Consumer price inflation, UK: July 2022

• The Consumer Prices Index including owner occupiers' housing costs (CPIH) rose by 8.8% in the 12 months to July 2022, up from 8.2% in June.
• The largest upward contributions to the annual CPIH inflation rate in July 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 0.6% in July 2022, compared with no change in July 2021.

• The Consumer Prices Index (CPI) rose by 10.1% in the 12 months to July 2022, up from 9.4% in June.

• On a monthly basis, CPI also rose by 0.6% in July 2022, compared with no change in July 2021.

• Rising food prices made the largest upward contribution to the change in both the CPIH and CPI annual inflation rates between June and July 2022.

The Consumer Prices Index including owner occupiers' housing costs (CPIH) rose by 8.8% in the 12 months to July 2022, up from 8.2% in June. The annual rate was below 1.2% from April 2020, at the start of the first coronavirus (COVID-19) lockdown, to March 2021. The rate has since risen markedly. The July 2022 figure is the highest recorded annual inflation rate in the National Statistic series, which began in January 2006. The rate was last higher in our constructed historical estimates in December 1990, when it stood at 9.2%. The largest contributions to the annual rate in July 2022 are from housing and household services, transport, and food and non-alcoholic beverages. Their effects are shown in Figure 5 in Section 4.

The Consumer Prices Index (CPI) rose by 10.1% in the 12 months to July 2022, up from 9.4% in June. Similar to the CPIH, the rate has risen sharply over recent months and 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 July 2022 rate are shown in Figure 9 in Section 5.

On a monthly basis, both CPIH and CPI rose by 0.6% in July 2022, compared with no change in July 2021. The CPIH and CPI monthly rates for July 2022 were the largest rises between June and July since the start of the historical constructed series in 1988. The food and non-alcoholic beverages, and transport divisions made the largest upward contributions to the monthly rates in July 2022. In June 2021, the main upward contribution to the monthly rates came from transport overall.

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 key 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 rise in inflation this month reflected prices rises across many parts of the basket. The largest movement (of 0.26 percentage points) in the annual Consumer Prices Index including owner occupiers' housing costs (CPIH) inflation rate in July 2022 came from food and non-alcoholic beverages. This upward movement was three times the size of the next largest contribution – from recreation and culture (0.09 percentage points).

Food and non-alcoholic beverages

Food and non-alcoholic beverage prices have continued to rise. There was an overall increase of 2.3% between June and July 2022, taking the division's annual inflation rate to 12.7% in July 2022, up from 9.8% in June. This month's rise in prices follows three months of increases (of between 1.2% and 1.5%) and is the highest monthly increase since May 2001, when the constructed historical estimates recorded food and non-alcoholic beverage annual inflation to be 2.8%. The annual rate of inflation was last higher in August 2008, when inflation for food and non-alcoholic beverages was 13.2%.

All the eleven food and non-alcoholic beverage classes made upward contributions to the change in the annual inflation rate, where prices overall rose this year but fell a year ago. The largest upward contributions (of 0.04 percentage points) came from bread and cereals, and from milk, cheese and eggs – where prices for shop-bought and delivered milk, cheddar cheese and yoghurts (or fromage frais) increased notably. Other smaller effects (of 0.03 percentage points) came from meat (notably from cooked ham and bacon), vegetables including tubers, and sugar, jam, syrups, chocolate and confectionery.

Recreation and culture

The annual rate for recreation and culture was 5.6% in the year to July 2022, up from 4.8% in June. This is the sixth month in succession where the annual inflation rate for recreation and culture has been 4.7% or more.

Overall prices rose by 0.4% between June and July 2022, compared with a comparable fall of 0.4% the previous year. There were upward contributions from pet related products (principally from pet food), recording media, package holidays, and games, toys and hobbies, amongst other items.

There was a partially offsetting small downward contribution from garden plants and flowers, where prices for potted shrubs fell between June and July 2022 but increased a year ago.

Housing and household services

Overall, prices for housing and household services increased by 9.1% in the year to July 2022, from 8.9% in June. This follows an increase of 0.4% between June and July 2022, compared with a smaller increase (of 0.1%) last year. The annual rate for housing and household services was last higher in March 1991, when it was estimated to be 12.5%.

The upward contribution, to the change in the annual inflation rate, principally came from owner occupiers' housing costs and because of rises to average charges for registered social landlord (RSL) rents. Prices rose between June and July 2022 and by more than a year ago.

Miscellaneous goods and services

Prices for miscellaneous goods and services increased by 4.0% in the year to July 2022, up from 3.1% in June 2022. This is the highest annual inflation rate for this division since June 2006, when it was 4.4%.

All classes in this division made small increases to the contribution to the CPIH annual rate, with the largest movement coming from appliances and products for personal care. Prices for toilet rolls, toothbrushes, electric hair styling appliances (like hair straighteners), and deodorants and anti-perspirants rose between June and July 2022, but fell between the same two months a year ago. There were partially offsetting downward contributions from toothpaste and shower gel, which both fell in price this year but had increased between June and July 2021.

Restaurants and hotels

Restaurant and hotel prices rose by 9.0% in the year to July 2022, up from 8.6% in June. This annual rate was the highest recorded in the National Statistics series, exceeding the 8.6% recorded last month and in August 2021, which was a result of the previous year's Eat Out to Help Out scheme.

Overall prices rose by 0.9% between June and July 2022, compared with a smaller rise of 0.5% a year ago. Most of the upward contribution came from accommodation services, where prices rose by 2.2% in the month, compared with a smaller increase of 1.0% a year earlier. Prices in restaurants and cafes also rose by more than a year ago, with the upward contributions coming from fast food, takeaways, and pub meals.

Clothing and footwear

Prices for clothing and footwear items fell by 1.5% between June and July 2022, compared with a larger fall of 2.0% in the previous year. Prices have risen by 6.6% in the year compared with an increase of 6.1% in the year to June.

The upward movements came from garments, in particular women's clothing, infant's clothing and women's footwear. There was a partially offsetting downward contribution from menswear, where prices overall fell, between June and July 2022, by more than a year ago.

Transport

Although the transport division only made a small upward contribution to change, there were substantial offsetting contributions at the group level.

The annual increase for transport was 15.1% in July 2022, down from 15.2 in June. Over the past two years, the annual rate has risen from minus 1.5% in June 2020 (during the first coronavirus (COVID-19) lockdown) to the latest figure for July 2022.

Within transport, there were upward contributions to the CPIH annual inflation rate from motor fuels and from transport services, where air fares and international rail tickets, in particular, rose in price between June and July 2022.

Fuel prices increased by 2.9% between June and July 2022, and by 43.7% in the year to July 2022. This is the highest rate since before the start of the constructed historical series in January 1989. Following June's record increase to petrol prices, weekly forecourt prices had started to fall during July. However, the gradual reduction still left July's average prices for petrol and diesel both 5.5 pence per litre higher than in June. Average petrol and diesel prices stood at 189.5 and 197.9 pence per litre, respectively, in July 2022, compared with 132.6 and 135.5 pence per litre a year earlier.

Elsewhere in the transport division, there was a large partially offsetting downward contribution from second-hand cars. Second-hand car prices rose by 8.6% in the year to July 2022, down from 15.2% in June. There was a small downward contribution from the repair and maintenance of vehicles, where prices rose between June and July 2022 but by less than a year ago.

Figure 3 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 13.6% in the 12 months to July 2022, up from 12.7% in June. The rate has risen sharply since February 2021 and is the highest level in the official series. The CPIH all services index rose by 4.9% in the 12 months to July 2022, up from 4.5% in June. This is the highest annual CPIH all services inflation rate since March 1993, when it was 5.5%. The rate has also risen over the last year but less sharply than for goods. CPIH excluding energy, food, alcohol and tobacco rose by 5.5% in the 12 months to July 2022, increasing from 5.2% in May and June.

On a monthly basis, CPIH rose by 0.6% in July 2022 compared with no change in July 2021. Figure 4 shows how each of the main groups of goods and services contributed to the change in the CPIH annual inflation rate between June and July 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 June 2022, and the rate in July 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 rise from 8.2% to 8.8%.

The rise in the annual CPIH annual rate for July 2022 was driven by contributions from 8 of the 12 divisions, with the largest contribution (of 0.26 percentage points) coming from food and non-alcoholic beverages. Within food and non-alcoholic beverages, there were upward effects from all 11 classes, with the largest movements (of 0.04 percentage points) coming from bread and cereals, and from milk, cheese and eggs.

Figure 5 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 8.8% in July 2022.

The largest upward contributions to the annual CPIH inflation rate in July 2022 came from housing and household services (2.91 percentage points, principally from electricity, gas and other fuels, and owner occupiers' housing costs), transport (1.66 percentage points, principally from motor fuels) and food and non-alcoholic beverages (1.15 percentage points).

Contributions from these three divisions accounted for 5.71 percentage points, which is nearly two-thirds of the annual CPIH inflation rate. Their combined weight comprises 51.8% of the CPIH basket.

The Consumer Prices Index (CPI) differs from the CPIH in that it does not include owner occupiers' housing costs (OOH) and Council Tax. Figure 6 shows the contribution of these components to the annual CPIH inflation rate in the context of wider housing-related costs. In July 2022, the contribution of housing and household services in total to the annual CPIH inflation rate was 2.91 percentage points, a rise of 0.08 percentage points from June. The July figure was the highest in the National Statistic series, which began in January 2006. The annual rate for the division was 9.1% in July 2022, increasing from 8.9% in June.

The relatively high contribution to the rate since April 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 July 2022, leading to an (unchanged) contribution to the annual inflation rate of 1.87 percentage points 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 increased to 0.60 from 0.56 percentage points between June and July 2022, increasing the annual rate by 0.04 percentage points. This is a result of costs increasing by 0.3% in July 2022 compared with a smaller rise of 0.1% a year earlier.

The contribution to the annual rate from Council Tax remained at 0.11 percentage points in July 2022, and therefore made no contribution to the change. This reflects an unchanged 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, 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 7 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 13.5% in the 12 months to July 2022, up from 12.7% in June. The CPI all services index rose by 5.7% in the 12 months to July 2022, up from 5.2% in June. “Core” CPI (excluding energy, food, alcohol and tobacco) rose by 6.2% in the year to July 2022, increasing from 5.8% in June.

The largest movements in the annual CPI inflation rate in July 2022 came from food.

Figure 8 shows how each of the main groups of goods and services contributed to the change in the annual CPI inflation rate between June and July 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 rise from 9.4% to 10.1%.

The rise in the annual CPI rate into July 2022 was driven by contributions from 9 of the 12 divisions, with the largest contribution (of 0.32 percentage points) coming from food and non-alcoholic beverages. Within food, all classes made an upward contribution to the CPI annual rate of inflation. The largest movements came from bread and cereals (0.06 percentage points), milk, cheese and eggs (0.05 percentage points), and vegetables (including tubers), meat, sugar, jam, honey, syrup, chocolate and confectionary, which each contributed 0.04 percentage points to the change in the annual rate.

Figure 9 shows the extent to which the different categories of goods and services have contributed to the overall CPI annual 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 10 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 July 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.

Personal inflation calculator

To assist individuals in understanding how the rise in inflation affects their expenditure, we have updated our personal inflation calculator. The updated calculator has additional features including allowing 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.

Transforming consumer prices statistics – questionnaire on communicating important changes

The Office for National Statistics (ONS) is undertaking a programme to transform consumer prices. This includes identifying new data sources, improving methods, and developing systems to improve the Consumer Prices Index (CPI) and the Consumer Prices Index including owner occupiers' housing costs (CPIH). Given the importance of the changes, we want to ensure that the information we provide and how we provide it, meets stakeholders' and partners' needs. This short questionnaire will take you less than 10 minutes to complete, and it will inform how best we communicate and engage on consumer price statistics transformation. We would be grateful if you could complete it by 31 August 2022.

Treatment of the energy bill package

On 3 February 2022, the UK government announced an Energy Bills Rebate package to help households to manage rising energy bills. The details of the rebate are described as follows.

• "A £200 discount on their energy bill this Autumn for domestic electricity customers in Great Britain. This will be paid back automatically over the next 5 years.

• A £150 non-repayable Council Tax Rebate payment for all households that are liable for Council Tax in Bands A-D in England.

• £144 million of discretionary funding for Local Authorities to support households who need support but are not eligible for the Council Tax Rebate.

• The devolved administrations are receiving around £715 million funding through the Barnett formula as usual where UK Government support doesn't cover Scotland, Wales or Northern Ireland."

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 CPIH and Retail Prices Index (RPI). Council Tax is not included in the CPI.

On 26 May 2022, the UK government announced a Cost of Living Support package. Part of this package replaced the £200 discount on energy bills, the first component of the Energy Bills Rebate package. The new announcement said the following.

• "Households will get £400 of support with their energy bills through an expansion of the Energy Bills Support Scheme.

• As well as doubling the £200 of support announced earlier this year, the full £400 payment will now be made as a grant, which will not be recovered through higher bills in future years."

The Economic Statistics Classification assessment of this will be made when more information becomes available following publication of the government response to the Department for Business, Energy and Industrial Strategy's Energy Bills Support Scheme (EBSS) consultation in summer 2022. Once the classification decision has been made, we will consider whether it affects consumer price inflation statistics (CPIH, CPI and RPI) and, if so, how the treatment can be consistently incorporated into those statistics.

We detailed in a statement published on 8 August that we aim to complete the classification review of the EBSS during August 2022, following the publication of the Government response to the technical consultation on the EBSS on 29 July 2022.

Once the classification review of the EBSS has been completed, we will consider whether it affects consumer price inflation statistics. Further information about this aspect is also expected to be announced on 31 August 2022.

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. This includes new estimates of CPIH over the period, and improved estimates of CPI.

In December 2018, the ONS published an extended CPIH historical series covering the period from 1989 to 2005 in our Consumer Prices Index including owner occupiers' housing costs (CPIH) historical series: 1988 to 2004 article. This extended series is an official statistic rather than a National Statistic, reflecting the historical uncertainty around the back casts. The 1950 to 1988 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.

Weights for consumer price inflation statistics in 2022

In line with usual practice at the start of each year, the expenditure weights used in compiling the CPIH and CPI have been calculated using updated spending information. Normally this would be national accounts Household Final Consumption Expenditure (HFCE) data lagged by two years. However, in 2021 we made further adjustments to incorporate some of the larger changes in spending patterns seen between 2019 and 2020. More information is provided in our Coronavirus (COVID-19) and Consumer Price Inflation weights and prices: 2021 article. This approach was consistent with Eurostat's international guidance on the compilation of HICP weights in case of large changes in consumer expenditures (PDF, 135KB). The guidance stipulated that: "The expenditure shares used for the Harmonised Index of Consumer Prices (HICP) in year t should be representative of year t-1. This is in line with the overall Laspeyres philosophy of the HICP".

For this year's weights update we adopted a similar approach. We estimated a 2021 dataset by taking the most up-to-date HFCE data available (quarters one to three, second estimate, available in our Consumer trends, UK: July to September 2021 bulletin) and imputing the fourth quarter based on the 2019 seasonal growth. We used the same threshold as in the previous year (25%) to identify Classification of Individual Consumption by Purpose (COICOP) classes where there were large changes in spending levels between 2020 and 2021. For these classes, we replaced the usual 2020 data with the 2021 estimate. Also, this year, we gave consideration to classes below the threshold that tended to contain a larger number of basket items that were unavailable because of coronavirus lockdowns (see Table 58 of our Consumer price inflation dataset). Our approach is consistent with the latest international guidance.

The COICOP classes that have been adjusted were detailed in our Consumer price inflation, updating weights: 2022 article, alongside an explanation of the latest movements. As with last year, we made no changes to the weighting scheme for the RPI.

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. However, the annual rate depends on prices collected in both 2022 and 2021. In July 2021, only a single item (football admissions) was unavailable to UK consumers. The unavailable items are listed in Table 58 of the Consumer price inflation dataset.

The contributions to the CPIH and CPI annual inflation rate in July 2022 from football admissions was negligible.

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 July 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 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.