1. Main points

The Consumer Prices Index (CPI) rose by 1.2% in the year to November 2016, compared with a 0.9% rise in the year to October.

The rate in November was the highest since October 2014, when it was 1.3%.

Rises in the prices of clothing, motor fuels and a variety of recreational and cultural goods and services, most notably data processing equipment, were the main contributors to the increase in the rate.

These upward pressures were partially offset by falls in air and sea fares.

CPIH (not a National Statistic) rose by 1.4% in the year to November 2016, up from 1.2% in October.

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2. Changes to publication schedule for economic statistics

From January 2017 we are improving the way we publish economic statistics, with related data grouped together under new "theme" days. This will increase the coherence of our data releases and involve minor changes to the timing of certain publications. For more information see Changes to publication schedule for economic statistics.

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3. A brief description of 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. A way to understand this is to think of a very large shopping basket containing all the goods and services bought by households. Movements in price indices represent the changing cost of this basket. An infographic explains how consumer price inflation is calculated, and Consumer price indices – a brief guide gives an overview of the indices and their uses. Consumer price indices are published monthly.

A price index can be used to measure inflation in a number of ways. The most common is to look at how the index has changed over a year. This is calculated by comparing the price index for the latest month with the same month a year ago. This is known as the 12-month inflation rate. This bulletin measures inflation to November 2016, so the 12-month rate measures changes in prices between November 2015 and November 2016.

A range of measures of consumer price and other price inflation are published. A tale of many price indices summarises information on the different measures.

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4. Consumer Prices Index (CPI)

What is the 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 also used for purposes such as uprating pensions, wages and benefits and can aid in the understanding of inflation on family budgets. For more information see Users and uses of consumer price inflation statistics.

Latest figure and long-term trend

The CPI 12-month rate (the amount prices change over a year) between November 2015 and November 2016 stood at 1.2%. This means that a basket of goods and services that cost £100.00 in November 2015 would have cost £101.20 in November 2016.

The November rate of 1.2% is an increase on the October figure and is the highest since October 2014 when it was 1.3%. At that time, the rate was falling to subsequently remain at or around zero for much of 2015 before gradually picking up from the end of the year.

The largest downward pull on inflation in November 2016 and for 2016 to date comes from prices for food and non-alcoholic beverages. Prices in all other broad categories rose in the year to November. This is the first time since mid-2014 that all non-food categories had an upward effect on inflation. Transport prices created a downward pressure during 2015 and early 2016 but have since become the largest upward pressure.

Additional analysis of the Producer Price Index (PPI) and Consumer Prices Index (CPI): November 2016 also published today, presents further analysis of the November PPI and CPI headline statistics and previous trends with a particular focus on how movements in the sterling exchange rate may have influenced these data.

Figure 1 shows the contributions to the CPI 12-month rate in November 2016 compared with the contributions to the 12-month rate a year earlier.

Figure 2 shows the CPI 12-month rate for the last 10 years. Table 1 shows the CPI 1-month rate (the amount prices change between 2 consecutive months), 12-month rate and index values for the last year.

Consumer Prices Index (CPI): What are the main movements?

This section explains which goods and services had the biggest impact on the change to the 12-month rate between October and November 2016 and, where relevant, considers the longer-term inflationary trends for these goods and services.

The change in the CPI 12-month rate can be calculated by comparing the 12-month rates for 2 consecutive months. An alternative, and equally valid, approach is to calculate it by comparing the price change between the latest 2 months and the price change between the same 2 months a year ago. Explaining the contribution to change in the 12-month rate (2013) is a diagram explaining the calculation.

The CPI rose by 0.2% between October and November 2016, compared with a negligible change between the same 2 months a year earlier. The movement was therefore higher this year compared with a year ago, leading to a rise in the CPI 12-month rate.

Between October and November 2016, the main upward contributions to the change in the CPI 12-month rate came from the following groups:

Clothing and footwear: the upward effect came mainly from clothing (in particular women’s and men’s outerwear) for which prices, overall, increased by 1.6% between October and November this year, compared with a fall of 0.1% between the same 2 months a year ago. This is the largest October to November rise since 2010 and continues the rather volatile movements observed during 2016, especially over the latest 3 months. The rise follows a relatively small increase in prices in October 2016, which resulted in a downward contribution to the change in the rate of a similar magnitude to the upward effect seen in November.

Recreation and culture: prices, overall, increased by 0.5% between October and November 2016, compared with a negligible change a year ago. The upward effect came principally from data processing equipment where prices rose this year but fell a year ago, particularly for peripherals. There have been reports from some IT equipment manufacturers over the last few months of prices being affected by changes in the exchange rate with products generally being priced in US dollars.

Furniture, household equipment and maintenance: prices, overall, increased by 0.5% between October and November 2016, compared with a fall of 0.2% a year ago. Within this group, the largest contribution to the change in the rate came from prices for furniture and furnishings, particularly leather settees. There was also an upward contribution from non-durable household goods such as household cleaner cream and bleach.

Transport: the upward contribution to the change in the rate came from motor fuels, with petrol prices rising by 1.6 pence per litre between October and November this year but falling by 1.5 pence per litre a year ago. Similarly diesel prices rose by 2.0 pence this year but fell by 0.6 pence a year ago. Fuel prices tend to reflect movements in oil prices and part of the increase in oil prices during 2016 to date can be explained by depreciation of sterling against the US dollar. The impact of fuel prices on the change in the 12-month rate is also influenced by what happened in the same period last year, when prices fell (by 1.1%). Additional analysis of the Producer Price Index (PPI) and Consumer Prices Index (CPI): Oct 2016 explained this point in more detail in relation to the October movements. Within the transport category, the upward effect from motor fuels was partly offset by downward contributions from air and sea fares, which fell by more than a year ago.

Food and non-alcoholic beverages: prices, overall, increased by 0.4% this year compared with 0.1% a year ago leading to a small upward contribution to the change in the rate. The main upward effects came from: bread and cereal products such as garlic bread and pizza; and milk, cheese and eggs, particularly milk and yoghurt/fromage frais. These were partly offset by a small downward effect from confectionery.

The only significant (but small) downward contribution to the change in the CPI 12-month rate between October and November 2016 came from alcohol and tobacco. Within this category, the main effect came from tobacco where prices rose by less than a year ago.

Figure 3 shows the contributions to change from each part of the CPI basket of goods and services.

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5. CPIH

On 10 November 2016, the National Statistician published a statement, confirming the intention that CPIH should become our preferred measure of inflation from March 2017. The Consumer Price Inflation Quality and Methodology Information page is a good starting point for understanding CPIH and how it relates to other measures of inflation.

CPIH has been re-assessed to evaluate the extent to which it meets the professional standards set out in the Code of Practice for Official Statistics and the assessment report published on 3 March 2016. The report includes a number of requirements that need to be implemented for CPIH to regain its status as a National Statistic. The actions taken to address these requirements were reported to the UK Statistics Authority at the end of September 2016, and a range of articles were published on 28 October 2016 (see the News section in the Background notes for further details).

CPIH is a measure of UK consumer price inflation that includes owner occupiers’ housing costs (OOH). These are the costs of housing services associated with owning, maintaining and living in one’s own home. OOH does not include costs such as utility bills, minor repairs and maintenance, which are already included in the index. The CPIH compendium provides further information, including the rationale for the choice of methodology for measuring OOH, which is still extensively debated. We also publish data for alternative measures of OOH on a quarterly basis alongside the article Understanding the different approaches of measuring owner occupiers' housing costs.

CPIH uses an approach called rental equivalence to measure OOH. Rental equivalence uses the rent paid for an equivalent house as a proxy for the costs faced by an owner occupier. In other words, this answers the question “how much would I have to pay in rent to live in a home like mine?” for an owner occupier. OOH does not seek to capture increases in house prices. Although this may be inconsistent with some users’ expectations of measures of OOH, the inclusion of an asset price and therefore capital gains would make the index less suitable as a measure of consumption. OOH currently accounts for 16.5% of the expenditure weight of CPIH. This compares with a weight of 19.5% in 2005.

Currently, the method of calculation, the population coverage, the basket of goods and services and the method of deriving the weights are the same as for the Consumer Prices Index (CPI), with the exception of OOH. A full description of how CPIH is compiled is given in the Consumer Price Indices Technical Manual and the CPIH compendium.

In November 2016, the 12-month rate (the rate at which prices increased between November 2015 and November 2016) for CPIH stood at 1.4%, up from 1.2% in October 2016. The difference between the CPI and CPIH annual rates in November 2016 was 0.2 percentage points, down from 0.3 percentage points in October. Owner occupiers’ housing costs increased by 0.2% between October and November 2016, compared with 0.3% between these months a year earlier. This meant that they had a small downward impact on the change in the CPIH 12-month rate between the 2 months.

Figure 4 shows the CPIH and OOH component 12-month rates for the last 10 years. The CPI 12-month rate has been included for comparative purposes. Table 2 shows the CPIH and OOH component 1-month and 12-month rates and index values for the last year. More CPIH data are available in Tables 21 to 34 of the Consumer Price Inflation dataset.

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6. Retail Prices Index (RPI) and RPIJ

In accordance with the Statistics and Registration Service Act 2007, the Retail Prices Index (RPI) and its derivatives have been assessed against the Code of Practice for Official Statistics and found not to meet the required standard for designation as National Statistics. The full assessment report can be found on the UK Statistics Authority website.

The RPI is a long-standing measure of UK inflation that has historically been used for a wide range of purposes such as the indexation of pensions, rents and index-linked gilts. For further information see Users and uses of consumer price inflation statistics.

RPIJ is a variant of the RPI and is calculated using formulae that meet international standards. The rationale for creating RPIJ was to give users a better alternative to the RPI if their needs were for a measure of inflation based on the same population, classifications, weights, etc as the RPI. Currently, RPIJ also acts as an analytical series in that it allows users to see the impact of using the Jevons (which meets international standards) in place of the Carli formula (which does not meet international standards) in the RPI. The use of the different formulae at the elementary aggregate level is currently the only difference between these indices. Detailed goods and services indices are not produced for RPIJ.

In November 2016, the 12-month rate for RPIJ stood at 1.5%, up from 1.3% in October.

The RPI 12-month rate for November 2016 stood at 2.2%, meaning that it was 0.7 percentage points higher than it would have been had it used formulae that meet international standards.

Figure 5 shows the RPI and RPIJ 12-month rates for the last 10 years. Over this period the RPIJ 12-month rate has been, on average, 0.6 percentage points lower than the RPI.

Table 3 shows the RPI and RPIJ 1-month and 12-month rates and index values for the last year.

If you would like to understand the causes of the difference between the CPI and RPI, please see Table 5 in the Consumer Price Inflation dataset.

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7. Guide to data

Table 4 outlines where data for all consumer price inflation statistics can be found.

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8. Quality and methodology

Understanding and accessing the data

The Consumer Price Inflation Quality and Methodology Information page provides a good starting point for understanding these statistics. It 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 report was last updated in October 2013.

A full description of how consumer price indices are compiled is given in the Consumer Price Indices Technical Manual. This is supplemented by further information available from the prices guidance and methodology webpage.

The mini Triennial Review of the CPI and RPI Central Collection of Prices is available.

All consumer price inflation data (including Excel dataset, time series data and explorable datasets) can be found on the dataset page.

To help you further, very detailed data are available, including the individual price quotes (for locally collected items only) and item indices that underpin the consumer price inflation statistics. The item indices behind the measurement of owner occupiers’ housing costs were included for the first time in the first quarter 2016 data. Please note, the data that are published are at a level which means that no individual retailer or service provider will be able to be identified. Previously the data published covered January 1996 to June 2016. The data for July to September 2016 are also now available. These data have previously been updated once a quarter with around a 2-month lag with the latest CPI publication. However, data for October to December will be published alongside the December CPI on 17 January 2017 and, subsequently, data will be updated monthly at the same time as the headline information. For example, January 2017 information will be released on 14 February 2017.

Internationally, the CPI is known as the Harmonised Index of Consumer Prices (HICP). HICPs are calculated in each member state of the European Union (EU) according to rules specified in a series of European regulations developed by the European Commission (Eurostat) in conjunction with the EU member states. Eurostat releases figures for the Harmonised Index of Consumer Prices (HICP) for the month of November 2016 for EU member states, together with an EU average, on 16 December 2016. A summary of the latest European data is available from Eurostat’s database tables. Further information on HICP for the EU, Euro area and other EU member states is available from Eurostat's HICP web page.

Methods – CPI and other measures of inflation

The CPI, CPIH, RPIJ and RPI are compiled using the same underlying price data, based on a large and representative selection of around 700 individual goods and services for which price movements are measured in around 140 randomly selected areas throughout the UK. Around 180,000 separate price quotations are used every month to compile the indices. The outlets in which the prices are collected are selected randomly. Expenditure weights are held constant for 1 year at a time.

The selection of goods and services that are priced to compile these indices is reviewed annually. The contents of the 2016 basket are described in an article Consumer Price Inflation: The 2016 Basket of Goods and Services. The expenditure weights used to compile the indices are also updated each year. Additional details of the updated weights for 2016 are available in an article published on 22 March 2016 entitled Consumer Price Inflation: 2016 Weights.

Rates of change for the CPI and CPIH are calculated from unrounded index levels, rather than from the published indices which are rounded to 1 decimal place. The use of unrounded indices increases the accuracy of the calculation. The unrounded index levels for the CPI and CPIH are available from Tables 63 and 64 of the Consumer Price Inflation dataset. By contrast, rates of change for the RPI and RPIJ are calculated from the published rounded indices.

Further information on the methods used to construct the CPI, CPIH, RPI and RPIJ, including differences in the methods used for each index, can be found in the Consumer Price Indices Technical Manual. Users and uses of consumer price inflation statistics provides further details of how consumer price statistics are used more generally.

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9 .Background notes

  1. News

    Inclusion of Council Tax and revising imputed rents in CPIH

    On 10 November 2016, the National Statistician published a statement, confirming the intention for CPIH to become our preferred measure of inflation from March 2017. Before this, there is an opportunity to introduce improvements and revisions to the statistic, to ensure that it is of the highest quality. The changes being made to the index are a revision of the weights for imputed rents, which constitute the owner occupiers’ housing element of CPIH, and the inclusion of Council Tax. Impact of inclusion of Council Tax and revised imputed rents on CPIH, published today, describes the background to the changes and presents an analysis of the impact from them.

    Alternative measures of owner occupiers’ housing costs

    Data for alternative measures of owner occupiers’ housing costs are published on a quarterly basis. The latest data, updated to include July to September 2016, have been published today with the accompanying article Understanding the different approaches of measuring owner occupiers' housing costs: July to Sept 2016.

    Web scraping and the CLIP

    The latest article on the use of web scraping to produce experimental price indices was published on 30 November 2016. This updated previously published information. It also introduced a new approach to measuring price change called the CLIP (clustering large data sets into price indices).

    Frequency of publishing microdata

    The individual price quotes (for locally collected items only) and item indices that underpin the consumer price inflation statistics have previously been released once a quarter with around a 2-month lag after the latest CPI publication. However, the frequency of publication will change in future. Data for October to December will be published alongside the December CPI on 17 January 2017 and, subsequently, data will be updated monthly at the same time as the headline information. For example, January 2017 information will be released on 14 February 2017. Please note, the data that are published are at a level which means that no individual retailer or service provider will be able to be identified.

    Re-assessment of CPIH

    On 10 November 2016, the National Statistician published a statement that constitutes his formal response to the consultation on the future of consumer prices indices and also gives an update on the work to improve the CPIH so that it can be redesignated as a National Statistic. Alongside this, we published an article clarifying future publication arrangements for the RPI.

    On 28 October 2016, we published a range of articles on consumer price inflation, which are accessible via the following links:

    CPIH Compendium

    Understanding the different approaches to measuring owner occupiers’ housing costs

    Comparing measures of private rental growth in the UK: 2016

    Consumer Price Indices – a brief guide

    Users and uses of consumer price inflation statistics

    Consumer prices development plan

    We subsequently published an additional article on 6 December 2016, Quality assurance of administrative data, Dec 2016, that sets out the processes and systems in place to ensure the quality of private rental data used to form the OOH component of CPIH.

    These articles were submitted to the UK Statistic Authority’s regulation team, as part of the ongoing assessment of CPIH against the standards set out in the Code of Practice for Official Statistics.

  2. Revisions policy

    On 15 October 2013, a revisions policy was published for the suite of consumer price inflation statistics. The policy reaffirms the existing practices for CPI and RPI and sets out the policies for the new CPIH and RPIJ measures.

    In summary, CPI, CPIH and RPIJ are revisable in theory though revisions only occur under exceptional circumstances. The RPI is never revised once published.

  3. Publication policy

    This bulletin includes the November 2016 data, collected on and around 15 November 2016. Future publication dates for this statistical bulletin are available to January 2019 (the publication of the December 2018 inflation figures). Publication dates from February 2018 onwards are provisional.

    Consumer price inflation for December 2015 to December 2016 will be published on 17 January 2017.

  4. Recorded message

    Consumer price inflation recorded message (available after 9.45am on release day): Telephone: + 44 (0) 800 0113703

  5. Code of Practice

    National Statistics are produced to high professional standards set out in the Code of Practice for Official Statistics. They undergo regular quality assurance reviews to ensure that they meet customer needs. They are produced free from any political interference and released according to the arrangements approved by the UK Statistics Authority.

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Contact details for this Statistical bulletin

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