Consumer price inflation, UK: February 2023

• The Consumer Prices Index including owner occupiers' housing costs (CPIH) rose by 9.2% in the 12 months to February 2023, up from 8.8% in January.
• The largest upward contributions to the annual CPIH inflation rate in February 2023 came from housing and household services (principally from electricity, gas, and other fuels), and food and non-alcoholic beverages.
• On a monthly basis, CPIH rose by 1.0% in February 2023, compared with a rise of 0.7% in February 2022.
• The Consumer Prices Index (CPI) rose by 10.4% in the 12 months to February 2023, up from 10.1% in January.
• On a monthly basis, CPI rose by 1.1% in February 2023, compared with a rise of 0.8% in February 2022.
• The largest upward contributions to the monthly change in both the CPIH and CPI rates came from restaurants and cafes, food, and clothing, partially offset by downward contributions from recreational and cultural goods and services (particularly recording media), and motor fuels.
• The estimates for February 2023 have been constructed using updated expenditure weights; this is the second and final weights update for 2023.
• This release is the first publication to include expanded data on rail fares as part of our project to transform consumer price statistics.

The Consumer Prices Index including owner occupiers' housing costs (CPIH) rose by 9.2% in the 12 months to February 2023, up from 8.8% in January but below a recent peak of 9.6% in October 2022. Indicative modelled consumer price inflation estimates suggest that the October 2022 rate was the highest rate in over 40 years (the CPIH National Statistic series begins in January 2006). Since October 2022, the CPIH annual rate has fluctuated around 9.2%, a rate that was previously recorded just over 30 years ago, between September and December 1990. The rise in the annual rate between January and February 2023 came as a result of prices rising by 1.0% on the month compared with a rise of 0.7% a year earlier.

The Consumer Prices Index (CPI) rose by 10.4% in the 12 months to February 2023, up from 10.1% in January but below a recent peak of 11.1% in October 2022. Our indicative modelled estimates of consumer price inflation suggest that the October 2022 peak was the highest annual inflation rate since 1981 (the CPI National Statistic series begins in January 1997). The rise in the CPI annual rate between January and February 2023 came as a result of prices rising by 1.1% on the month, compared with a rise of 0.8% 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, and it is covered in more detail in Section 4: Latest movements in CPIH inflation in this bulletin, while Section 5: Latest movements in CPI inflation provides commentary on the CPI. Section 3: Notable movements in prices covers both CPIH and CPI, though the figures reflect CPIH.

The increase in the annual inflation rate in February 2023 mainly reflected price rises in the restaurants and hotels, food and non-alcoholic beverages, and clothing and footwear divisions. These were partially offset by downward effects coming from recreation and culture, and from motor fuels within the transport division.

Restaurants and hotels

The annual inflation rate for restaurants and hotels was 12.1% in February 2023, up from 10.8% in January, and the highest rate since the constructed historical estimate of 12.1% in July 1991. The rate was last higher, at 12.2%, in June 1991.

The main driver behind the increase in the rate between January and February 2023 came from restaurants and cafes, where prices rose by 11.4% in the year to February 2023, up from 9.4% in the year to January 2023. This was a result of larger price rises between January and February 2023 than between the same two months in 2022. The upward pressure came from price increases for alcohol served in restaurants, cafes and pubs. The rise follows some price falls in January 2023 for items such as gin, whisky and some beers. However, the monthly rise into February 2023 was larger than the fall in January 2023.

Food and non-alcoholic beverages

Food and non-alcoholic beverage prices rose by 18.2% in the year to February 2023, up from 16.8% in January. The annual rate for this category in February 2023 is the highest observed for over 45 years. Indicative modelled estimates suggest that the rate would have last been higher in August 1977, when it was estimated to be 21.9%.

The increase in the annual rate for food and non-alcoholic beverages between January and February 2023 was driven by price movements from 8 of the 11 detailed classes, with no significant offsetting downward pushes. The largest upward effect came from vegetables, where prices rose in the month to February 2023 by more than a year earlier. There have been media reports of shortages of salad produce and other vegetables, reportedly because of bad weather in southern Europe and Africa, and the impact of higher electricity prices on produce grown out of season in greenhouses in the UK and northern Europe. These price movements resulted in an annual rate of 18.0% for vegetables in the year to February 2023, the highest rate since February 2009. The annual rates in February 2023 for bread and cereals, chocolate and confectionery, other food products (principally ready-meals and sauces) and hot beverages were each the highest since at least 2008.

Clothing and footwear

Prices of clothing and footwear rose, overall, by 8.0% in the year to February 2023, up from 6.2% in the year to January 2023, but below the recent high of 8.5% in October 2022. On a monthly basis, prices rose by 2.5% between January and February 2023, compared with a smaller rise of 0.8% between the same two months a year ago. Prices usually rise between January and February as new stock starts to enter the shops following the new year sales period. However, the 2.5% rise in 2023 is the largest observed between January and February since 2012. The price movements reflect the amount of discounting observed in the datasets.

The upward effect on the change in the headline rate between January and February 2023 was principally from women's clothing, where prices rose by more this year than a year ago.

Recreation and culture

These upward movements were partially offset by a downward effect from recreation and culture, where prices rose by 4.1% in the year to February 2023, down from 5.0% in January. The easing in the annual rate came largely from recording media (particularly DVDs), where prices fell by 2.8% in the year to February 2023 compared with a smaller fall of 0.6% in January. The movements in this class depend, in part, on the composition of bestseller charts. Short-term movements in the rate should therefore be interpreted with a degree of caution. Other smaller downward effects within recreation and culture came from games, toys and hobbies, and equipment for sport and open-air recreation.

Transport

The annual inflation rate for transport eased slightly from 3.4% in January 2023 to 3.1% in February 2023, down for an eighth consecutive month from a recent peak of 15.2% in June 2022, and the lowest rate since February 2021. This relatively small change in the annual rate hides larger changes in the more detailed transport categories. The driver behind the easing in the rate between January and February 2023 was motor fuels.

Overall, the annual rate for motor fuels eased from 7.7% to 4.6% between January and February 2023. Average petrol and diesel prices stood at 148.0 and 169.5 pence per litre, respectively, in February 2023, compared with 147.6 and 151.7 pence per litre in February 2022. Petrol prices fell by 1.4 pence per litre between January and February 2023, compared with a rise of 2.5 pence per litre between the same two months a year ago. Similarly, diesel prices fell by 2.6 pence per litre this year compared with a rise of 2.8 pence per litre a year ago.

Partially offsetting the downward effect from motor fuels, there were upward pushes between January and February 2023 from second-hand cars and transport services. Second-hand car prices fell by 5.9% in the year to February, compared with a larger fall of 7.2% in the year to January. The annual rate for transport services rose from 7.6% to 7.8% between January and February.

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 rose from 5.3% to 5.7% between January and February 2023.

The CPIH all goods index rose by 13.4% in the 12 months to February 2023, up slightly from 13.3% in January. The rise in the rate has come from an upward contribution to the change from food, alcoholic beverages and tobacco. This has been largely offset by a downward contribution from industrial goods, with overall energy prices rising by 48.3% in the year to February 2023, down from 50.7% in the year to January, principally caused by movements in motor fuel prices.

The CPIH all services index rose by 5.6% in the 12 months to February 2023, up from 5.2% in January. The largest upward contribution to the change in the rate between January and February 2023 was from recreational and personal services (almost entirely from catering services), with the annual inflation rate rising from 9.4% to 10.4% between January and February 2023. There were smaller upward contributions from travel and transport services, and communication.

Figure 6 shows how each of the main groups of goods and services contributed to the change in the annual CPIH inflation rate between January and February 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 January 2023 and the rate in February 2023. These differences sum to the change to the annual CPIH rate between the latest two months, that is, the rise from 8.8% to 9.2%.

The rise in the annual CPIH rate into February 2023 was driven by upward contributions from 7 of the 12 divisions, led by an upward contribution (of 0.17 percentage points) from restaurants and hotels. The majority of this came from alcohol served in restaurants, cafes and pubs. There were further large upward contributions from food and non-alcoholic beverages (0.12 percentage points), and clothing and footwear (0.09 percentage points). The largest, partially offsetting, downward contribution came from recreation and culture (0.08 percentage points).

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 both the price movement in that category as well as its 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, 9.2% in February 2023.

The largest upward contributions to the annual CPIH inflation rate in February 2023 came from housing and household services (principally from electricity, gas, and other fuels), and food and non-alcoholic beverages. Contributions from these two divisions accounted for 5.36 percentage points, over half of the annual CPIH inflation rate. Their combined weight comprises around 40% of the CPIH basket.

The annual contributions from food and non-alcoholic beverages (1.68 percentage points), restaurants and hotels (1.11 percentage points), miscellaneous goods and services (0.48 percentage points) and health (0.13 percentage points) were the largest since the start of the National Statistics 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 8 shows the contribution of these components to the annual CPIH inflation rate in the context of wider housing-related costs. In February 2023, the contribution of housing and household services in total to the annual CPIH inflation rate was 3.68 percentage points, down from 3.70 percentage points in January.

The relatively high contribution to the rate since April 2022 came mainly from electricity, gas, and other fuels. The contribution from this group reflects price rises for gas and electricity in April and October 2022, following increases in the Office of Gas and Electricity Markets (Ofgem) cap on energy prices – partly offset by the government's Energy Price Guarantee (EPG), which has limited the cost of electricity and gas since October 2022, "keeping a bill for a typical household in Great Britain to around £2,500 (annual equivalent)".

OOH's contribution to the CPIH annual inflation rate rose slightly from 0.66 to 0.67 percentage points between January and February 2023. Costs increased by 0.3% in the month to February 2023, compared with a slightly smaller rise of 0.2% in the same month a year earlier. There was also a 0.32 percentage point contribution from actual rentals, little changed from a month earlier.

The contribution to the annual rate from Council Tax remains unchanged at 0.10 percentage points in February 2023. This reflects an annual rate of 3.4%.

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 9 shows CPI inflation against the Group of Seven (G7) countries that produce a comparable measure.

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 6.2% in the year to February 2023, up from 5.8% in January but below the rates observed in the fourth quarter of 2022. The CPI all goods index increased by 13.4% in the year to February 2023, up from 13.3% in January. The CPI all services index increased by 6.6% in the year to February 2023, up from 6.0% in January.

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 January and February 2023.

The rise in the annual CPI rate into February 2023 was driven by contributions from 7 of the 12 divisions, with the largest upward contribution of 0.20 percentage points coming from restaurants and hotels. Further large upward contributions came from food and non-alcoholic beverages (0.15 percentage points) and clothing and footwear (0.11 percentage points). The largest, partially offsetting, downward contribution to the change in the annual rate came from recreation and culture (0.11 percentage points). 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.

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.

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, and food and non-alcoholic beverages.

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 our Consumer price indices, a brief guide: 2017.

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 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 the 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 13.8% in February 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 consumer price inflation statistics

In line with usual practice, the expenditure weights used in compiling the Consumer Prices Index including owner occupiers' housing costs (CPIH) and the Consumer Prices index (CPI) have been calculated using updated spending information. Normally, this would be national accounts Household Final Consumption Expenditure (HHFCE) data lagged by two years (that is, 2021). However, the unprecedented events of the last few years have meant we have adjusted 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 price inflation. Since consumers' expenditure was affected by the lockdowns that were in place at the start of 2021, we have decided to use the same broad approach in the 2023 update.

We estimated a 2022 dataset by taking the most up-to-date HHFCE data available (Quarter 1 (Jan to Mar) to Quarter 3 (July to Sept) 2022, second estimate) and imputing the fourth quarter based on the 2021 seasonal growth, since this is the most recent period with no national movement restrictions in place. We used the same threshold as in the previous year (25%, and also considering cases that fall in the range from 20% to 25%) to identify Classification of Individual Consumption by Purpose (COICOP) classes where there were large changes in spending levels between 2021 and 2022. For these classes, we replaced the usual 2021 data with the 2022 estimate. For some of these classes, we also made some additional changes:

• for energy classes that had experienced high inflation over the year, we adjusted our imputed estimate for Quarter 4 (Oct to Dec) 2022 to account for the general change in prices

• for some passenger transport and cultural services classes, we imputed Quarter 4 2022 using the 2019 growth rather than 2021; this was where 2021 spending may have been affected by ongoing movement restrictions in other countries or where consumer confidence was slower to recover following the end of national movement restrictions across the UK

Our approach is consistent with international guidance (PDF, 135KB).

The COICOP classes that have been adjusted are detailed in the 2023 edition of our Consumer price inflation, updating weights article, alongside an explanation of the latest movements. The weights data for CPIH and CPI in February 2023 are published in Tables 11 and 25 of the Consumer price inflation dataset. As with last year, we have made no changes to the weighting scheme for the Retail Prices Index.

Alternative data sources for rail fares

We have published our final impact analysis on the transformation of consumer price statistics for rail fares. The new data and methods have been included in CPIH, CPI and RPI from publication of the February 2023 indices on 22 March 2023. While the headline impact of new rail fares data on CPIH, CPI and RPI is negligible, these new data enable us to produce more granular statistics offering important insights into the components driving inflation in the UK.

Changes to the RPI follow the annual governance process in line with section 21 of the Statistics and Registration Service Act 2007, details of which can be seen on our Correspondence on proposed changes to the Retail Prices Index (RPI) page.

New data and methods for second-hand car indices have not been incorporated at this time. We intend to make further necessary improvements to our methods and systems to ensure their reliability before we are ready to commit to using these data for live production of our consumer price indices.

The technology and processes we have developed lay the foundation for our future transformation work. More information about the project and our ongoing transformation plans can be found in our Transformation of consumer price statistics article, that we will update this spring with amended timelines.

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

Treatment of the Council Tax rebate, Energy Bills Support Scheme (EBSS) and Energy Price Guarantee in consumer price inflation

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 (EBSS)

Subsequently, on 8 September 2022, the government announced the Energy Price Guarantee that would limit the unit cost of electricity and gas for households.

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 announced that the Council Tax rebate and EBSS are out of scope of the consumer price indices on 23 March and 31 August 2022, respectively. The formal Economic Statistics Classification decisions were that they were both current transfers paid by central government to the households sector. As such, both increased household income rather than reduced expenditure. The implication of the decisions was that they were not part of household expenditure and, as a result, out of scope of the consumer price indices.

On 31 October 2022, we published the conclusion of our classification review of the Energy Price Guarantee (EPG) for domestic consumers. The payments under this scheme have been classified as subsidies on products, paid by central government to the energy suppliers in the non-financial corporations sector in the UK. The implication for consumer price inflation of the classification decision is that the EPG influences the prices that domestic consumers are charged for a unit of gas or electricity. It is these reduced unit prices that are being used in compiling the CPIH, CPI and RPI, which are hence lower while the schemes are in operation than if the EPG had not been introduced.

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. If you have any questions or comments on the inflation calculator, please email cpi@ons.gov.uk.

Every quarter, we publish experimental estimates of inflation rates for different types of households on a CPIH basis, including for example inflation rates for households in different income deciles, different types of tenure, and retirement status. On 15 February 2023, we published monthly data for November to December 2022.

On 25 October 2022, we also published our experimental analysis of price changes for a sample of lowest-cost grocery items. The analysis uses in-house web-scraped data to investigate the price movements for a sample of 30 everyday grocery items (including pasta, rice, milk, and so on), which are commonly bought by households on low incomes.

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 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.

Pre-release access

The Bank of England was granted exceptional pre-release access to an estimate of consumer price inflation data at 8:30am on Monday 20 March 2023 so that the data were available for the Monetary Policy Committee meeting held on that day. The letters requesting and agreeing to pre-release are available in the Exchange of letters between the Bank of England, HM Revenue and Customs, and Office for National Statistics (ONS) for exceptional pre-release access 2023.

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 14 February 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 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 have described our future approach to measuring changing prices and costs for 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 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.