Consumer price inflation, UK: July 2019

Price indices, percentage changes and weights for the different measures of consumer price inflation.

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14 August 2019

Error in the RPI

An error has been identified in the Retail Prices Index (RPI) in 2019, caused by an issue with the 2017 to 2018 Living Costs and Food Survey (LCF) dataset, which is used to produce the weights underpinning the RPI.

Indicative estimates show that if the corrected LCF dataset had been used to calculate the 2019 RPI weights, it would have led to an upward revision of 0.1 percentage points to the published RPI annual growth rate in March 2019, from 2.4% as currently published to 2.5% and a downward revision of 0.1 percentage points to the June 2019 rate, from 2.9% as currently published to 2.8%. No other month’s annual growth rates have been affected.

Using the corrected LCF data would also have led to an upward move of 0.1 index points to the March 2019 RPI, from 285.1 to 285.2, and a downward move of 0.1 index points in each of April (288.2 to 288.1), May (289.2 to 289.1) and June (289.6 to 289.5). As stated previously, these index changes would have only affected the annual growth rate for March and June 2019.

In line with the published revisions policy for consumer price inflation statistics, the RPI will not be revised. This error has been corrected from the July publication, which will be published on Wednesday 14 August. The growth rates and index levels will be published as usual using the corrected weights. However, users should note that as previous months’ publications will be on the previous basis, there will be a discontinuity between July’s and June’s index levels.

We are aware RPI is used in certain financial contracts and so we are publishing this notice outside of trading hours.

There is no impact on the Consumer Prices Index including owner occupiers’ housing costs (CPIH) or the Consumer Prices Index (CPI), for which weights are calculated using more comprehensive national accounts data sources. These sources draw on a wider range of survey and administrative sources than just the LCF.

This is an accredited national statistic.

Contact:
Email Andy King

Release date:
14 August 2019

Next release:
18 September 2019

1. Main points

  • The Consumer Prices Index including owner occupiers’ housing costs (CPIH) 12-month inflation rate was 2.0% in July 2019, increasing from 1.9% in June 2019.

  • Between June and July 2019, there were large upward contributions to the change in the CPIH 12-month rate from games, toys and hobbies, and accommodation services, where prices for both rose by more than a year ago, and from clothing and footwear, and other financial services.

  • There were offsetting downward contributions to change coming from transport services and, to a lesser extent, from domestic fuels principally electricity and gas.

  • The Consumer Prices Index (CPI) 12-month rate was 2.1% in July 2019, increasing from 2.0% in June 2019.

  • Following the correction of an error in the 2017 to 2018 Living Costs and Food Survey (LCF) dataset used to produce the Retail Prices Index (RPI) 2019 weights, the July 2019 RPI is published on an updated basis – see Section 7: More about consumer price inflation.

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2. Analysis of consumer price inflation

CPIH 12-month inflation rate

The Consumer Prices Index including owner occupiers’ housing costs (CPIH) 12-month inflation rate was 2.0% in July 2019, increasing from 1.9% in June 2019.

The Consumer Prices Index (CPI) 12-month rate was 2.1% in July 2019, increasing from 2.0% in June 2019.

Table 1 presents the index numbers and inflation rates for CPIH, CPI and the owner occupiers’ housing costs (OOH) component of CPIH.

Figure 1 compares the 12-month inflation rates for CPIH, CPI and the OOH component of CPIH. Given that OOH accounts for around 17% of CPIH, it is the main driver for differences between the CPIH and CPI inflation rates.

Contributions to CPIH 12-month inflation rate

Figure 2 shows the extent to which the different categories of goods and services have contributed to the overall CPIH 12-month rate over the last two years.

In July 2019, the largest upward contribution to the CPIH 12-month rate continues to come from housing and household services, with prices rising by 1.9% on the year. Housing and household services has provided the largest contribution for the last nine months.

Within this group (which contributed 0.58 percentage points to the overall rate), the largest contributions were from owner occupiers’ housing costs (a 0.20 percentage point contribution), electricity, gas and other fuels (a 0.18 percentage point contribution), and Council Tax and Rates (a 0.12 percentage point contribution).

There were also large upward contributions to the CPIH 12-month rate from recreation and culture, and restaurants and hotels, where prices rose in the year to July 2019 by 2.4% and 3.1%, respectively.

Clothing and footwear also produced an upward contribution to the CPIH 12-month rate, reflecting that prices fell between June and July 2019 by less than a year ago. Until July, the contribution from this category had been negative for the last 10 months. This means that for July 2019, all CPIH broad groups (also known as divisions) produced an upward contribution to the overall 12-month rate.

Contributions to change in CPIH 12-month inflation rate

Figure 3 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 rate between June and July 2019. 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 largest upward contribution (of 0.08 percentage points) to change in the CPIH 12-month rate came from recreation and culture. Within this group, the largest effect came from games, toys and hobbies (in particular from computer games and consoles) where prices overall rose by 8.4% between June and July 2019 compared with a rise of 4.1% between the same two months a year ago. Price movements for these items can often be relatively large depending on the composition of bestseller charts and the upward contribution between the latest two months follows a downward contribution, from computer games purchased online and games consoles, between May and June 2019.

Restaurants and hotels produced a large upward contribution, with prices for accommodation services (particularly overnight hotel accommodation) rising by 3.1% between June and July this year compared with a 0.5% rise a year ago.

There were also large upward contributions from clothing and footwear, and from miscellaneous goods and services. The main upward effects came from footwear including repairs and garments, and from banking services (not elsewhere covered), where prices rose by 0.6% between June and July 2019 but fell by 4.2% between the same two months a year ago, following the removal of initial charges for investment in some unit trusts.

The largest offsetting downward contribution (negative 0.12 percentage points) to the change in the CPIH 12-month rate came from transport services (particularly from air, international rail and sea fares). Overall, the price of transport services rose by 2.6% between June and July this year compared with a larger rise of 6.1% between the same two months a year ago.

A smaller downward effect came from the operation of personal transport equipment where diesel pump prices fell by 2.3 pence per litre this year, to stand at 132.0 pence per litre, compared with a fall of 0.5 pence per litre a year ago. Petrol prices had little effect on the change in the 12-month rate where they fell by 0.9 pence per litre between June and July 2019, to stand at an average price of 127.3 pence per litre, compared with a fall of 0.8 pence per litre a year ago. There were further small downward contributions from the cost of car hire, repairs and roadside recovery, which were partially offset by a small upward effect from second-hand cars.

Housing and household services also had a large downward contribution to the change in the CPIH 12-month rate. Within this broad category, the downward effect came from electricity, gas and other fuels where prices overall rose by 1.3% last year but were little changed between June and July 2019.

Owner occupiers’ housing costs

Figure 4 shows the contribution of owner occupiers’ housing costs (OOH) and Council Tax to the Consumer Prices Index including owner occupiers’ housing costs (CPIH) inflation rate in the context of wider housing-related costs. The contribution from OOH had been on a downward trend from a high in October 2016. However, it has stabilised over the last year and was the largest contribution to the CPIH 12-month rate from all the housing and household services categories for the first three months of 2019, and for July 2019.

Electricity, gas and other fuels made a negative contribution during 2015 and 2016 but subsequent rises, most notably in electricity prices, saw the contribution turn positive through 2017 into 2018. Further electricity and gas price rises in summer and autumn 2018 increased their contribution to the CPIH 12-month rate. The introduction of Ofgem’s initial energy price cap resulted in reduced contributions to the CPIH 12-month rate for January to March 2019, but the contribution increased in April 2019 as energy providers responded to the latest change in the price cap. In the latest month, the contribution has continued to fall back slightly as price rises in July last year have had a downward effect on the 12-month rate for this category.

Increases in Council Tax starting in 2016 mean that its contribution has risen over recent years, though there was little change in the contribution when the 2019 increases were introduced in April this year. Conversely, the reduction in the contribution from rents is likely to be a result of a policy to reduce social housing rent starting from April 2016, although the contribution has risen slightly over the last year. Other housing costs (namely regular maintenance and repair, along with water and sewerage services) tend to make small contributions to the 12-month rate.

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3. Consumer price inflation data

Consumer price inflation tables
Dataset |Released on 14 August 2019

Measures of monthly UK inflation data including Consumer Prices Index including owner occupiers’ housing costs (CPIH), Consumer Prices Index (CPI) and Retail Prices Index (RPI). These tables complement the consumer price inflation time series dataset.

Consumer price inflation time series
Dataset | Dataset ID: MM23 | Released on 14 August 2019

Comprehensive database of time series covering measures of inflation data for the UK including CPIH, CPI and RPI.

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4. Glossary

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 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 of these are significant expenses for many households and are not included in the CPI.

Consumer Prices Index (CPI)

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.

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

Retail Prices Index (RPI)

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 and an at-a-glance comparison with other measures, please see the time series section of the inflation and price indices area of our website.

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5. Measuring the data

The consumer price indices are based on prices collected from outlets around the country, supplemented by information collected centrally over the internet and by phone.

Consumer price indices, a brief guide gives an overview of consumer price statistics.

The Consumer Price 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 Consumer Prices Index including owner occupiers’ housing costs (CPIH), with a focus on the approach to measuring owner occupiers’ housing costs (OOH).

The Consumer Price Inflation Quality and Methodology Information report contains important information on:

  • the strengths and limitations of the data and how it compares with related data

  • users and uses of the data

  • how the output was created

  • the quality of the output including the accuracy of the data

The figures in this publication use data collected on or around 9 July 2019.

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6. Strengths and limitations

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 that we currently publish and those that are under development. Specifically, they refer to the CPIH as our lead measure of inflation based on economic principles; the Household Costs Indices 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 Retail Prices Index as a measure of inflation, released on 8 March 2018, describes the issues with the RPI.

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7. More about consumer price inflation

Error in the RPI
Article | Released 8 August 2019

An error has been identified in the Retail Prices Index (RPI) in 2019, caused by an issue with the 2017 to 2018 Living Costs and Food Survey (LCF) dataset, which is used to produce the weights underpinning the RPI. Following the correction of this error, the July 2019 RPI is published on an updated basis. However, users should note that as previous months’ publications will be on the previous basis, there will be a discontinuity between July’s and June’s index levels. There is no impact on the Consumer Prices Index including owner occupiers’ housing costs (CPIH) or the Consumer Prices Index (CPI).

Consumer price inflation detailed briefing note
Article | Released 14 August 2019

Background briefing to the statistical bulletin.

Users and uses of consumer price inflation statistics
Article | Released 25 July 2018

Information about the users and uses of consumer price inflation statistics and user experiences of these statistics. Additionally, information on the characteristics of the different measures of consumer price inflation in relation to potential use.

Consumer price inflation, updating weights: 2019
Article | Released 18 March 2019

An overview of the latest annual update of the relative weights of items used in compiling the UK consumer price inflation indices.

Consumer price inflation basket of goods and services: 2019
Article | Released 11 March 2019

The review process for the items making up the inflation basket used to calculate the UK consumer price inflation indices and the changes in the latest year.

Explaining the contribution to change in the 12-month rate
Infographic | Released 2013

An explanation of how the various types of goods and services contribute to the change in the 12-month inflation rate between the latest two months. The size and direction of these contributions depends on how prices changed between both the latest two months this year and the same two months last year. For example, the price of a product could make an upward contribution to the change in the rate even if it fell, provided that it fell by less than it did between the same two months a year ago.

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8. You might also be interested in

Producer price inflation, UK
Bulletin | Released 14 August 2019

Changes in the prices of goods bought and sold by UK manufacturers including price indices of materials and fuels purchased (input prices) and factory gate prices (output prices).

UK House Price index
Bulletin | Released 14 August 2019

Monthly house price inflation in the UK, calculated using data from HM Land Registry, Registers of Scotland and Land and Property Services Northern Ireland.

Index of Private Housing Rental Prices
Bulletin | Released 14 August 2019

An experimental price index tracking the prices paid for renting property from private landlords in the UK.

Prices economic commentary
Article | Released 14 August 2019

Presents further analysis of producer prices, house prices and rental prices in addition to the Consumer Prices Index including owner occupiers’ housing costs (CPIH).

Advisory panels for Consumer Price Statistics

Reports, papers and minutes of the two independent advisory panels on consumer price statistics: a technical panel to advise the National Statistician on technical aspects of the statistics; and a stakeholder panel to provide advice on the uses and applications of price indices.

Consumer price inflation item indices and price quotes
Dataset | Released 14 August 2019

The individual price quotes (for locally-collected items only) and item indices that underpin the consumer price statistics.

Harmonised Index of Consumer Prices
Dataset | Released 14 August 2019

The Harmonised Index of Consumer Prices (HICP) provides a comparable measure of inflation for each member state of the EU. The UK HICP is identical to the UK Consumer Prices Index (CPI). Further information is available on the Eurostat website.

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Contact details for this Statistical bulletin

Andy King
cpi@ons.gov.uk
Telephone: Consumer Price Inflation Enquiries: +44 (0)1633 456900. Consumer Price Inflation recorded message (available after 9.45am on release day): + 44 (0)800 0113703