Consumer price inflation, UK: June 2021

• The Consumer Prices Index including owner occupiers’ housing costs (CPIH) rose by 2.4% in the 12 months to June 2021, up from 2.1% in the 12 months to May.

• The largest upward contribution to the CPIH 12-month inflation rate came from transport (0.80 percentage points).

• On a monthly basis, CPIH rose by 0.4% in June 2021, compared with a rise of 0.1% in June 2020.

• Prices for food, second-hand cars, clothing and footwear, eating and drinking out, and motor fuel rose in 2021 but mostly fell in 2020, resulting in the largest upward contributions to the change in the CPIH 12-month inflation rate between May and June 2021.

• These were partially offset by a large downward contribution from games, toys and hobbies, where prices fell this year but rose a year ago.

• The Consumer Prices Index (CPI) rose by 2.5% in the 12 months to June 2021, up from 2.1% to May; on a monthly basis, CPI rose by 0.5% in June 2021, compared with a rise of 0.1% in June 2020.

• The number of CPIH items identified as unavailable in June 2021 fell to 14, mostly relating to international travel, and accounting for 1.3% of the basket by weight; we collected a weighted total of 81.4% of the comparable coverage collected before the first lockdown in 2020 (excluding unavailable items).

The Consumer Prices Index including owner occupiers’ housing costs (CPIH) rose by 2.4% in the 12 months to June 2021, up from 2.1% to May. Inflation rates at this time are influenced by the effects of the first coronavirus (COVID-19) lockdown in spring 2020. The Office for National Statistics’ (ONS) blog Beware Base Effects describes how relatively low prices for some items during that period influence current inflation rates.

The Consumer Prices Index (CPI) rose by 2.5% in the 12 months to June 2021, up from 2.1% to May.

On a monthly basis, the CPIH rose by 0.4% in June 2021, compared with a rise of 0.1% in June 2020. Prices for food, second-hand cars, clothing and footwear, eating and drinking out, and motor fuel rose between May and June 2021 but mostly fell between the same two months a year ago. More information is provided in Section 4.

On a monthly basis, the CPI rose by 0.5% in June 2021, compared with a rise of 0.1% in June 2020. Again, price movements for food, second-hand cars, clothing and footwear, eating and drinking out, and motor fuel are the main reasons for the higher monthly rate this year than a year ago.

Given that the owner occupiers’ housing costs (OOH) component accounts for around 19% of the CPIH, it is the main driver for differences between the CPIH and CPI inflation rates.

Figure 2 shows the extent to which the different categories of goods and services have contributed to the overall Consumer Prices Index including owner occupiers’ housing costs (CPIH) 12-month inflation rate over the last two years.

The contribution from transport has shown more variation than any other group over the last two years. It has ranged from a downward contribution of 0.20 percentage points in May 2020 during the first lockdown to an upward contribution of 0.80 percentage points in June 2021. This is the largest upward contribution from any division this month. The contribution from transport was also 0.80 percentage points in February 2017 and was last higher in November 2011.

Within transport, the movements have been caused principally by changes in the price of motor fuels. Motor fuels made a downward contribution to the 12-month rate between March 2020 and February 2021, before turning positive in March 2021 and subsequently increasing to 0.41 percentage points in June 2021. This reflects a 12-month inflation rate for motor fuels of 20.3%, the largest rate since May 2010.

Average petrol prices stood at 129.7 pence per litre in June 2021, compared with 106.5 pence per litre a year earlier. The June 2021 price is the highest recorded since October 2018. In comparison, the UK was in the first national lockdown at this point last year and petrol prices were affected by reduced demand, reaching their lowest price in May 2020 for over four years. The relatively low price in June 2020 affects the current 12-month rate as described in the Office for National Statistics’ (ONS) blog Beware Base Effects.

Other contributions within transport are smaller but have changed over the last eighteen months. This is particularly true of the contribution from second-hand cars, which rose across 2020 from a downward effect of 0.07 percentage points in January to an upward pull of 0.15 percentage points in October. With the onset of the coronavirus (COVID-19) pandemic, there were reports of increased demand as people sought alternatives to public transport. From October 2020, the contribution to the 12-month rate gradually fell back to 0.01 percentage points in April 2021 before rising again to 0.07 percentage points in June 2021. This latest movement comes amidst reports of increased demand as dealers open following the latest national lockdown, together with a global semiconductor shortage affecting the production of new cars, resulting in consumers turning to the used car market.

The contribution from housing and household services increased slightly between May and June 2021 as owner occupiers’ housing costs rose, but the contributions in both months were significantly above those from April 2020 to March 2021. Reductions to household utility prices in April 2020 saw the group’s contribution to the CPIH headline rate fall to 0.16 percentage points but this fall was reversed in April 2021 with rises in gas and electricity prices.

The contribution from furniture, household equipment and maintenance has risen from a downward pull of 0.03 percentage points in December 2020 to an upward push of 0.17 percentage points in June 2021. This reflects a 12-month rate of 3.3% in June, the highest since February 2018. The contributions from all groups within this division have increased since the end of 2020, with the largest change coming from furniture and furnishings.

Clothing and footwear prices have risen in June 2021 and the resulting contribution to the 12-month rate (of 0.16 percentage points) is the largest observed since February 2018. For most months since March 2020, the contribution has been negative. It has turned positive from May 2021 in part because of the low prices experienced during the first coronavirus lockdown in 2020.

During 2020, clothing and footwear prices exhibited a different seasonal pattern compared with previous years, and they were clearly influenced by coronavirus restrictions. Then, in 2021, prices unusually fell between January and February, again potentially caused by coronavirus lockdown, before rising in subsequent months. These rises lead to a June index value (on a January of each year = 100 basis) which is above that experienced in recent years (Figure 3). This value is referenced on January 2021 when prices were relatively low, influenced again by the coronavirus lockdown.

Figure 3 shows the seasonal price movements for clothing and footwear over the latest six years, setting January equal to 100 in each year. The fall in price into February 2021 contrasts with the price rises in recent years. However, similar price falls were evident during previous lockdowns. The subsequent price rise between February and June 2021 reflects a significant reduction in the proportion of price discounting observed in the sample and evidence of new lines entering the collection in later months of 2021 than in 2020.

Food and non-alcoholic beverages is the only division with a downward contribution (of 0.04 percentage points) in June 2021. The majority of the more detailed food categories contribute to the downward pull, with the largest effect coming from meat.

Figure 4 shows how each of the main groups of goods and services contributed to the change in the Consumer Prices Index including owner occupiers’ housing costs (CPIH) 12-month inflation rate between May and June 2021. The corresponding figures for the Consumer Prices Index (CPI) can be found in Column F of Table 26 in the Consumer price inflation dataset.

There were upward contributions to the change in the CPIH 12-month inflation rate from 9 of the 12 divisions, partially offset by a downward contribution from health.

The largest upward contribution (of 0.08 percentage points) to the change in the CPIH 12-month inflation rate came from transport, where prices rose by 1.3% between May and June 2021, compared with a rise of 0.5% between the same two months of 2020. The effect was principally from second-hand cars and motor fuels.

Second-hand car prices rose between May and June this year whereas in recent years, they have fallen between these months. There are reports of prices rising as a result of increasing demand following the end of the latest national lockdown. Some buyers are reported to have turned to the used car market as a result of delays in the supply of new cars caused by the shortage of semiconductor chips used in their production.

The price of petrol rose by 2.5 pence per litre between May and June this year, compared with a rise of 0.3 pence per litre a year ago when prices were starting to recover from a four-year low of 106.2 pence per litre in May 2020. Similarly, diesel prices rose by 2.4 pence per litre this year, compared with a fall of 0.7 pence per litre a year ago. The average price of diesel was 112.7 pence per litre in June 2020, the lowest since August 2016. The movements reflect changes in oil prices as demand was affected last year by the coronavirus (COVID-19) pandemic.

There was also a large upward contribution of 0.06 percentage points from food and non-alcoholic beverages. Prices rose by 0.2% between May and June this year, compared with a fall of 0.6% between the same two months a year ago. Within this category, the largest effect came from bread and cereals, where prices of items such as packs of individual cakes and crumpets rose this year but fell a year ago. Prices in the bread and cereals class have shown a degree of volatility both during the early part of 2021 and the equivalent months of 2020, with price movements in any one month of 2021 generally in the opposite direction to those in the same month last year.

The upward contribution from restaurants and hotels reflects price rises for restaurant and café meals and drinks between May and June this year, as restrictions on movements eased. A year ago, many of these items were unavailable for consumers to purchase and the indices were estimated based on the movement in the index for all available CPI items. This means that the current contribution to change has to be interpreted with a degree of caution. The methodology used to estimate price movements for unavailable items is described in Coronavirus and the effects on UK prices.

A final, large, upward contribution (of 0.05 percentage points) came from clothing and footwear. Prices, overall, rose by 0.8% between May and June this year, compared with a fall of 0.1% between the same two months a year ago. Normally, prices fall between May and June as the summer sales season begins – see Figure 3 – but the seasonal patterns have been influenced by the timing of lockdowns since the onset of the coronavirus pandemic.

The amounts of discounting recorded in the clothing and footwear datasets in both May and June 2021 were below the levels usually seen in these months. In comparison, in May and June 2020, the proportions of discounting were relatively high during the first coronavirus lockdown when demand may have been reduced as a result of less browsing in stores, people spending more time at home where they might have been less interested in clothing, and a shift in spending patterns towards other necessities such as food and cleaning products. The upward effect this year came from a broad range of women’s clothing.

Smaller upward contributions came from furniture, household equipment and maintenance; housing, water, electricity, gas and other fuels; and alcoholic beverages and tobacco. With furniture, household equipment and maintenance, the majority of the contribution was from major appliances and small electric goods, particularly from items such as vacuum cleaners, washing machines and kettles. The upward effect from housing, water, electricity, gas and other fuels came principally from owner occupiers’ housing costs, which rose by more in 2021 than 2020. With alcohol and tobacco, the upward effect was spread across spirits, wine and tobacco, with prices rising in each category this year, compared with falls a year ago.

There was a small, upward contribution of 0.01 percentage points from recreation and culture, but within this broad division, there were larger offsetting effects. The largest downward contribution of 0.06 percentage points came from games, toys and hobbies, where prices fell this year but rose a year ago, with the main effects coming from computer games and games consoles. Prices of these products could have been influenced by the coronavirus restrictions changing the timing of demand, though for computer games, it is equally likely to be the result of the games in the bestseller charts used when collecting price quotes. This effect was more than offset by smaller upward contributions coming from a range of goods relating to data processing equipment, recording media, and books, newspapers and stationery.

A partially offsetting, small downward contribution (of 0.03 percentage points) to the change in the CPIH 12-month inflation rate came from health. Prices of pharmaceutical products, other medical and therapeutic equipment rose by 0.8% between May and June 2021, compared with a larger rise of 3.1% between the same two months a year ago.

For items that were unavailable in line with government guidelines in the early part of 2021, there were no January base prices. As these items become available again, base prices have been imputed in line with the procedures described in Coronavirus (COVID-19) and Consumer Price Inflation weights and prices: 2021. For the first month in which they become available again, item indices are imputed using either the monthly movement in the all-available-items index or, for a smaller number of seasonal items, the annual movement in the all-available-items index. The aim is that the indices for returning items have a negligible impact on the all-items inflation rate in the first month of return, reflecting the fact that these services are available only as price levels and do not have price growth associated with them (relative to the January base). Collected prices then start to influence the index in the following month.

As restrictions have eased from 12 April 2021, the number of items across the CPIH basket of goods and services that are unavailable to consumers has reduced to 14 in June, accounting for 1.3% of the CPIH basket by weight. Most of these items relate to international travel, for example, air fares and various types of foreign holiday. The changes to the list from previous months, are shown in Table 58 in the Consumer price inflation dataset.

In total, the unavailable items had a downward contribution of 0.02 percentage points to the change in the CPIH 12-month inflation rate. Most imputed items made no overall contribution to the change in the rate. The largest downward contributions, each of 0.01 percentage points, came from air fares and sea fares.

In addition to the 14 unavailable items and the 13 items returning to the CPIH basket in June, we identified one other item where, although available in theory, price collection had proved largely impossible, so we imputed the price movement. The categories where the number of price quotes used in constructing the indices is less than half the number used in February 2020 have been identified in relevant tables in the accompanying dataset, for example, in Table 3.

Overall, the number of price quotes that are usually collected in store and that are used in constructing the June 2021 indices was 85.4% of the number of price quotes collected in February 2020 (excluding unavailable items). Once all locally and centrally collected price quotes have been weighted together, the overall coverage for goods and services available in June 2021 was 81.4% of the comparable coverage collected before the March 2020 lockdown (excluding unavailable items).

Figure 5 shows the contribution of owner occupiers’ housing costs (OOH) and Council Tax to the Consumer Prices Index including owner occupiers’ housing costs (CPIH) 12-month inflation rate in the context of wider housing-related costs. In June 2021, the contribution of housing components to the CPIH 12-month inflation rate was 0.63 percentage points, its highest contribution since May 2019.

There have been only relatively small changes to the contributions from individual components between May and June 2021, principally from owner occupiers’ housing costs. This follows larger changes to gas and electricity prices in April when the Office of Gas and Electricity Markets’ (Ofgem’s) price cap, introduced on 1 April 2021, saw prices of these utilities rise by over 9%. The cost of water supply and sewerage collection also rose by 2.5% and 1.0% respectively between March and April 2021. These price rises in total resulted in all groups within the housing and household services division having a positive contribution to the CPIH 12-month inflation rate from April 2021.

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. Consumer price indices, a brief guide gives an overview of the indices and their uses.

12-month 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 12-month rate is determined by the balance between upward and downward price movements of the range of goods and services included in the index.

Consumer Prices Index including owner occupiers’ housing costs (CPIH)

The Consumer Prices Index including owner occupiers’ housing costs (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 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)

The Retail Prices Index (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 and 12-month inflation rate, please see the data time series section of the inflation and price indices area of our website.

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 response to the consultation, the CPIH methods and data sources will be introduced into the RPI, and the supplementary and lower-level indices of the RPI will be discontinued.

Coronavirus

Since the start of the coronavirus (COVID-19) pandemic, there have been challenges around our collection activities, as approximately 80% of the price quotes (45% by weight) for the Consumer Prices Index including owner occupiers’ housing costs (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 Consumer price statistics: resuming a field-based price collection. For June 2021, our price collectors were able to complete full collections in 100 of the locations with partial collections in the other 41, supplementing the latter by continuing to collect prices over the internet, by phone and by email.

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

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

Coronavirus supplementary analysis

In March 2021, we published Effect of reweighting the consumer prices basket during the coronavirus (COVID-19) pandemic: October to December 2020, which contains Experimental Statistics for both CPIH and the Consumer Prices Index (CPI). By linking the price changes between the latest month and the previous one on to the old series – a process called ”chain-linking” – we are able to change our expenditure weights each month to remove any unavailable items and adjust the weight of remaining items according to our best available evidence of consumption patterns.

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. As a result of the coronavirus pandemic, we collected all prices centrally in April 2021, but our price collectors have resumed in-store collections from May 2021.

The figures in this publication use data collected on or around 15 June 2021.

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

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

Users and uses of consumer price inflation statistics 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 Measuring changing prices and costs for consumers and households, proposed updates: March 2020.

The three cases refer to the Consumer Prices Index including owner occupiers’ housing costs (CPIH) as our lead measure of inflation based on economic principles, 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. Shortcomings of the RPI as a measure of inflation describes the issues with the RPI.