas in October 2021. In January 2022 these rates increased slightly to 19.2% for electricity and 28.3% for gas, although the overall contribution from electricity, gas and other fuels was unchanged at 0.59 percentage points. The increase in the rates for electricity and gas was because of changing energy prices in Northern Ireland, which is regulated separately from the rest of the UK and is not subject to the Ofgem price cap.

Elsewhere within housing and household services, owner occupiers’ housing costs rose 2.4% on the year to January 2022 resulting in a contribution of 0.45 percentage points to the CPIH annual inflation rate. Actual rentals rose 2.3% on the year resulting in a contribution of 0.17 percentage points.

Transport

The contribution from transport has shown more variation than any other group over the last two years. It has ranged from a downward contribution of 0.20 percentage points in May 2020 during the first coronavirus (COVID-19) lockdown, to an upward contribution of 1.34 percentage points in November 2021. The contribution has since eased to 1.24 percentage points in January 2022.

Within transport, the movements have mainly been caused by changes in the price of motor fuels. Motor fuels made a downward contribution to the 12-month rate between March 2020 and February 2021, before the contribution turned positive in March 2021 and subsequently increased to 0.58 percentage points in November 2021. In January 2022 the contribution fell back to 0.50 percentage points.

Average petrol prices stood at 145.1 pence per litre in January 2022, compared with 116.6 pence per litre a year earlier. The January 2022 figure has decreased from 145.8 pence per litre in November and December 2021, which is the highest recorded average price. A year earlier, despite the re-introduction of stricter lockdowns across the UK in January 2021, average petrol prices continued to rise, increasing by 2.5 pence per litre.

The contribution from second-hand cars has also changed significantly since the beginning of 2020. Their contribution rose from a downward effect of 0.07 percentage points in January 2020 to an upward pull of 0.15 percentage points in October 2020. With the onset of the coronavirus pandemic, there were reports of increased demand as people sought alternatives to public transport. From October 2020, the contribution to the 12-month rate gradually fell back to an upward 0.01 percentage points in April 2021. It then rose again to 0.35 percentage points in January 2022, the largest contribution from second-hand cars since the start of the National Statistic series in January 2006. Used car prices have grown 28.7% since January 2021, by comparison they grew 7.8% in the year to January 2021.

These latest movements come amidst reports of increased demand as dealers opened following the national lockdown at the start of 2021, together with a global semiconductor shortage affecting the production of new cars and resulting in consumers turning to the used car market. Additionally, there are reportedly concerns in the trade about the supply of second-hand cars because of a variety of factors. These include fewer one-year-old cars coming to the market now because of a fall in new car registrations a year earlier, and the extensions of lease contracts and fewer part exchanges caused again by delays in new-car supply. The recent Prices Economic Analysis compares the growth in second-hand car prices in the UK with the euro area and United States.

Figure 4 shows how each of the main groups of goods and services contributed to the change in the Consumer Prices Index including owner occupiers’ housing costs (CPIH) 12-month inflation rate between November and December 2021. The corresponding figures for the Consumer Prices Index (CPI) can be found in Column F of Table 26 in the Consumer price inflation dataset.

The rise in the CPIH annual rate for January 2022 was driven by upward contributions to change from five of the 12 divisions, with the largest contribution of 0.14 percentage points coming from clothing and footwear. These were partially offset by downward contributions to change in a further five divisions.

Clothing and footwear

The largest upward contribution to the change in the CPIH 12-month inflation rate came from clothing and footwear, which increased the rate by 0.14 percentage points between December 2021 and January 2022. The 2.9% fall in prices in January 2022 was smaller than the 4.8% fall a year earlier. It is the smallest monthly fall for clothing and footwear prices in January since the National Statistic series began in February 2005, and the smallest since 1990 in the constructed historical series when it stood at negative 2.1%.

Prices usually fall sharply between December and January because of sales (Figure 4); prior to the coronavirus (COVID-19) pandemic, between 2016 and 2020, the average monthly fall in January was 3.8%. Therefore, the 2021 monthly fall of 4.8% was slightly higher than usual, and the 2022 monthly fall of 2.9% was slightly lower than usual.

Between November 2020 and January 2021, there was increased discounting compared with other years. By contrast, in January 2022, we have seen less discounting. The unseasonal price rise into December 2021, followed by a shallower than usual fall in January 2021, matches the pattern seen in the 2021 summer sales. There was an unseasonal rise in prices in June 2021 followed by a smaller than usual drop in prices in July 2021.

The upward pressure was spread mainly across men’s and women’s garments (0.04 and 0.05 percentage points respectively), and women’s footwear (0.04 percentage points), all of which saw smaller price falls in January 2022 compared with a year earlier.

Furniture and household goods

Prices for furniture and household goods fell by less in January 2022 than in the same month a year earlier. This added 0.04 percentage points to the overall CPIH 12-month inflation rate. Prices fell by 0.5% on the month, compared with a fall of 1.6% a year ago. The effect was mainly concentrated in glassware, tableware and household utensils (0.03 percentage points), with a further 0.01 percentage points coming from tools and equipment for house and garden. In both cases prices rose on the month to January 2022, but fell in the same month a year earlier.

On the whole the annual rate for this division has been increasing since January 2021, when it stood at 1.0%. It currently stands at 8.5%, which is the highest recorded rate for this division since the start of the National Statistic series in January 2006 and also the highest recorded rate since the start of the historical modelled data series in January 1989.

Housing and household services

Housing and household services added 0.06 percentage points to the CPIH 12-month inflation rate in January 2022, with the effect coming principally from rents. This was split between owner occupiers’ housing costs (0.04 percentage points) and actual rentals (0.02 percentage points). Owner occupiers’ housing costs are discussed in more detail in Section 5. Actual rentals saw increases of 0.3% on the month, compared with 0.1% a year earlier.

There was also a small upward contribution to change from electricity, gas and other fuels of 0.01 percentage points (the contribution to change is not equal to the difference in the contributions to the rate because of rounding). This was because of rising energy prices in Northern Ireland, which has a different regulatory structure. Northern Ireland is therefore not affected by the Office for Gas and Electricity Markets (Ofgem) price cap, which came into effect in October 2021.

Restaurants and hotels

The largest offsetting downward contribution to the change in the CPIH 12-month inflation rate came from restaurants and hotels, which decreased the rate by 0.09 percentage points between December 2021 and January 2022. This was driven by accommodation services, which contributed negative 0.11 percentage points to the change, and was partially offset by catering services which added 0.02 percentage points to the annual rate.

It should be noted, however, that many items within this division were unavailable in January 2021 because of lockdowns that were in place across the UK. Unavailable items were imputed as described in Coronavirus and the effects on UK prices. This means that monthly movements in the previous year reflect imputed index movements, and should therefore be interpreted with caution.

Transport

There was a further offsetting downward contribution to the change in the CPIH 12-month inflation rate from transport, which decreased the rate by 0.06 percentage points between December 2021 and January 2022. Despite providing a large contribution to the annual rate itself this month, that contribution fell from 1.29 percentage points in December 2021 to 1.24 percentage points in January 2022 (differences are because of rounding).

This was mostly because of motor fuels, where prices fell 0.5% on the month to January 2022 but increased by 2.1% in the same month a year earlier. This led to a decrease of 0.06 percentage points in the annual rate. Elsewhere within transport, small upward contributions from second-hand cars, and spare parts and accessories were offset by similar small downward contributions from various transport services. Many items within transport services were unavailable in January’s lockdown in 2021, and were therefore imputed in line with the procedures described in Coronavirus and the effects on UK prices. This means that the monthly movements in January 2021 are imputed and should therefore be interpreted with some caution.

Unavailable items

For items that were unavailable in line with government guidelines in the early part of 2021, there were no January base prices. As these items became available again, base prices were imputed in line with the procedures described in Coronavirus (COVID-19) and Consumer Price Inflation weights and prices: 2021.

For the first month in which they became available again, item indices were imputed using either the monthly movement in the all-available-items index or, for a smaller number of seasonal items, the annual movement in the all-available-items index. The aim was that the indices for returning items had a negligible impact on the all-items inflation rate in the first month of return. This reflected the fact that these services were available only as price levels and did not have price growth associated with them (relative to the January base). Collected prices then started to influence the index in the following month.

Restrictions began easing from 12 April 2021 and, since August 2021, there are no items across the CPIH basket of goods and services that are unavailable to consumers.

However, the 12-month rate depends on prices collected in both 2022 and 2021. In January 2021, tougher national restrictions were introduced across the UK. This led to the number of CPIH items that were unavailable to UK consumers increasing from 9 in December 2020 to 69 in January 2021. The changes to the list across months, are shown in Table 58 in the Consumer price inflation dataset.

A number of items affected by lockdown restrictions a year earlier have made a contribution to the change in the CPIH 12-month inflation rate between December 2021 and January 2022. These items were imputed in December 2020 or January 2021 to reflect that they were unavailable for consumption (for more information please refer to the article Coronavirus and the effects on UK prices; a list of unavailable items can be found in Table 58 of the Consumer price inflation dataset).

The largest downward contribution is from hotel, one night stay, which decreased the annual rate by 0.12 percentage points. Contributions to change from other affected items are generally small (less than or equal to 0.02 percentage points in magnitude). In aggregate, the effect was to decrease the CPIH 12-month inflation rate by 0.09 percentage points, and to decrease the CPI rate by 0.12 percentage points between December 2021 and January 2022. The contribution to the 12-month inflation rate in January 2022 for these items was 0.47 percentage points in CPIH and 0.55 percentage points in CPI.

Figure 5 shows the contribution of owner occupiers’ housing costs (OOH) and Council Tax to the Consumer Prices Index including owner occupiers’ housing costs (CPIH) 12-month inflation rate in the context of wider housing-related costs. In January 2022, the contribution of housing and household services to the CPIH 12-month inflation rate was 1.37 percentage points, an increase of 0.06 percentage points from December 2021.

OOH’s contribution to the CPIH annual inflation rate increased from 0.41 percentage points to 0.45 percentage points between December 2021 and January 2022, pushing the annual rate up by 0.04 percentage points. This was because of rises of 0.3% on the month for owner occupiers’ equivalent rental properties, compared with a smaller fall of 0.1% a year earlier. The contribution to the annual rate from Council Tax remained at 0.13 percentage points, and therefore made no contribution to the change.

There have been only relatively small changes to the contributions from other individual components between December 2021 and January 2022. This follows larger changes to gas and electricity prices in October 2021 when the Office of Gas and Electricity Markets’ (Ofgem’s) change to the price cap (introduced on 1 October 2021) came into effect.

The large contribution from electricity, gas and other fuels of 0.59 percentage points in January 2022 makes this group the largest current contributor within housing and household services. From July 2019 to September 2021, OOH was the largest upward contributor to the annual rate in the division. However, there were downward contributions on a similar scale from electricity, gas and other fuels over much of 2020 and the first quarter of 2021, reflecting reductions in the energy price cap at the time.

Consumer price inflation

Consumer price inflation is the rate at which the prices of goods and services bought by households rise or fall. It is estimated by using price indices. Consumer price indices, a brief guide gives an overview of the indices and their uses.

12-month inflation rate

The most common approach to measuring inflation is the 12-month or annual inflation rate, which compares prices for the latest month with the same month a year ago. In any given month, the 12-month rate is determined by the balance between upward and downward price movements of the range of goods and services included in the index.

Consumer Prices Index including owner occupiers’ housing costs (CPIH)

CPIH is the most comprehensive measure of inflation. It extends the Consumer Prices Index (CPI) to include a measure of the costs associated with owning, maintaining and living in one’s own home, known as owner occupiers’ housing costs (OOH), along with Council Tax. Both are significant expenses for many households and are not included in the CPI.

Consumer Prices Index (CPI)

The CPI is a measure of consumer price inflation produced to international standards and in line with European regulations. The CPI is the inflation measure used in the government’s target for inflation.

The CPI is produced at the same level of detail as the CPIH in the accompanying dataset and data time series.

Retail Prices Index (RPI)

Retail Prices Index (RPI) does not meet the required standard for designation as a National Statistic. In recognition that it continues to be widely used in contracts, we continue to publish the RPI, its subcomponents and RPI excluding mortgage interest payments (RPIX). To view the all-items RPI and 12-month inflation rate, please see the data time series section of the inflation and price indices area of our website.

The UK Statistics Authority and HM Treasury launched a consultation in 2020 on the authority’s proposal to address the shortcomings of the RPI. From 2030 (at the earliest), as outlined in the response to the consultation, the CPIH methods and data sources will be introduced into the RPI, and the supplementary and lower-level indices of the RPI will be discontinued.

Weights for consumer price inflation statistics in 2022

In line with the usual timetable, the January 2022 Consumer Prices Index (CPI) and Consumer Prices Index including owner occupiers’ housing costs (CPIH) data are calculated using new expenditure weights, which incorporate the most up to date spending data. Normally this would be based on national accounts Household Final Consumption Expenditure (HFCE) data at a two-year lag. However, in 2021 we made further adjustments to incorporate some of the larger changes in spending patterns seen in the base year 2020. More information is provided in the article, Coronavirus (COVID-19) and Consumer Price Inflation weights and prices: 2021. This approach was consistent with international guidance, which stipulated that “the expenditure shares used for the HICP¹ in year t should be representative of year t-1. This is in line with the overall Laspeyres philosophy of the HICP”.

For this year’s weights update we have adopted a similar approach. We estimated a 2021 dataset by taking the most up to date HFCE data available (quarters 1 to 3, second estimate) and imputing the fourth quarter based on the 2019 seasonal growth. We used the same threshold as in the previous year (25%) to identify classification of individual consumption by purpose (COICOP) classes where there were large changes in spending levels between 2020 and 2021. For these classes, we replaced the usual 2020 data with the 2021 estimate. Also this year, we gave consideration to classes below the threshold that have tended to have a larger number of basket items that were unavailable because of coronavirus (COVID-19) lockdowns (see Table 58 of the Consumer price inflation dataset). Our approach is consistent with the latest international guidance.

The COICOP classes that have been adjusted will be detailed in the upcoming article, Consumer price inflation, updating weights, 2022, alongside an explanation of the latest movements. The weights data for CPIH and CPI in January 2022 can be accessed from Table 11 and Table 25 of the Consumer price inflation dataset. As with last year, we have made no changes to the weighting scheme for the Retail Prices Index.

Treatment of the upcoming Government support package for energy bills

On 3 February 2022, the UK Government announced a package of support to help households to manage rising energy bills. The details are described as follows:

• A £200 discount on their energy bill this Autumn for domestic electricity customers in Great Britain. This will be paid back automatically over the next 5 years.

• A £150 non-repayable Council Tax Rebate payment for all households that are liable for Council Tax in Bands A-D in England.

• £144 million of discretionary funding for Local Authorities to support households who need support but are not eligible for the Council Tax Rebate.

• The devolved administrations are receiving around £715 million funding through the Barnett formula as usual where UK Government support doesn’t cover Scotland, Wales or Northern Ireland.

Decisions on whether to include rebates in our consumer price inflation statistics are taken on a case by case basis. We aim to be consistent with the National Accounts, the Public Sector Finances, and other economic statistics. These decisions are based on international statistical guidance and practical considerations. More information is provided in section 9.2 of our Consumer Price Indices Technical Manual.

Details of the formal classification decision on the recording of the Council Tax rebate scheme in the National Accounts and the Public Sector Finances statistics are expected in the Public Sector Classifications Guide to be published on 28 February 2022. We aim to provide details on how this policy will be treated in consumer price inflation statistics in section 8 of the February 2022 consumer price inflation bulletin, published on 23 March 2022. We will provide details on our classification and treatment of the energy bills discount scheme as information about this policy becomes available.

Discontinuing the production of CPI(Y), CPIH(Y) and CPI-CT

We have discontinued production of the Consumer Prices Index excluding indirect taxes (CPIY), the Consumer Prices Index including owner occupiers’ housing costs excluding indirect taxes (CPIHY) and Consumer Prices Index at constant tax (CPI-CT). Few users have been identified for the former measures while the latter was used principally by Eurostat, the European statistical office, when the UK was part of the EU. These series were produced for the last time with the December data published in January 2022.

Making our published spreadsheets accessible

We have published sample versions of a selection of consumer price inflation tables prepared following the Government Statistical Service (GSS) guidance on releasing statistics in spreadsheets. It is essential that we aim to improve the usability, accessibility and machine readability of our published statistics so that everyone can make use of them. We have published these one-off sample tables to help communicate the changes we will be making to the consumer price inflation tables over the coming months. When we change to the new format, there will be a period where we will publish the tables in both the new and the current formats, along with a mapper to help users to find the information they require in the new format tables. If you have any questions or comments on these sample tables, please email cpi@ons.gov.uk.

Coronavirus

Since the start of the coronavirus (COVID-19) pandemic, there have been challenges around our collection activities, as approximately 80% of the price quotes (45% by weight) for the Consumer Prices Index including owner occupiers’ housing costs (CPIH) basket are usually physically collected in stores across 141 locations in the UK. In April 2021, for example, we were unable to collect prices in store. However, we resumed in-store collections from May 2021 following the approach detailed in Consumer price statistics: resuming a field-based price collection. For December 2021, our price collectors were able to complete full collections in 99 of the locations with partial collections in the other 42, supplementing the latter by continuing to collect prices over the internet, by phone and by email.

The approach for resuming in-store collections was consistent with Eurostat advice, published in their Guidance note on Harmonised Index of Consumer Prices (HICP) issues emerging from the lifting of lockdown measures (PDF, 388KB).

Coronavirus and the effects on UK prices describes the approach taken for imputing price movements for items that were unavailable for consumers to purchase.

Coronavirus supplementary analysis

In March 2021, we published Effect of reweighting the consumer prices basket during the coronavirus (COVID-19) pandemic: October to December 2020, which contains Experimental statistics for both CPIH and the Consumer Prices Index (CPI). By linking the price changes between the latest month and the previous one on to the old series (a process called ”chain-linking”), we are able to change our expenditure weights each month to remove any unavailable items and adjust the weight of remaining items according to our best available evidence of consumption patterns.

Methodology information

The consumer price indices are normally based on prices collected from outlets around the country, supplemented by information collected centrally over the internet and by phone. As a result of the coronavirus pandemic, we collected all prices centrally in April 2021, but our price collectors have resumed in-store collections from May 2021.

The figures in this publication use data collected on or around 11 January 2022.

Consumer price indices, a brief guide gives an overview of consumer price statistics, while the Consumer Prices Indices Technical Manual covers the concepts and methodologies underpinning the indices in more detail.

The CPIH Compendium provides a comprehensive source of information on the CPIH, focusing on the approach to measuring owner occupiers’ housing costs (OOH).

Users and uses of consumer price inflation statistics includes information on the users and uses of these statistics, and the characteristics of the different measures of inflation in relation to potential use.

Notes for: Measuring the data

1. The Harmonised Index of Consumer Prices (HICP), a measure of consumer price inflation defined by Eurostat.

We have illustrated our future approach to measuring changing prices and costs faced by consumers and households using three “use cases”, along with how they relate to the measures currently published and those under development. We have also published proposed updates in Measuring changing prices and costs for consumers and households, proposed updates: March 2020.

The three cases refer to the Consumer Prices Index including owner occupiers’ housing costs (CPIH) as our lead measure of inflation based on economic principles, the Household Costs Indices (HCIs) as a set of measures to reflect the change in costs as experienced by households, and the Retail Prices Index (RPI) as a legacy measure that is required to meet existing user needs. Shortcomings of the RPI as a measure of inflation describes the issues with the RPI.