UK CPI clocks in at 6.8% YoY in July

August 16, 2023 (MLN): UK’s Consumer Prices Index (CPI) clocked in at 6.8% YoY in July 2023, down from 7.9% YoY in June, according to the latest data issued by National Statistics.

On a monthly basis, CPI fell by 0.4% in July 2023, compared with a rise of 0.6% in July 2022.

Core CPI (excluding energy, food, alcohol and tobacco) rose by 6.9% YoY in July 2023, unchanged from June; the CPI goods annual rate slowed from 8.5% YoY to 6.1% YoY, while the CPI services annual rate rose slightly from 7.2% to 7.4%.

CPI estimates suggest that the October 2022 peak was the highest annual inflation rate since 1981 (the CPI National Statistic series begins in January 1997). The rate in July 2023 was the lowest since February 2022.

The easing in the annual inflation rates in July 2023 principally reflected price changes in the housing and household services division, particularly for gas and electricity.

There were also notable downward effects from food and non-alcoholic beverages, particularly from milk, bread and cereals.

Hotels and passenger transport by air provided the largest offsetting upward contributions to the change in the annual rate.

Whereas Consumer Prices Index including owner occupiers' housing costs (CPIH) rose by 6.4% YoY in July 2023, down from 7.3% YoY in June, and down from a recent peak of 9.6% YoY in October 2022.

On a monthly basis, CPIH fell by 0.3% in July 2023, whereas it rose by 0.6% in July 2022.

Consumer price inflation estimates suggest that the October 2022 rate was the highest in over 40 years (the CPIH National Statistic series begins in January 2006). The rate in July 2023 was the lowest since March 2022.

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 most comprehensive measure of inflation.

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