Consumer price inflation, UK: December 2023

• The Consumer Prices Index including owner occupiers’ housing costs (CPIH) rose by 4.2% in the 12 months to December 2023, the same rate as in November.

• On a monthly basis, CPIH rose by 0.4% in December 2023, the same rate as in December 2022.

• The Consumer Prices Index (CPI) rose by 4.0% in the 12 months to December 2023, up from 3.9% in November, and the first time the rate has increased since February 2023.

• On a monthly basis, CPI rose by 0.4% in December 2023, the same rate as in December 2022.

• The largest upward contribution to the monthly change in both CPIH and CPI annual rates came from alcohol and tobacco while the largest downward contribution came from food and non-alcoholic beverages.

• Core CPIH (excluding energy, food, alcohol and tobacco) rose by 5.2% in the 12 months to December 2023, the same rate as in November; the CPIH goods annual rate slowed from 2.0% to 1.9%, while the CPIH services annual rate remained at 6.0%.

• Core CPI (excluding energy, food, alcohol and tobacco) rose by 5.1% in the 12 months to December 2023, the same rate as in November; the CPI goods annual rate slowed from 2.0% to 1.9%, while the CPI services annual rate increased from 6.3% to 6.4%.

The Consumer Prices Index including owner occupiers’ housing costs (CPIH) rose by 4.2% in the 12 months to December 2023, the same rate as in November and down from a recent peak of 9.6% in October 2022. Our indicative modelled consumer price inflation estimates, as reported in our Consumer price inflation, historical estimates and recent trends, UK: 1950 to 2022 article, suggest that the October 2022 rate was the highest in over 40 years (the CPIH National Statistic series begins in January 2006). The annual rate in December 2023 was the joint lowest since October 2021.

The unchanged annual rate between November and December 2023 was a result of prices rising by 0.4% on the month, the same rate as it was between November and December a year earlier.

The owner occupiers' housing costs (OOH) component of CPIH rose by 5.3% in the 12 months to December 2023, the same rate as in November. OOH costs rose by 0.4% on the month in November 2023, the same rate as it was between November and December a year earlier.

The Consumer Prices Index (CPI) rose by 4.0% in the 12 months to December 2023, up from 3.9% in November and down from a recent peak of 11.1% in October 2022. Our indicative modelled consumer price inflation estimates suggest that the October 2022 peak was the highest rate in over 40 years (the CPI National Statistic series begins in January 1997). The annual rate in December 2023 was the second lowest since September 2021.

The small rise in the annual rate between November and December 2023 was a result of prices rising by 0.4% on the month, the same rate to one decimal place as it was between November and December a year earlier.

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

The identical CPIH annual inflation rates in November and December reflected downward contributions from three divisions (most notably food and non-alcoholic beverages) and upward contributions from five divisions (most notably alcohol and tobacco).

Alcohol and tobacco

Prices in the alcohol and tobacco division rose by 12.8% in the year to December 2023, compared with a rise of 10.2% in November. Prices rose by 1.2% between November and December this year, compared with a fall of 1.1% between the same two months a year ago.

The increase in the annual rate was largely the result of the increase in tobacco duty, after the government announced higher taxes in their autumn statement. Tobacco prices rose by 4.1% between November and December compared with a 0.3% rise between the same two months last year, leading to an annual increase of 16.0%.

Alcohol made a smaller contribution to the rise in the annual rate. Alcohol prices fell by 1.6% between November and December 2023 and by 2.3% between the same two months last year, leading to an annual increase of 9.6%.

Recreation and culture

Prices for recreational and cultural goods and services rose by 0.2% between November and December this year, compared with a fall of 0.2% a year ago. The annual rate rose to 6.0% in December 2023, up from 5.5% in November.

The increase in the rate between November and December 2023 was the result of small upward effects from a variety of the more detailed classes. The largest contributions came from DVDs, computer software, computer games consoles, sports equipment, toys, plants and flowers, cat food, live music, theatre admissions, and package holidays. Short-term movements in some of these categories should be interpreted with a degree of caution as the movements depend upon the composition of best seller charts.

Transport

Prices in the transport division fell by 1.3% in the year to December 2023, compared with a fall of 1.4% in November. Prices rose by 0.6% between November and December this year, compared with a rise of 0.5% between the same two months a year ago.

The reduction in the pace of decline was mainly the result of air fares, with motor fuels also providing a small positive contribution, however these were offset by a strong downward contribution from used cars.

Air fares rose as usual between November and December. This year, they rose by 57.1%, compared with 61.1% a year ago. However, because the weight for this subclass increased significantly between 2022 and 2023, this amplified the impact of the December 2023 monthly movement on the headline, resulting in a positive contribution to the change in annual consumer price inflation. The annual rate for air fares was 0.8% in December 2023, down from 3.3% in October and 31.4% in May this year.

The average price of petrol fell by 8.2 pence per litre between November and December 2023 to stand at 142.8 pence per litre, down from 155.3 pence per litre in December 2022. Diesel prices fell by 7.6 pence per litre this year to stand at 151.4 pence per litre, down from 179.1 pence per litre in December 2022.

These movements resulted in overall motor fuel prices falling by 10.8% in the year to December 2023, compared with a fall of 10.6% in the year to November.

Second-hand car prices fell for the seventh consecutive month. Between November and December 2023, they fell by 2.8%, compared with a rise of 0.3% between the same two months last year. On an annual basis, prices fell by 8.4% in the year to December, compared with a fall of 5.4% in the year to November.

Food and non-alcoholic beverages

Food and non-alcoholic beverage prices rose by 0.5% between November and December 2023, compared with a rise of 1.6% a year ago. The annual rate was 8.0% in December 2023, easing for the ninth consecutive month from a recent high of 19.2% in March 2023, the highest annual rate seen for over 45 years. The December 2023 rate is the lowest since April 2022.

The easing in the annual rate for food and non-alcoholic beverages was driven by milk, cheese and eggs, where prices rose by 0.5% on the month, compared with a rise of 4.1% a year ago. Prices of a variety of products in this class fell on the month having increased in price the year before leading to downward contributions from low-fat milk, yoghurt, cheese, and eggs.

This resulted in an annual rate for milk, cheese and eggs of 3.3%, the lowest observed since October 2021.

Other smaller but still notable downward contributions to the change in the rate came from meat, fish, and sugar and jam. The only partially offsetting upward effect came from bread and cereals, where cakes, and chocolate biscuits provided upward contributions.

Although the annual inflation rate for food has been slowing, food prices are still high following relatively sharp rises over the latest two years. The overall price of food and non-alcoholic beverages rose by around 26% over the two years between December 2021 and December 2023. This compares with a rise of around 9% over the 10 years between December 2011 and December 2021.

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

The core CPIH annual inflation rate was 5.2% in December 2023. This is the joint-lowest rate since June 2022, when it was also 5.2%. It is down from a recent high of 6.5% in May 2023, which was the highest rate since November 1991, when it was also 6.5% in the constructed historical series.

The CPIH all goods index rose by 1.9% in the 12 months to December 2023, down from 2.0% in November, and the lowest rate since April 2021. The slowing in the rate has been caused principally by a downward contribution to the change from processed food and non-alcoholic beverages.

The CPIH all services index rose by 6.0% in the 12 months to December 2023, the same rate as in November. The largest upward contribution to the change came from travel and transport services, whereas the largest downward contribution came from miscellaneous and other services.

Figure 6 shows how each of the main groups of goods and services contributed to the change in the annual CPIH inflation rate between November and December 2023. To understand what has changed the inflation rate between these months, we can look at the differences between the contributions each of the 12 divisions made to the rate in November 2023 and the rate in December 2023. These differences sum to the change in the annual CPIH rate between the latest two months. This month, the differences sum to zero as the rate has remained at 4.2%.

The identical rates in November and December 2023 reflected upward contributions from five divisions, which were offset by downward contributions from three divisions, most notably food and non-alcoholic beverages.

Figure 7 shows the extent to which the distinct categories of goods and services have contributed to the overall annual CPIH inflation rate over the last two years. The contribution of each category to the annual rate depends on the price movement in that category as well as its weight, which is updated annually. Contributions help to explain what is driving the inflation rate by expressing it as the additive sum of its parts. For any one month, when added together, the contributions from the 12 divisions sum to the overall CPIH inflation rate, for example, 4.2% in December 2023.

The largest upward contributions to the annual CPIH inflation rate in December 2023 came from restaurants and hotels, and food and non-alcoholic beverages. The contribution from the latter group eased for the ninth successive month, from a high of 1.76 percentage points in March to 0.76 percentage points in December 2023, the lowest since April 2022. The contribution from restaurants and hotels was 0.80 percentage points, down from 0.83 percentage points in November 2023.

Transport provided the only negative contribution (of 0.15 percentage points) to the annual CPIH inflation rate, while the contribution from alcohol and tobacco was the highest since records began in January 2006.

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

OOH’s contribution of 0.84 percentage points was the second highest since at least January 2006. The contribution from housing and household services overall was 0.58 percentage points in December 2023, little changed from November.

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: December 2023 article.

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

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

Annual core CPI rose by 5.1% in the year to December 2023, the same rate as in November and down from a recent high of 7.1% in May, which was the highest recorded since March 1992. The CPI all goods index rose by 1.9 in the year to December 2023, down from 2.0% in November. The CPI all services index rose by 6.4% in the year to December 2023, up from 6.3% in November 2023 and down from 7.4% in July 2023, which was the joint-highest rate (with May 2023) since March 1992.

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

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

The rise in the rate into December 2023 was driven by upward contributions from six divisions, partially offset by downward contributions from three divisions. The largest upward contributions came from alcohol and tobacco, transport, and recreation and culture.

Although the sizes of the contributions differ from CPIH, the main drivers to the change are the same where they are common to both measures on the assumption there has been no weights effect from year to year.

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

The CPIH includes extra housing components not included in the CPI. This can result in the largest contributions to the annual CPI and CPIH inflation rates coming from different divisions. However, in December 2023, the largest-contributing divisions were the same, namely restaurants and hotels (with a contribution of 0.97 percentage points to the CPI annual rate) and food and non-alcoholic beverages (with a contribution of 0.94 percentage points).

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 range of indices available and their uses, please see Consumer price indices, a brief guide: 2017 and our Measuring changing prices and costs for consumers and households: December 2023 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 (CPI)

The CPI is a measure of consumer price inflation produced to international standards and is based on European regulations for the Harmonised Index of Consumer Prices. The CPI is the inflation measure used in the government’s target for inflation.

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

Retail Prices Index (RPI)

The RPI does not meet the required standard for designation as a National Statistic. In recognition that it continues to be widely used in contracts, we continue to publish the RPI, its subcomponents and RPI excluding mortgage interest payments (RPIX). To view the all-items RPI, please see the data time series section of the inflation and price indices area of our website. The annual RPI inflation rate was 5.2% in December 2023.

The UK Statistics Authority and HM Treasury launched a consultation in 2020 on the authority’s proposal to address the shortcomings of the RPI. From 2030 (at the earliest), as outlined in the UK Statistics Authority response to the consultation, the CPIH methods and data sources will be introduced into the RPI. Additionally, the supplementary and lower-level indices of the RPI will be discontinued.

Weights for 2023 and 2024 consumer price inflation statistics

In line with usual practice at the start of each year, the expenditure weights used in compiling the Consumer Prices Index including owner occupiers’ housing costs (CPIH) and the Consumer Prices Index (CPI) in 2023 were calculated using updated spending information. Normally, this would be national accounts household final consumption expenditure (HHFCE) data lagged by two years. However, because of the unprecedented events of the last few years and the larger changes seen in spending patterns, we adjusted the data so that the resulting weights were more reflective of the year immediately before use in consumer price inflation. This is in line with the procedures adopted in 2021 and 2022. More information is available in our Consumer price inflation, updating weights articles.

Since the final coronavirus (COVID-19) lockdown occurred in 2021, we plan to revert to our standard methodology and use unadjusted data reflecting spending in 2022 when producing the 2024 CPIH and CPI weights. The weights for the Retail Prices Index (RPI) were not adjusted for changed spending patterns in 2021 to 2023 and will not be adjusted for 2024.

The weights used to produce the CPI and CPIH have historically been rounded to integers as parts per thousand of the all-items indices. For 2024, we plan to use unrounded weights in compiling the indices. The RPI will continue to be based on integer weights.

Households and the cost of living

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

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

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

On 4 December 2023, we published our experimental Household Costs Indices (HCIs) for UK household groups on a quarterly basis for the first time. This included new estimates for the period from January 2022 to September 2023, and revised estimates from 2007 to 2021. The HCIs reflect how different types of households experience changing prices and differ from CPIH and CPI, which are based on recognised economic principles and which provide an aggregate measure of inflation for household spending in the UK.

We have previously published CPIH and CPI-consistent inflation rate estimates for UK household groups. However, the quarterly publication of HCIs will now better support users' understanding of how rising prices and the cost of living affect different types of households, reflecting their unique role in our range of consumer price inflation measures. CPIH and CPI-consistent subgroup estimates will therefore be discontinued.

Alternative data sources

We are undertaking a programme of transformation across our price statistics, including identifying new sources, improving methods, and developing systems. More information about the project and our ongoing transformation plans can be found in our updated Research and developments in the transformation of UK consumer price statistics article, released on 1 December 2023. The latest release includes information on the transformation of consumer price statistics on second-hand cars and private rents, which we plan to introduce in March 2024, and our proposed approach to outlier detection in grocery scanner data.

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

Consumer price inflation historical estimates, UK, 1950 to 1988

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

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

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 12 December 2023.

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

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

Our Users and uses of consumer price inflation statistics: July 2018 update methodology 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 illustrated our approach to Measuring changing prices and costs for consumers and households in March 2018 using three "use cases", along with how they relate to the measures published and under development. We have also published updates, most recently in our Measuring changing prices and costs for consumers and households: December 2023 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 that reflect the change in costs and prices experienced by different households, and the Retail Prices Index (RPI) as a legacy measure that is required to meet existing user needs. Our Shortcomings of the RPI as a measure of inflation article describes the issues with the RPI.