Consumer Price Inflation, UK June 2022

20th July 2022

Main points
The Consumer Prices Index including owner occupiers' housing costs (CPIH) rose by 8.2% in the 12 months to June 2022, up from 7.9% in May.

The largest upward contributions to the annual CPIH inflation rate in June 2022 came from housing and household services (principally from electricity, gas and other fuels, and owner occupiers' housing costs) and transport (principally from motor fuels).

On a monthly basis, CPIH rose by 0.7% in June 2022, compared with a rise of 0.4% in June 2021.

The Consumer Prices Index (CPI) rose by 9.4% in the 12 months to June 2022, up from 9.1% in May.

On a monthly basis, CPI rose by 0.8% in June 2022, compared with a rise of 0.5% in June 2021.

Rising prices for motor fuels and food made the largest upward contributions to the change in both the CPIH and CPI 12-month inflation rates between May and June 2022.

The largest, partially offsetting downward contributions to change in the rates were from second-hand cars and audio-visual equipment (principally recording media).

Consumer Price Inflation
The Consumer Prices Index including owner occupiers' housing costs (CPIH) rose by 8.2% in the 12 months to June 2022, up from 7.9% in May. The annual rate was below 1.2% from April 2020, at the start of the first coronavirus (COVID-19) lockdown, to March 2021. The rate has since risen. The June 2022 figure is the highest recorded annual inflation rate in the National Statistic series, which began in January 2006. The rate was last higher in the constructed historical estimates in March 1991, when it stood at 8.3%. The largest contributions to the annual rate in June 2022 are from housing and household services, and transport. Their effects are shown in Figure 6 in Section 4.

The Consumer Prices Index (CPI) rose by 9.4% in the 12 months to June 2022, up from 9.1% in May. Similar to the CPIH, the rate has risen sharply over recent months and the June figure was the highest annual CPI inflation rate in the National Statistic series, which began in January 1997. Indicative modelled consumer price inflation estimates suggest that the CPI rate would last have been higher around 1982, where estimates range from nearly 11% in January down to approximately 6.5% in December. The main contributors to the June 2022 rate are shown in Figure 10 in Section 5.

On a monthly basis, CPIH rose by 0.7% in June 2022, compared with a rise of 0.4% in the same month a year earlier. The CPI monthly rate was 0.8%, compared with 0.5% in June 2021. The CPIH and CPI monthly rates for June 2022 were the largest rises between May and June since the start of the historical constructed series in 1988. Rising prices for motor fuels and food resulted in the largest upward contributions to the monthly rates in June 2022. In June 2021, the main upward contribution to the monthly rates came from transport overall.

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. The inclusion of Council Tax and rates in CPIH is the only further difference in coverage. This makes CPIH our most comprehensive measure of inflation and, therefore, the figures in Section 3 and overall commentary in Section 4 in this bulletin focus on CPIH. While the coverage differs, the key drivers of the annual inflation rate are the same where they are common to both measures. Section 5 comments, mostly graphically, on the CPI.

Transport
The annual increase for transport was 15.2% in June 2022. Over the past two years, the annual rate has risen from minus 1.5% in June 2020 (during the first coronavirus (COVID-19) lockdown) to the latest figure for June 2022.

Within transport, the high 12-month rate in June 2022 was mainly caused by a 42.3% rise in the price of motor fuels on the year. This is the highest rate since before the start of the constructed historical series in January 1989. Average petrol prices stood at 184.0 pence per litre in June 2022, compared with 129.7 pence per litre a year earlier. The June 2022 price is the highest on record (since 1990). The average price of diesel in June 2022, which was 192.4 pence per litre, was also the highest recorded.

The increase in the annual rate for transport between May and June 2022 was also caused by the changing price of motor fuels. Average petrol prices rose by 18.1 pence per litre in June 2022, the largest monthly rise on record (since 1990). This compares with a rise of 2.5 pence per litre a year ago. Diesel prices moved similarly, with a rise of 12.7 pence per litre this year, compared with 2.4 pence per litre a year ago.

Within transport, there was an offsetting, downward movement from second-hand cars, where prices fell by 2.5% on the month in 2022. This was the fifth consecutive monthly fall in prices. In comparison, prices rose by 4.4% between May and June 2021. In 2021, there were reports of increased demand, combined with reports of restricted supply.

Food and non-alcoholic beverages
Food and non-alcoholic beverage prices have risen by 9.8% in the year to June 2022, up from 8.7% in May, and the highest rate since March 2009. The annual rate partly reflects price rises over the latest few months, including a 1.2% rise between May and June 2022. This monthly rise was the largest between May and June since 2008, and it follows similar monthly rises into April and May 2022.

The increase in the annual rate for food and non-alcoholic drinks between May and June 2022 was driven by price movements across many of the more detailed classes. The largest upward effect came from milk, cheese and eggs, where prices of milk and cheese rose between May and June 2022, compared with price falls a year ago. Other upward effects came from vegetables, meat and other food products (such as ready meals).

Restaurants and hotels
Prices charged in restaurants and for accommodation rose by 8.6% in the year to June 2022, up from 7.6% in May. The annual rate to June 2022 was the highest since 8.6% recorded in August 2021, which was influenced by the effect of the previous year's Eat Out to Help Out scheme.

Prices rose by 1.2% between May and June 2022, compared with a smaller rise of 0.3% a year ago. However, it should be noted that some items within this category were imputed in June 2021 because they were still not available following the coronavirus lockdown earlier in the year. This means that monthly movements for those items in 2021 reflect imputed index movements and should be interpreted with caution.

Clothing and footwear
The annual rate for clothing and footwear was 6.1% in the year to June 2022, down from 6.9% in May. Prices were little changed on the month in 2022 but rose by 0.8% between May and June 2021. Prices normally fall at this time of year as the summer sales season begins, but there was little movement in 2022 and, in 2021, prices were still rising following the end of the coronavirus lockdown.

Note
For much more detail read the full report HERE