By Patrick Barnham
The Office for National Statistics (Ofcom) today (May 24) released UK consumer price inflation figures for April 2023.
- The Consumer Prices Index including owner occupiers’ housing costs (CPIH) rose by 7.8% in the 12 months to April 2023, down from 8.9% in March; on a monthly basis, CPIH rose by 1.2% in April 2023, compared with a rise of 2.1% in April 2022.
- The Consumer Prices Index (CPI) rose by 8.7% in the 12 months to April 2023, down from 10.1% in March; on a monthly basis, CPI rose by 1.2% in April 2023, compared with a rise of 2.5% in April 2022.
- Electricity and gas prices contributed 1.42 percentage points to the fall in annual inflation in April as last April’s rise dropped out of the annual comparison, but this component still contributed 1.01 percentage points to annual inflation.
- Food and non-alcoholic beverage prices continued to rise in April and contributed to high annual inflation, however, the annual inflation rate of food and non-alcoholic beverages eased, from 19.2% in the year to March 2023, to 19.1% in the year to April 2023.
- Core CPI (excluding energy, food, alcohol and tobacco) rose by 6.8% in the 12 months to April 2023, up from 6.2% in March, which is the highest rate since March 1992; the CPI goods annual rate eased from 12.8% to 10.0%, while the CPI services annual rate rose from 6.6% to 6.9%.
Consumer price inflation rates
Figure 1: Annual CPIH and CPI inflation rates continue to ease in April 2023
CPIH, OOH component and CPI annual inflation rates for the last 10 years, UK, April 2013 to April 2023
The Consumer Prices Index including owner occupiers’ housing costs (CPIH) rose by 7.8% in the 12 months to April 2023, down from 8.9% in March and from a recent peak of 9.6% in October 2022.
Our indicative modelled consumer price inflation estimates suggest that the October 2022 rate was the highest rate in over 40 years (the CPIH National Statistic series begins in January 2006). The slowdown in the annual rate between March and April 2023 came as a result of prices rising by 1.2% on the month compared with a rise of 2.1% a year earlier.
The Consumer Prices Index (CPI) rose by 8.7% in the 12 months to April 2023, down from 10.1% in March and from a recent peak of 11.1% in October 2022. Our indicative modelled estimates of consumer price inflation suggest that the October 2022 peak was the highest annual inflation rate since 1981 (the CPI National Statistic series begins in January 1997). The easing in the CPI annual rate between March and April 2023 came as a result of prices rising by 1.2% on the month compared with a rise of 2.5% a year earlier.
The main drivers of the annual inflation rate for CPIH and CPI are the same where they are common to both measures. However, the owner occupiers’ housing costs (OOH) component accounts for 16% of the CPIH and is the main driver for differences between the CPIH and CPI inflation rates. This makes CPIH our most comprehensive measure of inflation, and it is covered in more detail in Section 4: Latest movements in CPIH inflation in this bulletin, while Section 5: Latest movements in CPI inflation provides commentary on the CPI. Section 3: Notable movements in prices covers both CPIH and CPI, though the figures reflect CPIH.
Notable movements in prices
The easing in the annual inflation rate in April 2023 mainly reflected price changes in the housing and household services division, particularly for gas and electricity. This was offset partially by upward effects coming from recreation and culture, alcoholic beverages and tobacco, communication, and transport.
Housing and household services
The CPIH annual inflation rate for housing, water, electricity, gas and other fuels was 7.3% in April 2023, down from a peak of 11.8% in January 2023 and from a rise of 11.6% in March 2023. The CPI annual inflation rate for housing, water, electricity, gas and other fuels was 12.3% in April 2023, down from a peak of 26.7% in January 2023 and from a rise of 26.1% in March 2023. This fall is largely because of the upward contribution from the higher April 2022 Office of Gas and Electricity Markets (Ofgem) energy cap dropping out of the annual estimates.
The main driver behind the change was gas, with monthly prices falling by 1.0% between March and April this year, compared with a rise of 66.8% between the same two months a year ago. This was the first time since October 2020 that monthly gas prices fell and meant that gas provided a downward contribution of 0.75 percentage points to the monthly change in CPIH. Electricity also provided a substantial downward contribution with prices falling by 1.1% between March and April this year, compared with a rise of 40.5% between the same two months a year ago. This meant that electricity provided a downward contribution of 0.67 percentage points to the monthly change in CPIH.
Other categories provided an offsetting positive contribution to the monthly change in CPIH. Council tax rose by 5.1% between March and April this year compared with a rise of 3.4% between the same two months a year ago and meant that it provided an upward contribution of 0.04 percentage points to the monthly change in CPIH. Registered social landlord rents rose by 2.2% between March and April this year compared with a 0.03% fall between the same two months a year ago meaning it provided an upward contribution of 0.03 percentage points to the monthly change in CPIH. Finally, sewerage collection rose by 8.0% between March and April this year compared with a rise of 3.3% between the same two months a year ago and meant that it provided an upward contribution of 0.03 percentage points to the monthly change in CPIH.
Food and non-alcoholic beverages
Food and non-alcoholic beverage prices saw a monthly increase of 1.4% compared with a rise of 1.5% in the equivalent time period last year and an annual rise of 19.1% in April 2023 compared with an annual rise of 19.2% in March 2023. Our indicative modelled estimates suggest that the annual rate for this category in April 2023 is the second highest seen for over 45 years, when the rate in August 1977 was estimated to be 21.9%.
Figure 2: Annual inflation rate for food and non-alcoholic beverages falls slightly
CPIH, and food and non-alcoholic beverages annual inflation rates, UK, April 2013 to April 2023
The decrease in the annual rate for food and non-alcoholic beverages between March and April 2023 was driven by price movements from 6 of the 11 detailed classes and the largest negative contributions came from bread and cereals; fish; milk, cheese and eggs; and sugar, jam and honey.
The largest positive contribution came from vegetables (including potatoes and other tubers), where prices rose by 1.8% in the month to April 2023 but only rose by 1.3% in the equivalent time period a year earlier.
Recreation and culture
Prices for recreational and cultural goods and services rose, overall, by 6.4% in the year to April 2023, up from 4.6% in March. The increase in the annual rate was widespread, with every group in the division providing a positive contribution. Audio-visual equipment provided the largest positive contribution, which saw a monthly increase of 1.5% compared with a fall of 2.8% in the equivalent time period last year. However, it should be noted that the movements in this class depend, in part, on the composition of bestseller charts. Therefore, short-term movements in the rate should be interpreted with a degree of caution.
Alcoholic beverages and tobacco
Prices for alcoholic beverages and tobacco rose by 9.1% in the year to April 2023, up from 5.3% in March. The main contribution to this increase came from an 11.0% rise in tobacco prices in the year to April 2023, up from 4.7% on the year to March 2023. The rise was influenced by the rise in tobacco duty, which had not increased since October 2021.
Prices of wine and beer saw an increase between March 2023 and April 2023 and, as prices fell in the equivalent time period last year, both wine and beer provided a positive contribution to the monthly change in the annual rate of CPIH. However, spirits’ contribution to the monthly change in the annual rate of CPIH was flat.
Transport
The annual inflation rate for transport was 1.6%, the first increase in its rate of annual inflation in nine months, having peaked at 15.2% in June 2022. An important contributor to this rise was the purchase of second-hand cars, which saw an increase of 2.7% between March 2023 and April 2023 compared with a fall of 3.1% in the same time period last year.
Partially offsetting the upward effect from second-hand cars was motor fuel, which fell by 1.3% between March 2023 and April 2023, compared with a 1.9% increase in the equivalent time period last year. Average petrol and diesel prices stood at 145.8 and 162.4 pence per litre, respectively in April 2023, compared with 161.8 and 176.1 pence per litre in April 2022. Petrol prices fell by 1 pence per litre between March and April 2023 compared with a rise of 1.6 pence per litre between the same two months a year ago, after Russia invaded Ukraine in February 2022. Similarly, diesel prices fell by 4.1 pence per litre this year, compared with a rise of 5.6 pence per litre a year ago.
Figure 3: Motor fuel prices lower in April 2023 than April 2022
CPIH, transport and motor fuels annual inflation rates, UK, April 2013 to April 2023
