Consumer price inflation, UK: August 2023

• The Consumer Prices Index including owner occupiers' housing costs (CPIH) rose by 6.3% in the 12 months to August 2023, down from 6.4% in July.
• On a monthly basis, CPIH rose by 0.4% in August 2023, compared with a rise of 0.5% in August 2022.

• The Consumer Prices Index (CPI) rose by 6.7% in the 12 months to August 2023, down from 6.8% in July.

• On a monthly basis, CPI rose by 0.3% in August 2023, compared with a rise of 0.5% in August 2022.

• The largest downward contributions to the monthly change in both CPIH and CPI annual rates came from food, where prices rose by less in August 2023 than a year ago, and accommodation services, where prices can be volatile and fell in August 2023.

• Rising prices for motor fuel led to the largest upward contribution to the change in the annual rates.

• Core CPIH (excluding energy, food, alcohol and tobacco) rose by 5.9% in the 12 months to August 2023, down from 6.4% in July; the CPIH goods annual rate rose slightly from 6.1% to 6.3%, while the CPIH services annual rate slowed from 6.5% to 6.1%.

• Core CPI (excluding energy, food, alcohol and tobacco) rose by 6.2% in the 12 months to August 2023, down from 6.9% in July; the CPI goods annual rate rose slightly from 6.1% to 6.3%, while the CPI services annual rate slowed from 7.4% to 6.8%.

The Consumer Prices Index including owner occupiers' housing costs (CPIH) rose by 6.3% in the 12 months to August 2023, down from 6.4% in July, and down from a recent peak of 9.6% in October 2022. Our indicative modelled consumer price inflation estimates suggest that the October 2022 rate was the highest in over 40 years (the CPIH National Statistic series begins in January 2006). The rate in August 2023 was the lowest since March 2022.

The slight easing in the annual rate between July and August 2023 was a result of prices rising by 0.4% on the month compared with a rise of 0.5% a year earlier.

The Consumer Prices Index (CPI) rose by 6.7% in the 12 months to August 2023, down from 6.8% in July, and down from a recent peak of 11.1% in October 2022. Our indicative modelled consumer price inflation estimates suggest that the October 2022 peak was the highest annual inflation rate since 1981 (the CPI National Statistic series begins in January 1997). The rate in August 2023 was the lowest since February 2022.

The easing in the CPI annual rate between July and August 2023 was a result of prices rising by 0.3% on the month compared with a rise of 0.5% a year earlier.

The main drivers of the annual inflation rate for CPIH and CPI are the same where they are common to both measures. However, the owner occupiers' housing costs (OOH) component accounts for 16% of the CPIH and is the main driver for differences between the CPIH and CPI inflation rates. This makes CPIH our most comprehensive measure of inflation. We cover this in more detail in Section 4: Latest movements in CPIH inflation of this bulletin, and provide a commentary on the CPI in Section 5: Latest movements in CPI inflation. We also cover both CPIH and CPI in Section 3: Notable movements in prices, though the figures reflect CPIH.

The slight easing in the annual inflation rates in August 2023 principally reflected offsetting contributions across six divisions. Large downward effects from restaurants and hotels, food and non-alcoholic beverages, recreation and culture, and furniture and household goods were partially offset by upward contributions from transport, and housing and household services.

Restaurants and hotels

The annual inflation rate for restaurants and hotels was 8.3% in August 2023, down from 9.6% in July, and the lowest rate since May 2022. On a monthly basis, prices fell by 0.1% between July and August 2023, compared with a rise of 1.0% between the same two months a year ago.

The easing in the rate reflected a downward effect from accommodation services, where prices fell on the month this year but rose a year ago. Within this category, the majority of the effect was from overnight hotel accommodation, where prices are taken just before the date and can vary depending on the number of available rooms resulting in month to month volatility.

Food and non-alcoholic beverages

Food and non-alcoholic beverage prices rose by 0.3% between July and August 2023, compared with a rise of 1.5% between the same two months a year ago. This resulted in an easing in the annual rate to 13.6% in August 2023, down from 14.9% in July and a recent high of 19.2% in March 2023, which was the highest annual rate seen for over 45 years.

The easing in the annual rate for food and non-alcoholic beverages between July and August 2023 was driven by relatively small price movements from 7 of the 11 detailed classes. The largest downward contributions came from the milk, cheese and eggs, vegetables, and fish categories.

Within milk, cheese and eggs, the downward effects came principally from milk and cheese, with prices for these products falling slightly between July and August this year, compared with larger price rises between the same two months a year ago. This has led to the annual rate for milk, cheese and eggs easing to 15.3% in the year to August 2023, down from 18.7% in July.

The overall price of vegetables fell between July and August 2023, compared with a rise between the same two months of 2022. As a result, the annual rate eased from 16.7% in July to 14.0% in August 2023.

Similarly, fish prices fell this year but rose a year ago, leading to a slowing in the annual rate from 13.4% in July to 6.8% in August 2023. The effect came from across the range of fresh, chilled, frozen and processed fish and seafood.

Recreation and culture

Prices for recreational and cultural goods and services rose, overall, by 6.0% in the year to August 2023, down from 6.8% in July. On a monthly basis, prices rose by 0.2% into August 2023, compared with a larger rise of 0.9% into August 2022.

The easing in the annual rate between July and August 2023 was the result of small downward effects from a variety of the more detailed classes. The largest came from cultural services, recording media, and pets and related products.

Furniture and household goods

Prices of furniture and household goods rose by 0.2% between July and August this year, compared with a 1.3% rise a year ago. This resulted in an annual rate of 5.1% in August 2023, down from 6.3% in July, and the lowest rate recorded since September 2021.

The easing in the rate reflected small downward effects from furniture and furnishings, and household appliances. Prices of furniture and furnishings rose between July and August this year but by less than between the same two months a year ago. The downward effect was spread across a wide range of lounge, bedroom, kitchen and dining room furniture.

Household appliance prices overall fell this year but rose a year ago, with the largest individual downward effect coming from vacuum cleaners.

Transport

The slight easing in the headline inflation rate was partially offset by an upward effect from transport, where prices rose by 0.2% between July and August 2023, compared with a fall of 1.2% between the same two months last year. On an annual basis, prices fell by 0.7% in the year to August, compared with a larger fall of 2.1% in the year to July.

The overall upward effect from transport was almost entirely because of movements in the price of motor fuels. The average price of petrol rose by 5.3 pence per litre between July and August 2023 to stand at 148.5 pence per litre in August 2023. Last year, prices fell by 14.3 pence per litre from a record high in July to stand at 175.2 pence per litre in August 2022. Similarly, diesel prices rose by 5.9 pence per litre this year to stand at 151.1 pence per litre. Last year, they fell by 11.3 pence per litre again from a record high in July to stand at 186.6 pence per litre in August 2022. These movements resulted in motor fuel prices falling by 16.4% in the year to August 2023, compared with a larger fall of 24.9% in the year to July.

Within transport, the effect from motor fuels was partially offset by downward effects from second-hand cars and air fares. Second-hand car prices fell by 1.8% on the month this year, compared with a rise of 0.9% a year ago. On an annual basis, prices fell by 0.5% in the year to August, compared with a rise of 2.3% in the year to July.

Air fares fell by 2.1% between July and August 2023, compared with a rise of 13.4% a year ago. This is only the second time that fares have fallen between July and August since the monthly collection of prices began in 2001. The other time was in 2020 when price movements were affected by the coronavirus (COVID-19) pandemic. The fall this year partially reflects a relatively high July 2023 price which may, in turn, relate to the departure date of the flights priced and its proximity to school holiday periods. This year, July prices were collected for outward bound flights leaving on 18 July, whereas the departure date was 12 July last year.

Housing and household services

The Consumer Prices index including owner occupiers' housing costs (CPIH) annual inflation rate for housing, water, electricity, gas and other fuels was 5.7% in August 2023, up from 5.4% in July but down from a peak of 11.8% in January and February. The increase in the rate between July and August 2023 reflected upward effects from owner occupiers' housing (OOH) costs and liquid fuels. OOH costs rose by 4.8% in the year to August 2023, compared with a rise of 4.5% in July. This is the highest annual rate since April 1993 in the constructed historical series. Liquid fuel prices rose by 17.7% between July and August 2023, compared with a 14.1% fall between the same two months of 2022.

Figure 5 shows the annual inflation rates for the Consumer Prices Index including owner occupiers’ housing costs (CPIH) all goods and all services series, together with CPIH excluding energy, food, alcohol and tobacco (often referred to as core CPIH). The CPIH inflation rate is added for comparison.

The core CPIH annual inflation rate was 5.9% in August 2023. This is down from 6.4% in July and from 6.5% in May, which was the highest rate since November 1991, when it was also 6.5% in the constructed historical series.

The CPIH all goods index rose by 6.3% in the 12 months to August 2023, up from 6.1% in July. The increase in the rate has been caused by an upward contribution to the change from energy, where prices fell by 3.6% in the year to August 2023, having fallen by 8.2% in the year to July. This has been partially offset by downward contributions from food, alcoholic beverages and tobacco, and from non-energy industrial goods.

The CPIH all services index rose by 6.1% in the 12 months to August 2023, down from 6.5% in July. The largest downward contributions to the change came from accommodation services and air fares.

Figure 6 shows how each of the main groups of goods and services contributed to the change in the annual CPIH inflation rate between July and August 2023. To understand what has changed the inflation rate between these months, we can look at the differences between the contributions each of the 12 divisions made to the rate in July 2023 and the rate in August 2023. These differences sum to the change in the annual CPIH rate between the latest two months, that is, the easing from 6.4% to 6.3%.

The slowing in the rate into August 2023 was driven by downward contributions from six divisions, partially offset by upward contributions from five divisions. The largest downward contributions came from restaurants and hotels, and food and non-alcoholic beverages. These were partially offset by a large upward contribution from transport, particularly motor fuels.

Figure 7 shows the extent to which the distinct categories of goods and services have contributed to the overall annual CPIH inflation rate over the last two years. The contribution of each category to the annual rate depends on both the price movement in that category as well as its weight. Contributions help to explain what is driving the inflation rate by expressing it as the additive sum of its parts. For any one month, when added together, the contributions from the 12 divisions sum to the overall CPIH inflation rate, for example, 6.3% in August 2023.

The largest upward contributions to the annual CPIH inflation rate in August 2023 came from housing and household services, and food and non-alcoholic beverages. The contribution from the former group was 1.77 percentage points, up from 1.71 percentage points in July, but down from a recent high of 3.70 percentage points in January this year. The contribution from the latter group eased for a fifth successive month, from a high of 1.76 percentage points in March to 1.28 percentage points in August.

Although smaller, the 0.37 percentage point contribution to the annual rate in August 2023 from alcohol and tobacco was the largest from that division since the start of the National Statistics series in 2006.

Figure 8 shows the contribution of owner occupiers' housing (OOH) costs and Council Tax to the annual CPIH inflation rate in the context of wider housing-related costs. The Consumer Prices Index (CPI) differs from the CPIH in that it does not include these two components.

OOH's contribution rose from 0.74 to 0.78 percentage points between July and August 2023, continuing the increase seen over the past three years. The contribution from Council Tax was little changed at 0.14 percentage points between July and August 2023, while the contribution from housing and household services in total rose from 1.71 to 1.77 percentage points.

While the Consumer Prices Index including owner occupiers' housing costs (CPIH) is our lead and most comprehensive measure of consumer price inflation, the Consumer Prices Index (CPI) is based on a harmonised methodology developed by Eurostat and allows for international comparisons to be drawn. For more information on the use cases for our consumer price inflation statistics, please refer to our Measuring changing prices and costs for consumers and households, proposed updates: March 2020 article.

Figure 9 shows CPI inflation against the EU and Group of Seven (G7) countries that produce a comparable measure. Further information on international comparisons can be found in our Food and energy price inflation, UK: 2023 article, released on 23 May 2023.

Figure 10 shows the annual inflation rates for the CPI all goods and all services series, together with CPI excluding energy, food, alcohol and tobacco (often referred to as core CPI).

Annual core CPI rose by 6.2% in the year to August 2023, down from 6.9% in July and down from a recent high of 7.1% in May, which was the highest recorded since March 1992. The CPI all goods index rose by 6.3% in the year to August 2023, up from 6.1% in July. The CPI all services index rose by 6.8% in the year to August 2023, down from 7.4% in July 2023, which was the joint highest rate (with May 2023) since March 1992.

As with the all-items annual inflation rates, the drivers of CPIH and CPI goods and services inflation are the same (with the exception of owner occupiers' housing costs and Council Tax, which are excluded from CPI). The drivers are discussed in more detail in Section 4: Latest movements in CPIH inflation.

Figure 11 shows how each of the main groups of goods and services contributed to the change in the annual CPI inflation rate between July and August 2023.

The easing in the annual CPI rate into August 2023 was driven by downward contributions to change from 6 of the 12 divisions, with the largest coming from restaurants and hotels, and food and non-alcoholic beverages. These were partially offset by a large upward contribution coming from the motor fuels class within transport.

Although the sizes of the contributions differ from CPIH, the main drivers to the change are the same where they are common to both measures.

Figure 12 shows the extent to which the distinct categories of goods and services have contributed to the overall annual CPI inflation rate over the last two years.

The CPIH includes extra housing components not included in the CPI. This results in the largest contributions to the annual CPI and CPIH inflation rates coming from different divisions. The largest contribution to the CPI rate came from food and non-alcoholic beverages. The negative contribution from transport is present in both CPIH and CPI.

Annual 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 annual rate is determined by the balance between upward and downward price movements of the range of goods and services included in the index.

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. For an overview of the indices and their uses, please see Consumer price indices, a brief guide: 2017.

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 is based on European regulations for the Harmonised Index of Consumer Prices. 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 our accompanying dataset and accompanying data time series.

Retail Prices Index (RPI)

The 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, please see the data time series section of the inflation and price indices area of our website. The annual RPI inflation rate was 9.1% in August 2023.

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 UK Statistics Authority response to the consultation, the CPIH methods and data sources will be introduced into the RPI. Additionally, the supplementary and lower-level indices of the RPI will be discontinued.

Households and the cost of living

To assist individuals in understanding how the rise in inflation affects their expenditure, we have produced a personal inflation calculator. The calculator allows users to enter the amount they spend across either a reduced or a wide range of categories, to produce an estimate of their personal inflation based on those spending patterns.

Our shopping prices comparison tool shows how the average prices of items have changed over time. As a result, the number of average price series in Table 55 in our Consumer price inflation dataset has been reduced to two, covering petrol and diesel, and Table 54 has been discontinued. The average price data originally presented in these tables are currently still available as time series on our website and can be found using the four-character identifiers in Table 55.

Update on the Household Costs Indices and CPIH-consistent subgroups, UK

In our statement in June 2022, we set out our ambitions to move our annual experimental estimates of Household Costs Indices (HCIs) onto a regular quarterly publication basis in 2023. The HCIs reflect how different types of households experience changing prices, and differ from the Consumer Prices Index including owner occupiers' housing costs (CPIH) and the Consumer Prices Index (CPI), which are based on recognised economic principles. Moving the HCIs to a quarterly publication will better support users' understanding of how rising prices and the cost of living affect different types of households. It also recognises the HCIs' unique role in our range of consumer price inflation measures.

In order to meet our objective of beginning our quarterly HCIs publication in 2023, we have temporarily suspended our publication of CPIH-consistent subgroup data, which show the CPIH and CPI rates of inflation for different household subgroups. However, we recognise that there is a current user need for these measures and, while the CPIH-consistent subgroup publication is suspended, we will publish provisional estimates for selected sub-groups based on the previous year's weights (updated for changes in total UK spending). The provisional estimates for January to June 2023 are available in Provisional CPIH and CPI-consistent inflation rate estimates for UK household groups: January to June 2023.

We are committed to an ongoing quarterly publication of the HCIs. However, in light of wider prioritisation, we will be focusing our ongoing efforts on transforming and improving our entire range of consumer price inflation measures, including the HCIs, such as through alternative data sources. Our Consumer prices development plan: updated July 2023 describes our wider research plans and lists our priorities.

We will update our publication plans in due course and will continue to discuss these matters with our Advisory Panels on Consumer Prices (APCPs) and other stakeholders.

Weights for 2023 consumer price inflation statistics

In line with usual practice at the start of each year, the expenditure weights used in compiling the CPIH and the CPI were calculated using updated spending information. Normally, this would be national accounts household final consumption expenditure (HHFCE) data lagged by two years. However, because of the unprecedented events of the last few years and the larger changes seen in spending patterns, we adjusted the data so that the resulting weights were more reflective of the year immediately before use in consumer price inflation. This is in line with the procedures adopted in 2021 and 2022. More information is available in our Consumer price inflation, updating weights articles.

Alternative data sources

We are undertaking a programme of transformation across our price statistics, including identifying new sources, improving methods, and developing systems. More information about the project and our ongoing transformation plans can be found in our updated Transformation of consumer price statistics article, released on 6 July 2023.

As usual, we welcome your feedback on our work by email to cpi@ons.gov.uk.

Consumer price inflation historical estimates, UK, 1950 to 1988

On 18 May 2022, we published our Consumer price inflation, historical estimates, UK, 1950 to 1988 – methodology and Consumer price inflation, historical estimates and recent trends, UK: 1950 to 2022 article. These include new estimates of CPIH and improved estimates of CPI for the period 1950 to 1988. These estimates (published in response to user need for a longer series) are indicative and are for analytical purposes only. They are not intended for official use and do not constitute part of the National Statistic series.

Previously, in December 2018, we published our Consumer Prices Index including owner occupiers' housing costs (CPIH) historical series: 1988 to 2004 article. This series is an official statistic rather than a National Statistic, reflecting the historical uncertainty around the back casts.

Pre-release access

The Bank of England was granted exceptional pre-release access to an estimate of consumer price inflation data at 9.00am on Monday 18 September 2023 so that the data were available for the Monetary Policy Committee meeting held on that day. The letters requesting and agreeing to pre-release are available in the Exchange of letters between the Bank of England, HM Revenue and Customs, and Office for National Statistics (ONS) for exceptional pre-release access 2023.

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. The figures in this publication use data collected on or around 15 August 2023.

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

Our CPIH Compendium provides a comprehensive source of information on the CPIH, focusing on the approach to measuring owner occupiers' housing costs.

Our Users and uses of consumer price inflation statistics: July 2018 update includes information on the users and uses of these statistics, and the characteristics of the different measures of inflation in relation to potential use.

We have illustrated our future approach to measuring changing prices and costs for 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 our Measuring changing prices and costs for consumers and households, proposed updates: March 2020 article.

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