Consumer price inflation, UK: August 2022

• The Consumer Prices Index including owner occupiers’ housing costs (CPIH) rose by 8.6% in the 12 months to August 2022, down from 8.8% in July.
• The largest upward contributions to the annual CPIH inflation rate in August 2022 came from housing and household services (principally from electricity, gas and other fuels, and owner occupiers’ housing costs), transport (principally motor fuels), and food and non-alcoholic beverages.
• On a monthly basis, CPIH rose by 0.5% in August 2022, compared with a rise of 0.6% in August 2021.
• The Consumer Prices Index (CPI) rose by 9.9% in the 12 months to August 2022, down from 10.1% in July.
• On a monthly basis, CPI rose by 0.5% in August 2022, compared with a rise of 0.7% in August 2021.
• A fall in the price of motor fuels made the largest downward contribution to the change in both the CPIH and CPI annual inflation rates between July and August 2022.
• Rising food prices made the largest, partially offsetting, upward contribution to the change in the rates.

The Consumer Prices Index including owner occupiers’ housing costs (CPIH) rose by 8.6% in the 12 months to August 2022, down from 8.8% in July, and despite a 0.5% rise in the month to August 2022.

The annual rate was below 1.2% from April 2020, at the start of the first coronavirus (COVID-19) lockdown, to March 2021. It then rose markedly to July 2022 before easing slightly in August 2022. The July 2022 figure was the highest recorded annual inflation rate in the National Statistic series, which began in January 2006. The rate was last higher in the constructed historical estimates in December 1990, when it stood at 9.2%.

The largest contributions to the annual rate in August 2022 are from housing and household services, transport, and food and non-alcoholic beverages. Their effects are shown in Figure 6 in Section 4.

The Consumer Prices Index (CPI) rose by 9.9% in the 12 months to August 2022, down from 10.1% in July. Similar to the CPIH, the rate had risen sharply over recent months before easing in August.

The July figure was the highest annual CPI inflation rate in the National Statistic series, which began in January 1997. Indicative modelled consumer price inflation estimates suggest that the CPI rate would last have been higher around 1982, where estimates range from nearly 11% in January down to approximately 6.5% in December. The main contributors to the August 2022 rate are shown in Figure 10 in Section 5.

On a monthly basis, CPIH rose by 0.5% in August 2022, compared with a rise of 0.6% in the same month a year earlier. The CPI monthly rate was also 0.5%, compared with 0.7% in August 2021.

Food and non-alcoholic beverages made the largest upward contribution to the monthly rates in August 2022, while falling prices for motor fuels resulted in a large offsetting downward contribution. In August 2021, the main upward contributions to the monthly rates came from transport, and recreation and culture.

Given that the owner occupiers’ housing costs (OOH) component accounts for around 17% of the CPIH, it is the main driver for differences between the CPIH and CPI inflation rates. The inclusion of Council Tax and rates in CPIH is the only further difference in coverage. This makes CPIH our most comprehensive measure of inflation and, therefore, the figures in Section 3 and overall commentary in Section 4 in this bulletin focus on CPIH. While the coverage differs, the main drivers of the annual inflation rate are the same where they are common to both measures. Section 5 comments, mostly graphically, on the CPI.

The easing in the annual inflation rate in August 2022 reflected principally a fall in the price of motor fuels in the transport part of the index. Smaller, partially offsetting, upward effects came from price rises for food and non-alcoholic beverages, miscellaneous goods and services, and clothing and footwear.

Transport

The annual inflation rate for transport was 12.4% in August 2022, down from 15.1% in July. The annual rate rose from minus 1.6% in May 2020 (during the first coronavirus (COVID-19) lockdown) to 15.2% in June 2022 before easing in the latest two months.

Motor fuel price changes are the main driver behind the overall movements within transport, with fuel prices increasing by 32.1% in the year to August 2022. Average petrol and diesel prices stood at 175.2 and 186.6 pence per litre, respectively, in August 2022, compared with 134.6 and 137.0 pence per litre a year earlier.

The annual rate for motor fuels eased from 43.7% to 32.1% between July and August 2022. This is principally a result of petrol prices falling by 14.3 pence per litre between these months. A year ago, petrol prices rose by 2.0 pence per litre between July and August 2021. Diesel prices also contributed to the change in the rate, falling by 11.3 pence per litre this year, compared with a 1.5 pence per litre rise a year ago.

Elsewhere in the transport division, second-hand car prices rose by 4.6% in the year to August 2022, down from 8.6% in July. The annual rate has eased for the fifth consecutive month since March 2022, when it was 31.0%. Although prices have fallen between March and August 2022, much of the change in the annual inflation rate is a base effect as prices rose by over 18% between March and August 2021. During that period, there were reports of increased demand, combined with restricted supply.

Food and non-alcoholic beverages

Food and non-alcoholic beverage prices rose by 13.1% in the 12 months to August 2022, up from 12.7% in July. The annual rate for this category was minus 0.6% in July 2021 but it has since risen for 13 consecutive months. The current rate is the highest since August 2008.

The increase in the annual rate between July and August 2022 was driven by price movements across many of the more detailed classes. The largest upward effect came from milk, cheese and eggs, where prices of milk and cheese rose between July and August 2022 by more than between the same two months a year ago.

Overall prices for food and non-alcoholic beverages have risen throughout 2022, and the 1.5% increase between July and August 2022 was the largest July to August rise since 1995, when a constructed series for food and non-alcoholic beverages showed a 1.6% increase.

Miscellaneous goods and services

The annual rate for the miscellaneous goods and services category was 4.6% in August 2022, up from 4.0% in July. The rate is the highest recorded since September 2005. This division contains such diverse goods and services as hairdressing, toiletries and cosmetics, jewellery, insurance, and financial services. The main driver behind the annual rate for the overall division, and the change in its annual rate between July and August 2022, came from appliances and products for personal care.

Clothing and footwear

The annual rate for clothing and footwear was 7.6% in the year to August 2022, up from 6.6% in July. Prices rose by 1.1% on the month in 2022, compared with a smaller rise of 0.2% in August 2021. Prices normally rise at this time of year as the autumn ranges enter the shops following the summer sales season. However, the coronavirus pandemic affected the standard seasonal pattern in 2021 (and 2020), and the 0.2% rise in 2021 was the lowest July to August movement since a 0.2% fall between July and August 1992 in the constructed historical series.

The increase in the annual rate between July and August 2022 came principally from men’s and women’s clothing, where prices rose between July and August 2022 but fell between the same two months a year ago.

Figure 4 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 CPIH all goods index rose by 13.0% in the 12 months to August 2022, down from 13.6% in July. The rate rose sharply between February 2021 and July 2022 before easing in August.

The CPIH all services index rose by 5.1% in the 12 months to August 2022, up from 4.9% in July. The rate has also risen over the last year but less sharply than for goods. However, the August rate is the highest since March 1993, when it was 5.5% in the constructed historical series.

CPIH excluding energy, food, alcohol and tobacco rose by 5.6% in the 12 months to August 2022, up from 5.5% in July. This is the highest core CPIH inflation rate since April 1992, when it was 5.7% in the constructed historical series.

Figure 5 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 2022. To understand what has changed the inflation rate between these months, we can look at the differences between the contributions made by the groups to the rate in July 2022, and the rate in August 2022. Summing the contributions to change across the 12 divisions results in the change to the annual CPIH rate between the latest two months, that is, the easing from 8.8% to 8.6%.

The easing in the annual CPIH rate into August 2022 was driven by contributions from 3 of the 12 divisions, with the largest downward contribution (of 0.29 percentage points) coming from transport, particularly motor fuels (0.27 percentage points). This was partially offset by smaller upward contributions from food and non-alcoholic beverages (0.05 percentage points), miscellaneous goods and services (0.04 percentage points) and clothing and footwear (0.04 percentage points).

Figure 6 shows the extent to which the different categories of goods and services have contributed to the overall annual CPIH inflation rate over the last two years. The contribution of lower-level spending categories to the annual rate depends on both the price movement in those categories as well as their weight. Contributions help to understand 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, 8.6% in August 2022.

The largest upward contributions to the annual CPIH inflation rate in August 2022 came from housing and household services (2.90 percentage points, principally from electricity, gas and other fuels, and owner occupiers’ housing costs), transport (1.36 percentage points, principally from motor fuels) and food and non-alcoholic beverages (1.20 percentage points). Contributions from these three divisions accounted for 5.46 percentage points, which is nearly two-thirds of the annual CPIH inflation rate. Their combined weight comprises 51.8% of the CPIH basket.

The contributions from food and non-alcoholic beverages (1.20 percentage points) and restaurants and hotels (0.79 percentage points) are the largest since the start of the National Statistic series in 2006.

The Consumer Prices Index (CPI) differs from the CPIH in that it does not include owner occupiers’ housing costs (OOH) and Council Tax. Figure 7 shows the contribution of these components to the annual CPIH inflation rate in the context of wider housing-related costs. In August 2022, the contribution of housing and household services in total to the annual CPIH inflation rate was 2.90 percentage points, little changed from 2.91 percentage points in July. The July figure was the highest in the National Statistic series, which began in January 2006.

The relatively high contribution to the rate since April 2022 came mainly from electricity, gas and other fuels. This reflects price rises for gas and electricity following the increase in the Office of Gas and Electricity Markets (Ofgem) cap on energy prices on 1 April 2022, and follows an earlier rise in the price cap on 1 October 2021. Electricity prices rose by 54.0% and gas prices by 95.7% in the 12 months to August 2022, leading to a 1.84 percentage point contribution to the annual inflation rate from electricity, gas and other fuels in total. The next change to the Ofgem energy price cap is due in October 2022.

OOH’s contribution to the CPIH annual inflation rate rose marginally from 0.60 to 0.61 percentage points between July and August 2022, increasing the annual rate by 0.01 percentage points. This is a result of costs increasing by 0.3% in August 2022, compared with a smaller rise of 0.2% a year earlier.

The contribution to the annual rate from Council Tax was 0.10 percentage points in August 2022. This reflects an annual rate of 3.4%. In April 2022, a £150 non-repayable Council Tax rebate payment was provided to all households that are liable for Council Tax in Bands A to D in England. There was also further funding available for households that need support but are not eligible for this rebate, and for the devolved countries to administer to non-England households. This rebate was out of scope of CPIH and therefore not reflected in the figures.

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 8 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). The CPI inflation rate is added for comparison.

The CPI all goods index rose by 12.9% in the 12 months to August 2022, down from 13.5% in July. The CPI all services index rose by 5.9% in the 12 months to August 2022, up from 5.7% in July. Core CPI (excluding energy, food, alcohol and tobacco) rose by 6.3% in the year to August 2022, increasing from 6.2% in July.

Figure 9 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 2022. Summing the contributions to change across the 12 divisions results in the change to the annual CPI rate between the two months, that is, the fall from 10.1% to 9.9%.

The easing in the annual CPI rate into August 2022 was driven by contributions from 4 of the 12 divisions, with the largest downward contribution of 0.37 percentage points coming from transport, particularly motor fuels (0.33 percentage points). This was partially offset by smaller upward contributions from food and non-alcoholic beverages (0.06 percentage points), clothing and footwear (0.05 percentage points) and miscellaneous goods and services (0.05 percentage points). Although the sizes of the contributions differ from CPIH, the main drivers to change are the same where they are common to both measures.

Figure 10 shows the extent to which the different categories of goods and services have contributed to the overall annual CPI inflation rate over the last two years.

While the CPIH includes extra housing components not included in the CPI, the largest contributions to the annual CPI inflation rate were from the same divisions that made the largest contributions to the annual CPIH rate, namely housing and household services, transport, and food and non-alcoholic beverages.

Figure 11 illustrates CPI inflation against the G7 countries that produce a comparable measure.

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 the Consumer price indices, a brief guide: 2017 article.

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

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

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

Retail Prices Index (RPI)

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 12.3% in August 2022.

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.

Treatment of the Energy Bills Support Scheme (EBSS)

On 3 February 2022, the UK government announced an Energy Bills Rebate package to help households to manage rising energy bills. On 26 May 2022, the UK government announced an additional Cost of Living Support package. These packages included:

• a £150 non-repayable Council Tax rebate payment for all households that are liable for Council Tax in Bands A to D in England
• a £400 payment to support households with their energy bills through the Energy Bills Support Scheme

Decisions on whether to include rebates, subsidies and discounts in our consumer price inflation statistics are not clear cut and are taken on a case-by-case basis. We aim to be consistent with the national accounts, the public sector finances and other economic statistics. Decisions are based on international statistical guidance and practical considerations. More information on this is provided in Section 9.2 of our Consumer Price Indices Technical Manual. We have previously announced that the Council Tax rebate is out of scope of the Consumer Prices Index including owner occupiers’ housing costs (CPIH) and Retail Prices Index (RPI). Council Tax is not included in the Consumer Prices Index (CPI).

The Office for National Statistics (ONS) classifications assessment of the EBSS and its treatment in consumer price indices was announced on 31 August 2022. The EBSS has been classified as a current transfer paid by central government to the households sector. As such, the transfers increase household income rather than reduce household expenditure. The implication of this decision, and in line with the ONS’s previous decision on the classification of the Council Tax rebate, is that the EBSS is not part of household expenditure and will therefore be treated as out of scope of the consumer price indices.

Other more recently announced policy proposals will go through the same ONS procedures to determine their treatment in the national accounts and consumer price inflation statistics.

Personal inflation calculator

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, in order to produce an estimate of their personal inflation based on those spending patterns. If you have any questions or comments on the inflation calculator, please email cpi@ons.gov.uk.

Consumer price inflation historical estimates, UK, 1950 to 1988

On 18 May 2022, we published the Consumer price inflation, historical estimates, UK, 1950 to 1988 – methodology. This includes new estimates of CPIH over the period, and improved estimates of CPI. 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 a CPIH historical series covering the period from 1989 to 2005 in the 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.

Weights for consumer price inflation statistics

In line with usual practice, the expenditure weights used in compiling the CPIH and CPI will be updated at the start of 2023. Normally the weights would be updated using the latest Blue Book-consistent Household final consumption expenditure (HFCE) dataset, which is lagged by two years. The unprecedented events of the last few years have meant we have made adjustments to expenditure feeding into the weights update to incorporate some of the larger changes seen in spending patterns so they are more reflective of the year immediately prior to use in consumer inflation. More information on these adjustments can be found in Section 2 of our Consumer price inflation, updating weights: 2022 article.

We are considering the most suitable approach to use for the forthcoming 2023 update of expenditure weights. In particular, this will take into account any continued, large shifts in consumer spending along with international guidance and best practice. We will aim to announce our agreed approach for the update of 2023 consumer inflation weights in the November 2022 release, to be published on 14 December 2022 subject to the publication of international guidance.

Coronavirus impacts

Since the start of the coronavirus pandemic, there have been challenges around our collection activities. This is because 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. In April 2021, for example, we were unable to collect prices in store. However, we resumed in-store collections from May 2021 following the approach detailed in our Consumer price statistics: resuming a field-based price collection methodology.

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

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

Restrictions caused by the coronavirus pandemic began easing from 12 April 2021 and, since August 2021, there are no items across the CPIH basket of goods and services that are unavailable to consumers. The items that were unavailable during parts of 2020 and 2021 are listed in Table 58 of the Consumer price inflation 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. The figures in this publication use data collected on or around 16 August 2022.

Our Consumer price indices, a brief guide article 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 methodology article 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 faced by consumers and households using three “use cases”, along with how they relate to the measures currently published and those under development. We have also published proposed updates in 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 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.