Consumer price inflation, UK: March 2022

• The Consumer Prices Index including owner occupiers' housing costs (CPIH) rose by 6.2% in the 12 months to March 2022, up from 5.5% in February.

• The largest upward contributions to the annual CPIH inflation rate in March 2022 came from housing and household services (1.49 percentage points, principally from electricity, gas and other fuels, and owner occupiers' housing costs) and transport (1.47 percentage points, principally from motor fuels and second-hand cars).

• On a monthly basis, CPIH rose by 0.9% in March 2022, compared with a rise of 0.2% in March 2021.

• The upward contributions to the change in the CPIH 12-month inflation rate between February and March 2022 came from many categories, with the largest from motor fuels, with no large offsetting downward contributions.

• The Consumer Prices Index (CPI) rose by 7.0% in the 12 months to March 2022, up from 6.2% in February.

• On a monthly basis, CPI rose by 1.1% in March 2022, compared with a rise of 0.3% in March 2021.

The Consumer Prices Index including owner occupiers’ housing costs (CPIH) rose by 6.2% in the 12 months to March 2022, up from 5.5% in February. This is the highest recorded 12-month inflation rate in the National Statistics series, which began in January 2006. The rate was last higher in the historic modelled estimates in February 1992 when it stood at 6.3%.

On a monthly basis, CPIH rose by 0.9% in March 2022, compared with a rise of 0.2% in the same month a year earlier. Rising prices for motor fuels resulted in the largest upward contribution to the monthly rate in March 2022. In March 2021, the main upward contributions to the monthly rate came from clothing and footwear, and transport (principally motor fuels), partly offset by a downward contribution from food.

The Consumer Prices Index (CPI) rose by 7.0% in the 12 months to March 2022, up from 6.2% in February. This is the highest CPI 12-month inflation rate in the National Statistics series, which began in January 1997. It is also the highest rate in the historic modelled series since March 1992, when it stood at 7.1%.

In March 2022, the CPI monthly rate was 1.1%, compared with 0.3% in March 2021.

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.

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.

Contributions from 6 of the 12 divisions were the largest observed for over 10 years. Of these, 4 were the highest in the National Statistics series, which began in 2006.

Housing and household services

Housing and household services contributed 1.49 percentage points to the CPIH 12-month inflation rate in March 2022. This was the largest contribution from any division this month, and the largest contribution from housing and household services since January 2009. The contribution rose significantly in October 2021 as a result of price rises for gas and electricity following the increase in the Office of Gas and Electricity Markets (Ofgem) cap on energy prices, which changed on 1 October 2021.

The Ofgem energy price caps limit the price energy suppliers can charge the estimated 15 million households that either use a prepayment meter or are on the "standard variable" energy (or default) tariff. They update the energy price caps twice a year, in April and October, and on 6 August 2021, they published the cap levels for the period from 1 October 2021 to 31 March 2022. They reported that the price cap had increased by 12% since April 2021 because of "a rise of over 50% in energy costs over the last six months with gas prices hitting a record high as the world emerges from lockdown". The rise resulted in 12-month inflation rates of 18.8% for electricity and 28.1% for gas in October 2021. These have since increased slightly to 19.2% and 28.3% respectively.

Ofgem announced the cap levels for the period from 1 April to 30 September 2022 on 3 February. They said that “Those on default tariffs paying by direct debit will see an increase of £693 from £1,277 to £1,971 per year (difference due to rounding). Prepayment customers will see an increase of £708 from £1,309 to £2,017. The increase is driven by a record rise in global gas prices over the last six months, with wholesale prices quadrupling in the last year”. This latest change does not affect the consumer price indices for March. Its impact will be included in the April figures scheduled for release on 18 May 2022.

Elsewhere within housing and household services, owner occupiers' housing costs rose by 2.7% in the year to March 2022, the largest 12-month rate since 2.7% in October 2016. This resulted in a contribution of 0.50 percentage points to the CPIH annual inflation rate.

Transport

Over the last two years, the contribution from transport has ranged from a downward contribution of 0.20 percentage points in May 2020 during the first coronavirus (COVID-19) lockdown, to an upward contribution of 1.47 percentage points in March 2022. This latest contribution is the largest since before the start of the National Statistics series in January 2006.

Within transport, the movement has mainly been caused by changes in the price of motor fuels. This category made a downward contribution to the 12-month rate between March 2020 and February 2021, before the contribution turned positive in March 2021 and subsequently increased to 0.68 percentage points in March 2022. This is the largest contribution since April 2010.

Average petrol prices stood at 160.2 pence per litre in March 2022, compared with 123.7 pence per litre a year earlier. The March 2022 price is the highest recorded. The average price of diesel in March 2022, 170.5 pence per litre, was also the highest on record. The 12-month rate for motor fuels and lubricants was 30.7%, the highest since before the start of the historic modelled series in January 1989.

The contribution from second-hand cars has also changed significantly since the beginning of 2020, rising from a downward effect of 0.07 percentage points in January 2020 to an upward pull of 0.15 percentage points in October 2020. With the onset of the coronavirus 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 an upward 0.01 percentage points in April 2021. It then rose again to 0.36 percentage points in February 2022 and is little changed in March 2022.

The movement from April 2021 comes amidst reports of increased demand, together with a global semiconductor shortage affecting the production of new cars, resulting in consumers turning to the used car market. Additionally, there have reportedly been concerns in the trade about the supply of second-hand cars because of a variety of factors. These include fewer one-year-old cars coming to the market because of a fall in new car registrations a year earlier, and the extensions of lease contracts and fewer part exchanges caused again by delays in new-car supply. The March 2022 prices economic analysis considers further the growth in second-hand car prices.

Other divisions

The contributions from three of the other divisions were higher in March 2022 than at any other point since before the start of the National Statistics series in January 2006. Clothing and footwear prices rose by 9.7% in the year to March 2022, resulting in a contribution of 0.57 percentage points to the all items 12-month rate. Prices for furniture, household equipment and maintenance rose by 10.4% in the year to March, also contributing 0.57 percentage points to the headline rate. Prices, overall, for recreational and cultural goods and services rose by 5.0% to March, contributing 0.55 percentage points. Additionally, prices for food and non-alcoholic beverages rose by 5.9% on the year, resulting in a contribution of 0.53 percentage points, the highest 12-month rate and contribution for this category since September 2011.

Figure 3 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 February and March 2022. 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 rise in the CPIH annual rate for March 2022 was driven by upward contributions to change from 8 of the 12 divisions, with the largest coming from transport. There were no large offsetting downward contributions to change.

Transport

The largest upward contribution to the change in the CPIH 12-month inflation rate came from transport, where prices, overall, rose by 2.4% between February and March 2022, compared with a smaller rise of 0.7% between the same two months a year ago. Almost all the 0.21 percentage points upward contribution came from motor fuels.

Average petrol prices rose by 12.6 pence per litre between February and March 2022, the largest monthly rise on record (since 1990). This compares with a rise of 3.5 pence per litre between the same months of 2021. Similarly, diesel prices rose by 18.8 pence per litre this year, compared with a rise of 3.5 pence per litre a year ago.

Restaurants and hotels

There was also a large upward contribution to change (of 0.17 percentage points) from restaurants and hotels. Prices rose, overall, by 2.0% between February and March 2022, the largest change between these months since the start of the historic constructed series in 1988. The upward effect came principally from alcoholic drinks served in restaurants, cafes and public houses, and from accommodation services.

It should be noted that many items within this division were unavailable in March 2021 because of lockdowns that were in place across the UK. Unavailable items were imputed as described in our Coronavirus and the effects on UK prices article. This means that monthly movements for those items in 2021 reflect imputed index movements and should therefore be interpreted with caution.

Housing, water, electricity, gas and other fuels

The upward contribution of 0.10 percentage points from this division came mostly from liquid fuels, where prices of kerosene for domestic heating rose by 44.0% between February and March 2022, compared with a rise of 2.9% a year ago. There was also an upward contribution from owner occupiers' housing costs which rose by 0.2% this year but were little changed a year ago.

Furniture and household goods

Rising prices for furniture and household goods led to an increase of 0.09 percentage points in the overall CPIH 12-month inflation rate between February and March 2022. Prices rose by 1.9% on the month in 2022, compared with a smaller rise of 0.8% a year earlier. The effect was principally from furniture and furnishings (0.06 percentage points), particularly lounge and bedroom furniture.

Small upward contributions came from household textiles, major appliances, and tools and equipment for house and garden.

Food and non-alcoholic beverages

Food and non-alcoholic beverages provided an upward contribution of 0.07 percentage points as prices rose by 0.2% this year, compared with a fall of 0.6% a year ago. There were small upward contributions from 6 of the 11 detailed classes, with the largest coming from oils and fats (principally margarine and low fat spread), and milk, cheese and eggs.

Alcoholic beverages and tobacco

Prices of alcohol and tobacco rose by 1.1% in 2022, compared with a fall of 0.1% in 2021, leading to an upward contribution to change of 0.05 percentage points. The upward effect came from a combination of tobacco (particularly cigarettes) and spirits such as vodka and whisky.

Unavailable items

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 became available again, base prices were 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 became available again, item indices were 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 was that the indices for returning items had a negligible impact on the all-items inflation rate in the first month of return, reflecting the fact that these services were available only as price levels and did not have price growth associated with them (relative to the January base). Collected prices then started to influence the index in the following month.

Restrictions 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 12-month rate depends on prices collected in both 2022 and 2021. In March 2021, national restrictions were in place across the UK resulting in 67 CPIH items being unavailable to UK consumers. The list of unavailable items is shown in Table 58 of the Consumer price inflation dataset.

A number of items affected by lockdown restrictions last year have contributed to the change in the CPIH 12-month inflation rate between February and March 2022. These items were imputed in February and March 2021, reflecting their unavailability for consumption. (For more information please refer to our Coronavirus and the effects on UK prices article).

The largest upward contributions to change (from affected items) are from overnight hotel accommodation and on sales of gin, which increased the annual rate by 0.06 and 0.04 percentage points respectively. Contributions to change from other affected items are generally small (less than or equal to 0.02 percentage points in magnitude). In aggregate, the effect was to increase the CPIH 12-month inflation rate by 0.17 percentage points between February and March 2022, and to increase the CPI rate by 0.22 percentage points. The contribution to the 12-month inflation rate in March 2022 for these items was 0.68 percentage points in CPIH and 0.82 percentage points in CPI.

Figure 4 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 March 2022, the contribution of housing and household services to the CPIH 12-month inflation rate was 1.49 percentage points, an increase of 0.10 percentage points from February.

The largest upward contribution to change between February and March came from liquid fuels, where prices of kerosene increased by 44.0% on the month, compared with a rise of 2.9% a year ago. This follows changes to gas and electricity prices in October when the Office of Gas and Electricity Markets' (Ofgem's) change to the price cap (introduced on 1 October 2021) came into effect.

OOH's contribution to the CPIH annual inflation rate increased from 0.46 to 0.50 percentage points between February and March 2022, increasing the annual rate by 0.04 percentage points. The contribution to the annual rate from Council Tax remained at 0.13 percentage points, and therefore made no contribution to the change.

The large contribution to the rate from electricity, gas and other fuels of 0.65 percentage points in March 2022 makes this group the largest current contributor within housing and household services.

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)

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)

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 UK Statistics Authority 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.

Consumer price inflation historical estimates, UK, 1950 to 1988

In December 2018, the Office for National Statistics (ONS) published an extended Consumer Prices Index including owner occupiers’ housing costs (CPIH) historical series. Previously, the series had only been available back to 2005. These new historical estimates took the series back further, to 1988. The extended series is an official statistic rather than a National Statistic, reflecting the historical uncertainty around the backcasts. However, there is a user need for a longer series still, and we plan to publish indicative estimates back to 1950 for CPIH divisions on 18 May 2022. These estimates are for analytical purposes only and are not intended for official use.

As part of this publication, we will also be modelling new indicative estimates for the Consumer Prices Index (CPI) between 1950 and 1988. These updated models account for errors in the modelled CPI historical series between 1989 and 1996, previously identified. This only affected modelled estimates and did not constitute part of the CPI National Statistic series. The error was corrected when the CPIH historical series was published, and updating the CPI series will ensure that users have a consistent set of modelled indices. For more information, please see the accompanying article. The updated CPI estimates will also have broader coverage than those previously published.

Personal inflation calculator

To assist individuals in understanding how the rise in inflation affects their expenditure, we have published a personal inflation calculator. It enables consumers to enter the amounts they spend against different categories, and the calculator will provide an estimate of their personal inflation based on those spending patterns. We are also working with our colleagues in the Office for National Statistics Data Science Campus to create a set of statistics using web scraped data, which will measure the changing prices of 30 essential grocery items, such as pasta, rice, bread and milk.

Treatment of the upcoming energy bill rebate

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 below.

• 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.

The formal Economic Statistics Classification decision on the recording of the Council Tax rebate scheme in England (the second component of the rebate) in the National Accounts and the Public Sector Finances statistics was announced on 28 February 2022 in Classification of the Council Tax rebate in England. The Office for National Statistics (ONS) concluded that there is no reduction to Council Tax liability, and in accordance with the international guidance, the Council Tax rebate in England should therefore be classified as a payable tax credit. This is specifically a current transfer, paid by central government to households. The implication of this decision for consumer price inflation is that the rebate is not part of household expenditure and should therefore be treated as out of scope of the Consumer Prices Index including owner occupiers' housing costs (CPIH) and Retail Prices Index (RPI). Council Tax is not included in the Consumer Prices Index (CPI).

The available information from the devolved administrations is that the support package in Wales mirrors that in England, and a similar approach will be taken in Scotland (though fewer details are available). At present, there appear to be no plans in Northern Ireland to apply the rebate to the rates bill in April 2022. We will continue to monitor the situation but based on current evidence, any rebate from the devolved administrations (fourth component of the rebate) will not affect the CPIH and RPI.

The third component — discretionary funding to support households who need support but are not eligible for the Council Tax rebate — is out of scope, as the support is by definition discretionary. It does not represent a payment for a good or service and, as such, has no price associated with it.

The Economic Statistics Classification assessment for the first component of the package, which is the proposed £200 discount on Autumn 2022 domestic energy bills, will be made when more information becomes available. 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.

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 2 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 the article, Coronavirus (COVID-19) and Consumer Price Inflation weights and prices: 2021. This approach was consistent with international guidance (PDF, 135KB), which 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 1 to 3, second estimate) 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 (COVID-19) lockdowns (see Table 58 of the Consumer price inflation dataset). Our approach is consistent with the latest international guidance.

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

Economic statistics governance after EU exit

Following the UK's exit from the EU, new governance arrangements are being put in place that will support the adoption and implementation of high-quality standards for UK economic statistics. These governance arrangements will promote international comparability and add to the credibility and independence of the UK's statistical system.

At the centre of this new governance framework will be the new National Statistician's Committee for Advice on Standards for Economic Statistics (NSCASE). NSCASE will support the UK by ensuring its processes for influencing and adopting international statistical standards are world leading. The advice NSCASE provides to the National Statistician will span the full range of domains in economic statistics, including the National Accounts, fiscal statistics, prices, trade and the balance of payments and labour market statistics.

Making our published spreadsheets accessible

We have published sample versions of a selection of consumer price inflation tables prepared following the Government Statistical Service (GSS) guidance on releasing statistics in spreadsheets. It is essential that we aim to improve the usability, accessibility and machine readability of our published statistics so that everyone can make use of them. We have published these one-off sample tables to help communicate the changes we will be making to the consumer price inflation tables over the coming months. When we change to the new format, there will be a period where we will publish the tables in both the new and the current formats, along with a mapper to help users to find the information they require in the new format tables. If you have any questions or comments on these sample tables, please email cpi@ons.gov.uk.

Coronavirus

Since the start of the coronavirus pandemic, there have been challenges around our collection activities, as 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 Consumer price statistics: resuming a field-based price collection. For March 2022, our price collectors were able to complete full collections in 115 of the locations with partial collections in the other 26, 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 were unavailable for consumers to purchase.

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 March 2022.

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.