Consumer price inflation, UK: March 2021

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

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Contact:
Email Philip Gooding

Release date:
21 April 2021

Next release:
19 May 2021

1. Main points

  • The Consumer Prices Index including owner occupiers’ housing costs (CPIH) rose by 1.0% in the 12 months to March 2021, up from 0.7% to February.

  • The largest upward contribution to the CPIH 12-month inflation rate came from transport (0.44 percentage points).

  • Rising prices for motor fuels and clothing resulted in the largest upward contributions to the change in the CPIH 12-month inflation rate between February and March 2021.

  • These were partially offset by falls in the price of food.

  • On a monthly basis, the CPIH rose by 0.2% in March 2021, compared with little change in March 2020.

  • As a result of the ongoing restrictions caused by the coronavirus (COVID-19) pandemic, the number of CPIH items identified as unavailable in March 2021 was 67, accounting for 8.2% of the basket by weight; this is slightly down from 69 in February 2021; for the March 2021 price collection, we collected a weighted total of 82.2% of comparable coverage collected before the first lockdown (excluding unavailable items).

  • The Consumer Prices Index (CPI) rose by 0.7% in the 12 months to March 2021, up from 0.4% to February 2021; on a monthly basis, CPI rose by 0.3% in March 2021, compared with little change in March 2020.

  • The Office for National Statistics (ONS) has released a public statement on the coronavirus (COVID-19) and the production of statistics; Section 8: Measuring the data describes the situation in relation to consumer price statistics.

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2. Annual CPIH inflation rate

The Consumer Prices Index including owner occupiers’ housing costs (CPIH) rose by 1.0% in the 12 months to March 2021, up from 0.7% to February.

The Consumer Prices Index (CPI) rose by 0.7% in the 12 months to March 2021, up from 0.4% to February.

On a monthly basis, the CPIH rose by 0.2% in March 2021, compared with little change in March 2020. The monthly rate is higher in March 2021 than March 2020 principally because of price movements for motor fuels and clothing. Prices for these goods rose between February and March 2021, compared with a fall between the same two months a year ago. More information is provided in Section 4 of this bulletin.

Likewise, on a monthly basis, CPI rose by 0.3% in March 2021 compared with little change in March 2020. Again, price movements for motor fuels and clothing are the main reasons for the higher monthly rate this year than a year ago.

Given that the owner occupiers’ housing costs (OOH) component accounts for around 19% of the CPIH, it is the main driver for differences between the CPIH and CPI inflation rates.

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3. Contributions to the annual CPIH inflation rate

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.

The contribution from transport has shown more variation than any other group over the last two years, ranging from a downward contribution of 0.20 percentage points in May 2020 to an upward contribution of 0.56 percentage points in April 2019. Since May last year, the contribution has gradually increased to stand at 0.44 percentage points in March 2021. This is the largest upward contribution to the CPIH 12-month rate from any division this month.

Within transport, the movements have been caused principally by changes in the price of motor fuels. Between March 2020 and February 2021, motor fuels made a downward contribution to the CPIH 12-month rate. However, the contribution has turned positive in March 2021 reflecting a 12-month rate for motor fuels of 3.5%, the first positive rate since February 2020. Petrol prices stood at 123.7 pence per litre in March 2021, compared with 119.4 pence per litre in March 2020 and a recent low of 106.2 pence per litre in May 2020.

The contribution from clothing and footwear to the headline rate has mostly been negative over the last two years and remains negative in March 2021 despite prices rising on the month. Within the year, prices normally follow a clear seasonal pattern, rising over the period from January to May, then falling between May and July as items are placed on sale in preparation for the arrival of autumn product ranges. Prices then tend to rise until further sales in December and January.

Throughout 2020, we saw clothing and footwear prices follow a different pattern compared with previous years. We recorded increased discounting during March and April 2020, probably in response to the first UK-wide lockdown, then prices were relatively stable (compared with previous years) to August 2020. Between August and October 2020, prices broadly increased as usual, but this was followed by a fall between October and November 2020, because of notable sales in November as many areas went back into lockdown.

Following a slight rise in December 2020, prices fell as usual into January 2021. They then fell by a further 1.5% into February before rising by 1.6% in March. This latest rise partly unwinds the unusual fall into February and reflects the patterns of price discounting in the sector. Normally the amount of discounting falls between January and February, and again between February and March as the winter sales season ends and spring fashions enter the shops. This year, there was increased discounting in February potentially caused by the coronavirus (COVID-19) pandemic leading to delays in selling off winter stock. The amount of discounting has fallen back in March but despite the fall back, levels of discounting are still high for the time of year.

Figure 3 shows the seasonal price movements for clothing and footwear over the latest six years, setting January equal to 100 in each year. The fall in price into February 2021 contrasts with the price rises in recent years. Similar price falls were evident at the start of previous lockdowns. The subsequent price rise into March 2021 reflects a fall back in discounting.

The contribution from food and non-alcoholic beverages to the headline rate is also downward, for the fifth month in succession, reflecting a fall in overall prices of 1.4% in the year to March. The 12-month rate for food and non-alcoholic beverages was the same in the year to December 2020 and was last lower in November 2016. The negative contribution came from across a wide range of product groups, with the largest individual downward pulls from bread and cereals, and confectionery.

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4. Contributions to change in the annual CPIH inflation rate

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 February and March 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 largest upward contribution (of 0.15 percentage points) to the change in the CPIH 12-month inflation rate came from transport. Prices, overall, rose by 0.7% between February and March 2021, compared with a fall of 0.6% between the same two months a year ago. Within this group, the upward effect came almost entirely from motor fuels. Between February and March 2021, petrol and diesel prices each rose by 3.5 pence per litre, to stand at 123.7 and 128.1 pence per litre respectively. In comparison, between February and March 2020, petrol and diesel prices fell by 5.1 and 5.5 pence per litre, to stand at 119.4 and 123.8 pence per litre.

Within transport, a small, partially offsetting, downward contribution to the change in the 12-month rate came from second-hand cars. Prices fell (for the second successive month) in March 2021, compared with a rise in March last year and a continued upward movement through most of 2020 when there were reports of increased demand for used cars as people sought alternatives to public transport.

There was also a large upward contribution (of 0.11 percentage points) from clothing and footwear, where prices, overall, rose by 1.6% between February and March 2021, compared with a fall of 0.3% between the same two months a year ago. Prices usually rise between these months but price movements have not followed standard seasonal patterns since the beginning of the coronavirus (COVID-19) pandemic and the fall last year reflected increased discounting at the start of the pandemic. The rise this year has been influenced by a fall in the amount of discounting between February and March, albeit the incidence of discounting is still above normal levels for the time of year. The upward contribution came principally from a wide range of women’s clothing.

A smaller upward contribution of 0.04 percentage points came from furniture, household equipment and maintenance, where prices rose by 0.8% this year but were little changed a year ago. Small upward effects came from small kitchen appliances and articles, and lounge furniture.

The largest, partially offsetting, downward contribution (of 0.07 percentage points) to the change in the CPIH 12-month inflation rate came from food and non-alcoholic beverages. Prices for a variety of bread and cereal items fell this year but rose a year ago, resulting in a downward contribution of 0.06 percentage points. The products included chocolate biscuits, packs of individual cakes, breakfast cereals, dried potted snacks, cereal bars, chilled pizzas and crumpets. Prices for each of these rose by more between February and March 2020 than between the same two months in other recent years. This may have been an effect of the onset of the coronavirus but, equally, prices of these products can be relatively volatile so movements have to be interpreted with caution. Other smaller downward contributions came from the milk, cheese and eggs; oils and fats; and confectionery categories, partially offset by a small upward contribution from fruit.

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5. Owner occupiers’ housing costs

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 March 2021, the contribution of housing components to the CPIH 12-month inflation rate was 0.24 percentage points, unchanged from February. The contribution has been relatively low since April 2020 (in contrast with contributions in excess of 0.50 percentage points at the start of 2020) as a result of reduced contributions from electricity, gas, liquid fuels, water supply and sewerage collection.

The contribution from OOH had been on a downward trend since a high in October 2016. However, prices were relatively stable during 2020. The annual contribution in March 2021 stands at 0.22 percentage points, down slightly from 0.24 percentage points in March 2021, which was the highest since November 2017. The measurement of OOH uses the rent paid for an equivalent house as a proxy for the costs faced by an owner occupier. It includes the rents paid for all lets, not just new lets, so that changes in rents take longer to feed through than in the case of measures based on new lets only.

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6. Consumer price inflation data

Consumer price inflation tables
Dataset | Released 21 April 2021
Measures of monthly UK inflation data including the 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 21 April 2021
Comprehensive database of time series covering measures of inflation data for the UK including the CPIH, CPI and RPI.

Consumer price inflation detailed briefing note
Dataset | Released 21 April 2021
Background briefing to the statistical bulletin.

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7. 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 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)

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

The CPI is a measure of consumer price inflation produced to international standards and in line with European regulations. First published in 1997 as the Harmonised Index of Consumer Prices (HICP), the CPI is the inflation measure used in the government’s target for inflation.

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

Retail Prices Index (RPI)

The 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 recommended in 2019 that the publication of the RPI should be stopped at a point in the future and that in the interim, the shortcomings of the RPI should be addressed by introducing CPIH data sources and methods into its production. The Authority and HM Treasury subsequently launched a consultation on 11 March 2020 on the Authority’s proposal to address the shortcomings of the RPI.

The response to the consultation was published on 25 November 2020. In summary, the Authority concluded that to make the change, it would follow the methodology outlined in the consultation document. In addition, it would discontinue the supplementary and lower-level indices of the RPI when the proposals are implemented, providing users with guidance to assist moving away from RPI-related indices. The Chancellor decided that, to minimise the impact of the Authority’s proposal on the holders of index-linked gilts, he could not give his consent to implementing the changes before 2030 when the last of the relevant index-linked gilts matures.

Alongside the launch of the consultation on the future of the RPI, we published proposed updates to our article on the three “use cases” for our consumer inflation measures in Measuring changing prices and costs for consumers and households, proposed updates: March 2020.

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8. Measuring the data

The Office for National Statistics (ONS) is publishing more data and analysis than ever before. We are constantly reviewing our publications based on your feedback to make sure that we continue to meet the needs of our users. As a result, future editions of this publication will focus more strongly on headline indicators and main messages. Thank you for your continued support and we value your feedback.

Coronavirus

In response to the coronavirus (COVID-19) pandemic, we are working to ensure that we continue to publish our consumer price statistics. In line with the current government guidelines, we are enabling ONS staff to work from home and to avoid unnecessary travel and social contact. We have an established infrastructure, and these changes will not affect our ability to produce our Consumer Prices Index including owner occupiers’ housing costs (CPIH), Consumer Prices Index (CPI) and Retail Prices Index (RPI) statistics.

In April to July 2020, there were challenges around some of our collection activities, as approximately 80% of the price quotes (45% by weight) for the CPIH basket are usually physically collected in stores across 141 locations in the UK. However, in August 2020, our price collectors were able to resume full or partial in-store collections in 128 locations following the approach detailed in our Consumer price statistics: resuming a field-based price collection article.

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). Where we were unable to collect prices locally, prices continued to be collected over the internet and by phone and email.

Once the UK governments introduced national restrictions across the UK from the start of November 2020, we reverted to full central collection for all 141 UK locations using a combination of internet, email and phone.

For the collection in December 2020, there were a variety of restrictions in place across the UK. While some locations could be visited and prices collected physically in stores, the number that were in areas where restrictions were greater was sufficiently large to justify a consistent central approach to price collection. The central collection of prices has continued through to March 2021 with the return of national restrictions across the UK. Looking ahead, central data collection continues for April but our price collectors will resume in-store collections for the May 2021 index (due to be published on 16 June 2021).

For the March 2021 collection, we identified 67 items across the CPIH basket of goods and services that were unavailable to consumers, accounting for 8.2% of the CPIH basket by weight. It is important to remember that the coverage weight is based on the March 2021 weights, which have been adjusted to better reflect 2020 expenditure. The items that are unavailable tend to be in divisions where expenditure reduced in 2020 as a result of the pandemic. The number of unavailable items is down slightly from 69 in February and is lower than the 72 items that were unavailable during the last lockdown in November 2020. The list of unavailable items in March 2021, and the changes to the list from previous months, are shown in Table 58 in the Consumer price inflation dataset.

In total, these unavailable items had an upward contribution of 0.04 percentage points to the change in the CPIH 12-month inflation rate. Most imputed items made no overall contribution to the change in the rate. The largest upward contributions, each of 0.01 percentage points, came from sea and coach fares, theatre admissions and foreign holidays. These were partially offset by a small downward contribution from air fares.

The Coronavirus and the effects on UK prices article describes the approach we have taken for imputing price movements for items that are currently unavailable to consumers to purchase. For unavailable items in the RPI, we have imputed price movements based on the all-available-items price movement of the RPI (annual or monthly, depending on whether the series is seasonal or not), and for the CPIH and CPI we have imputed price movements based on the all-available-items price movement of the CPI. It is necessary to use the CPI price movement for both, so that both CPIH and CPI are constructed from the same set of item indices.

In March 2021, two school meal items – primary school fixed charge and secondary school cafeteria meals – became available for consumption in line with government guidelines. However, as these items were unavailable to consume in the January 2021 base period, there are no base prices available and no price movement associated with them. Base prices will be imputed in line with the procedure described in the Coronavirus (COVID-19) and Consumer Price Inflation weights and prices: 2021 article, and will influence the index from April 2021. For March 2021, the indices will be imputed using the all-available-items 12-month growth so that they have a negligible impact on the all-items inflation rate, reflecting the fact that these services are available only as price levels and do not have price growth associated with them (relative to the January base).

Overall, the number of price quotes that are usually collected in store and that are used in constructing the March 2021 indices was 86.6% of the number of price quotes collected in February 2020 (excluding unavailable items). It is not unusual for the proportion of quotes to be below 100% as there are often prices that are either temporarily missing or where the price for a non-comparable replacement item is collected. For this reason, we have compared the coverage in March 2021 with the February 2020 index collected before the social distancing policies and movement restrictions came into effect.

The price quotes collected by ONS staff or from administrative data account for approximately 20% of the price quotes in our CPIH sample. Once all price quotes have been weighted together, the overall coverage for goods and services available in March 2021 was 82.2% of the comparable coverage collected before the first lockdown (excluding unavailable items). This compares with 81.1% for February 2021 once the updated weights are used in the calculation.

For March 2021, in addition to the 67 unavailable items in the CPIH basket, we identified six other items where, although available in theory, price collection had proved largely impossible, so we imputed the price movement. The categories where the number of price quotes used in constructing the indices is less than half the number used in February 2020 have been identified in relevant tables in the accompanying dataset, for example, in Table 3.

We continue to engage with other national statistical institutes (NSIs) and international organisations to understand how they are responding to similar issues. Under Section 21 of the Statistics and Registration Service Act 2007, the Bank of England must make a determination on any changes to the coverage or basic calculation of the RPI that we propose, to establish whether such a change “constitutes a fundamental change in the index which would be materially detrimental to the interests of the holders of relevant index-linked gilts”.

We shared our plan with the Bank of England, and they determined that none of the temporary changes outlined “were both fundamental changes to the coverage or basic calculation of the RPI, and also materially detrimental to the holders of relevant index-linked gilts”. The correspondence on proposed changes to the RPI is available.

Coronavirus supplementary analysis

In March, we published the Effect of reweighting the consumer prices basket during the coronavirus (COVID-19) pandemic: October to December 2020, which contains experimental consumer price statistics for both CPIH and 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.

Consumer Price Inflation weights and prices: 2021

The weights and sample (or basket) of items used to compile the consumer price indices are updated at the beginning of each year. For CPIH and CPI, the 2021 weights would normally be based on spending patterns for 2019 from the national accounts. Given the effect of the coronavirus on spending during 2020 and the problems with collecting prices for new items potentially under lockdown conditions, we have changed the procedures for 2021. In line with international guidance (PDF, 503KB), we have decided to update the weights and basket, and to adjust the weights where there has been a clear change in spending between 2019 and 2020.

For RPI, the 2021 weights would normally be based on spending patterns for the 12 months ending June 2020 from our Living Costs and Food Survey (LCF). Since this includes a period when spending was affected by the coronavirus, we have decided to use the results from the survey without further adjustment for changed spending patterns.

In January 2021, we published the Coronavirus (COVID-19) and Consumer Price Inflation weights and prices: 2021 article describing the procedures in more detail.

To produce an indicative estimate of the impact of the weights changes, we re-aggregated the CPIH and the CPI for January 2021 based on the 2019 Household Final Consumption Expenditure (HHFCE) data that would have been used for expenditure weights had we chosen to use the normal procedure for estimating weights. This was to give an indication of the likely impact of the weights compilation process used for 2021.

For the January 2021 indices, the indicative estimates showed that the CPI 12-month inflation rate would have been unchanged (to one decimal place) if we had not adjusted to better reflect 2020 expenditure for the most heavily affected spending categories. For the CPIH, the indicative estimate showed that the 12-month inflation rate (rounded to one decimal place) would have been 0.1 percentage points lower.

The weights used for the indicative estimates have not been through the same level of quality assurance as the weights used in the compilation of headline CPIH and CPI.

The annual article describing the updated weights for 2021 was published, alongside the 2021 basket update article, on 15 March 2021.

End of EU exit transition period

As the UK enters into a new Trade and Co-operation Agreement with the EU, the UK statistical system will continue to produce and publish our wide range of economic and social statistics and analysis. We are committed to continued alignment with the highest international statistical standards, enabling comparability both over time and internationally, and ensuring the general public, statistical users and decision-makers have the data they need to be informed.

As the shape of the UK’s future statistical relationship with the EU becomes clearer over the coming period, the ONS is making preparations to assume responsibilities that as part of our membership of the EU, and during the transition period, were delegated to the statistical office of the EU, Eurostat. This includes responsibilities relating to international comparability of economic statistics, deciding what international statistical guidance to apply in the UK context and to provide further scrutiny of our statistics and sector classification decisions.

In applying international statistical standards and best practice to UK economic statistics, we will draw on the technical advice of experts in the UK and internationally, and our work will be underpinned by the UK’s well-established and robust framework for independent official statistics, set out in the Statistics and Registration Service Act 2007. Further information on our proposals will be made available later this year.

Delivery to Eurostat

Following the end of the transition period, the ONS has ceased to provide a monthly submission of consumer price inflation data to Eurostat.

We have also stopped publishing the Harmonised Index of Consumer Prices (HICP) international comparisons for EU countries previously presented in Tables 52 and 53 of the Consumer price inflation dataset. The international comparisons will continue to be available on the Eurostat website and a link has been provided in place of the current tables.

At the end of the transition period, we considered releasing the Consumer Prices Index at constant taxes (CPI-CT) on a quarterly basis since this series was produced principally for international purposes. However, following requests from users, we are re-introducing monthly publication with the March dataset.

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. From April to July 2020, as a result of the coronavirus pandemic, we collected all prices centrally by phone, email and from websites and used imputation to produce series for some goods and services, as outlined in Coronavirus and the effects on UK prices.

For the August 2020 index, price collectors were able to resume full in-store collections in 102 of the locations and partial collection in a further 26 out of the 141 locations used across the country. For the remaining locations, which were affected by local lockdowns and collection issues, prices continued to be collected centrally. Consumer price statistics: resuming a field-based price collection describes the principles used in resuming price collection across the country and discusses specific issues arising from the resumption.

In November 2020, the government in England introduced tougher national restrictions in England from 5 November, the tiered system of COVID-19 protection levels was introduced in Scotland on 2 November, the firebreak lockdown in Wales ended during the prices collection period but non-essential travel was still discouraged, and Northern Ireland’s circuit breaker lockdown was in force affecting various services. As a result of the various restrictions to travel and outlet opening in November 2020, we returned to full central collections for all 141 UK locations using a combination of internet, email and phone.

For the collection in December, there were a variety of restrictions in place across the UK. Restrictions varied according to countries within the UK and, for those countries operating a tier system, by location also. While some locations could be visited and prices collected physically in stores, the number that were in areas where restrictions were greater was sufficiently large to justify a consistent central approach to price collection. The central collection continues for April but our price collectors will resume in-store collections for the May 2021 index.

The figures in this publication use data collected on or around 16 March 2021.

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

The Consumer Prices Indices Technical Manual covers the concepts and methodologies underpinning the indices in more detail. The latest version was released on 18 September 2019.

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

More quality and methodology information on strengths, limitations, appropriate uses, and how the data were created is available in the Consumer price inflation QMI.

Users and uses of consumer price inflation statistics provides information about the users and uses of consumer price inflation statistics and user experiences of these statistics. It also provides information on the characteristics of the different measures of consumer price inflation in relation to potential use.

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9. 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 currently published and those under development. We have also published proposed updates to the article in Measuring changing prices and costs for consumers and households, proposed updates: March 2020.

Specifically, 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, released on 8 March 2018, describes the issues with the RPI.

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Contact details for this Statistical bulletin

Philip Gooding
cpi@ons.gov.uk
Telephone: Consumer price inflation enquiries: +44 (0)1633 456900. Consumer price inflation recorded message (available after 8:00 on release day): +44 (0) 800 011 3703