Consumer price inflation, UK: March 2019

• The Consumer Prices Index including owner occupiers’ housing costs (CPIH) 12-month inflation rate was 1.8% in March 2019, unchanged from February 2019.

• Rising prices for motor fuels and clothing produced the largest upward contributions to change in the rate between February and March 2019.

• The largest, offsetting, downward contributions came from across a range of recreational and cultural goods, food and motor vehicles.

• The Consumer Prices Index (CPI) 12-month rate was 1.9% in March 2019, unchanged from February 2019.

On 25 April 2019, we will be publishing our second set of preliminary estimates of the Household Costs Indices (HCIs). The HCIs are a set of measures that reflect changing prices and costs as experienced by different household groups. The second release follows the first set of preliminary estimates, which were published in December 2017 and covered the time period from January 2005 to June 2017. The new results extend the time series to December 2018 and include an additional breakdown by tenure type. They also include some methodological improvements; in particular, student loans will be incorporated on a repayments basis for the first time.

The Office for National Statistics is committed to improving its releases. We would like to ask your views on how we can shape the future of the Consumer price inflation detailed briefing note. We would be extremely grateful if you could please complete the following anonymous survey. Your answers to this survey – which should take less than five minutes to complete – would be invaluable.

The National Statistics status of the Consumer Prices Index including owner occupiers’ housing costs (CPIH) was reinstated on 31 July 2017. A letter from the Director General for Regulation to the National Statistician detailed the actions that were taken to meet the requirements as set out in the CPIH assessment report.

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 that we currently publish and those that are under development. Specifically, they refer to the CPIH as our lead measure of inflation based on economic principles; the Household Costs Indices 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 Retail Prices Index as a measure of inflation, released on 8 March 2018, describes the issues with the RPI.

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. One way to understand this is to think of a shopping basket containing all the goods and services bought by households. Movements in price indices represent the changing cost of this basket. Consumer price indices – a brief guide gives an overview of the indices and their uses.

The most common approach to measuring inflation is the 12-month 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.

This release also examines how the various types of goods and services contribute to the change in the 12-month inflation rate between the latest two months. The size and direction of these contributions depends on how prices changed between both the latest two months this year and the same two months last year. For example, the price of a product could make an upward contribution to the change in the rate even if it fell, provided that it fell by less than it did between the same two months a year ago. Explaining the contribution to change in the 12-month rate (2013) covers this concept in more detail.

The CPIH is the most comprehensive measure of inflation. It extends the 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 of these are significant expenses for many households and are not included in the CPI.

Aside from including OOH and Council Tax, CPIH is otherwise identical to CPI. This means that, aside from these two components, the factors contributing to the CPI rate are the same as those contributing to the CPIH. For example, if food is reported as increasing the CPIH rate, it is also acting to increase the CPI rate. The size of the contributions for components other than OOH and Council Tax are exaggerated in the CPI compared with the CPIH because they account for a larger proportion of the overall index.

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

The Retail Prices Index (RPI) does not meet the required standard for designation as National Statistics. In recognition that it continues to be widely used in contracts, we continue to publish the RPI, its sub-components and RPIX. To view the all-items RPI and 12-month inflation rate and an at-a-glance comparison with other measures, please see the time series section of the inflation and price indices area of our website. The accompanying dataset and time series provide more detailed information.

The figures in this publication use data collected on or around 12 March 2019.

The Consumer Prices Index including owner occupiers’ housing costs (CPIH) 12-month rate was 1.8% in March 2019, unchanged from February 2019.

Figure 1 compares the 12-month inflation rates for CPIH and the Consumer Prices Index (CPI), along with the rate for the owner occupiers’ housing costs (OOH) component of CPIH. Given that OOH accounts for around 17% of CPIH, it is the main driver for differences between the CPIH and CPI inflation rates.

Figure 2 shows that price movements for most of the broad categories of goods and services had an upward effect on the Consumer Prices Index including owner occupiers’ housing costs (CPIH) 12-month rate in March 2019. The exception was clothing and footwear, which had a small downward pull on the rate, with prices falling by 1.6% in the year to March 2019. This category has had a downward effect on the 12-month rate in each month starting from September 2018.

The largest upward contribution to the CPIH 12-month rate in March 2019 came from housing and household services, with prices rising by 1.4% on the year, the same as in February 2019. Within this broad group, the largest contributions were from owner occupiers’ housing costs (a 0.19 percentage point contribution to the CPIH 12-month rate), and Council Tax and rates (a 0.12 percentage point contribution).

There were other large upward contributions from transport, where prices rose by 3.2% on the year, and recreation and culture, where they rose by 2.7%. Within these categories, the most notable upward contributions were from package holidays and new cars. The contribution from motor fuels rose in March 2019 to become the second largest within transport, following a sequence of four months in which its contribution had declined.

Figure 3 shows the extent to which the different categories of goods and services have contributed to the overall CPIH 12-month rate over the last two years. Transport, and food and non-alcoholic beverages prices have been important factors in driving the changes in the rate. As the overall CPIH rate began to level off from April 2017, the contribution from food and non-alcoholic beverages continued to increase, being offset by a fall in the contribution from transport, particularly motor fuels.

The contributions from most of the categories began to fall back in the early months of 2018, leading to a fall in the 12-month rate. However, the pattern has been more mixed since spring 2018, reflecting the relative stability in the headline rate. For example, the contribution from clothing and footwear has broadly continued to decline through to March this year, whereas the contribution from housing and household services rose slowly over 2018, following increases to utility bills, but then fell in January this year due to the fall in gas and electricity prices. The contribution from transport has fluctuated, rising between April and August 2018 then gradually falling back until a small rise in March this year. Conversely, the contribution from food and non-alcoholic beverages broadly fell to November 2018 but has since risen slightly until a small fall in March 2019.

Figure 4 shows how each of the main groups of goods and services contributed to change in the Consumer Prices Index including owner occupiers’ housing costs (CPIH) 12-month rate between February and March 2019. The corresponding figures for the Consumer Prices Index (CPI) can be found in column F of Table 26 in the Consumer price inflation dataset.

The largest upward contribution to change in the CPIH 12-month rate came from transport, where prices fell between February and March this year but by less than between the same two months a year ago. The main upward effect within this grouping came from motor fuels. Petrol prices rose by 1.2 pence per litre between February and March 2019, compared with a fall of 1.6 pence per litre a year ago. They now stand on average at 120.3 pence per litre. Similarly, diesel prices rose by 1.4 pence per litre this year to stand at 130.7 pence per litre, compared with a fall of 1.5 pence per litre a year ago. This upward effect was partially offset by smaller downward contributions coming from new cars and air fares, the latter principally from European routes.

Miscellaneous goods and services also produced a small upward effect, with prices for personal care products rising this year but falling a year ago. This category includes toiletries, cosmetics and personal electrical appliances such as hairdryers and straighteners.

Finally, there was a small upward contribution from clothing and footwear, where clothing prices continued to rise following the January sales period but by more than a year ago. The upward effect came principally from a variety of women’s clothing items.

The largest downward contribution to change in the CPIH 12-month rate came from recreation and culture, where prices rose by 0.2% between February and March 2019 compared with a larger rise of 0.6% between the same two months of 2018. Within this group, the largest downward effect came from games, toys and hobbies, particularly computer games. Price movements for these can often be relatively large depending on the composition of bestseller charts and the downward contribution between the latest two months follows an upward contribution between January and February 2019. There was also a small downward effect from recording media, which fell in price this year but rose in 2018.

Food and non-alcoholic beverages also produced a small downward contribution, with prices rising by less between February and March this year than between the same two months a year ago. The downward contribution came from a range of categories, with the single largest effect coming from oils and fats, where prices of margarine and low-fat spread fell this year but rose a year ago.

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) inflation rate in the context of wider housing-related costs. The contribution from OOH had been on a downward trend from a high in October 2016. However, it has stabilised over the latest 12 months and was the largest contribution to the CPIH 12-month rate in March 2019 of all the housing and household services categories.

Utility bills made a negative contribution during 2015 and 2016 but subsequent rises, most notably in electricity prices, saw the contribution turn positive through 2017 into 2018. Further electricity and gas price rises in autumn 2018 increased their contribution to the CPIH 12-month rate. However, in January 2019, there was a reduction in the contribution from electricity and gas, which partially reflected the introduction of Ofgem’s energy price cap.

Increases in Council Tax starting in 2016 mean that its contribution has increased over recent years. Conversely, the reduction in the contribution from rents is likely to be a result of a policy to reduce social housing rent starting from April 2016, although the contribution has risen slightly over the last year. Other housing costs (namely regular maintenance and repair, along with water and sewerage services) tend to make small contributions to the 12-month rate.

Data relating to the Retail Prices Index (RPI) are available in the accompanying dataset and time series. To view the all-items RPI and 12-month inflation rate and an at-a-glance comparison with other measures, please see the time series section of the inflation and price indices area of our website.

Other important measures of inflation and prices include Producer price indices, the House Price Index and the Index of Private Housing Rental Prices (IPHRP). Prices economic commentary presents further analysis of these in addition to the Consumer Prices Index including owner occupiers’ housing costs (CPIH).

The individual price quotes (for locally-collected items only) and item indices that underpin the consumer price inflation statistics are available. In March 2019, the item indices and price quotes were released the day after publication of the headline figures but from April, they will be published at the same time as the headline information. The datasets can be accessed using the weblink under the “You might also be interested in:” section of the Consumer price inflation release page.

The Harmonised Index of Consumer Prices (HICP) provides a comparable measure of inflation for each member state of the EU. The UK HICP is identical to the UK Consumer Prices Index (CPI). Further information is available on the Eurostat website.

The Consumer Price Inflation Quality and Methodology Information report contains important information on:

• the strengths and limitations of the data and how it compares with related data

• users and uses of the data

• how the output was created

• the quality of the output including the accuracy of the data

The Consumer Price 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 Consumer Prices Index including owner occupiers’ housing costs (CPIH), with a focus on the approach to measuring owner occupiers’ housing costs (OOH).

The Consumer price inflation basket of goods and services: 2019 article details the annual review process for the items making up the inflation basket used to calculate the UK consumer price inflation indices and describes the changes in the latest year.

Consumer price inflation, updating weights: 2019 describes the latest changes to the relative weights of items in the inflation basket to ensure they remain representative of current consumer spending patterns.