Consumer Price Inflation UK October 2023 - 4.6% In October Down From 6.7% In September

15th November 2023

The Consumer Prices Index including owner occupiers' housing costs (CPIH) rose by 4.7% in the 12 months to October 2023, down from 6.3% in September.

On a monthly basis, CPIH rose by 0.1% in October 2023, compared with a rise of 1.6% in October 2022.

The Consumer Prices Index (CPI) rose by 4.6% in the 12 months to October 2023, down from 6.7% in September.

On a monthly basis, CPI did not change in October 2023, compared with a rise of 2.0% in October 2022.

The largest downward contribution to the monthly change in both CPIH and CPI annual rates came from housing and household services, where the annual rate for CPI was the lowest since records began in January 1950.

The second-largest downward contribution to the monthly change in both CPIH and CPI annual rates came from food and non-alcoholic beverages where the annual rate was the lowest since June 2022.
Core CPIH (excluding energy, food, alcohol and tobacco) rose by 5.6% in the 12 months to October 2023, down from 5.9% in September; the CPIH goods annual rate fell from 6.2% to 2.9%, while the CPIH services annual rate fell from 6.3% to 6.2%.

Core CPI (excluding energy, food, alcohol and tobacco) rose by 5.7% in the 12 months to October 2023, down from 6.1% in September; the CPI goods annual rate fell from 6.2% to 2.9%, while the CPI services annual rate fell from 6.9% to 6.6%.

The Consumer Prices Index including owner occupiers' housing costs (CPIH) rose by 4.7% in the 12 months to October 2023, down from 6.3% in September and a recent peak of 9.6% in October 2022. Our indicative modelled consumer price inflation estimates, as reported in our Consumer price inflation, historical estimates and recent trends, UK: 1950 to 2022 article, suggest that the October 2022 rate was the highest in over 40 years (the CPIH National Statistic series begins in January 2006).

The annual rate in October 2023 was the lowest since November 2021.

The easing in the annual rate between September and October 2023 was a result of prices rising by 0.1% on the month compared with a rise of 1.6% a year earlier.

The Consumer Prices Index (CPI) rose by 4.6% in the 12 months to October 2023, down from 6.7% in September, and from a recent peak of 11.1% in October 2022. Our indicative modelled consumer price inflation 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 annual rate in October 2023 was the lowest since October 2021.

The easing in the annual rate between September and October 2023 was a result of prices remaining the same on the month compared with a rise of 2.0% 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.

Notable movements in prices
The easing in the annual inflation rates principally reflected negative contributions from three divisions, with large downward effects from housing and household services, food and non-alcoholic beverages, and restaurants and hotels. Recreation and culture provided the only large positive contribution.

Housing and household services
Housing and household services prices fell by 0.3% between September and October 2023, compared with a rise of 3.4% between the same two months a year ago. This resulted in an easing in the annual rate to 1.9% in October 2023, down from 5.7% in September and a peak of 11.8% in January and February.

The decrease in the rate between September and October 2023 reflected downward effects from gas and electricity. Gas costs fell by 31.0% in the year to October 2023, compared with a rise of 1.7% in September. This is the lowest annual rate since records began in January 1989. Electricity costs fell by 15.6% in the year to October 2023, compared with a rise of 6.7% in September. This is the lowest annual rate since records began in January 1989.

Although electricity and gas prices have fallen on the month and the year, their prices are still high in comparison to recent years. The price of gas in October 2023 was around 60% higher than it was in October 2021 while the price of electricity in October 2023 was around 40% higher than it was in October 2021. Electricity, gas and other fuels fell by 6.9% between September and October 2023 and were down 21.7% on the year.

The downward contribution from gas and electricity was partly offset by the owner occupiers' housing costs (OOH) component of CPIH, which rose by 5.4% in the 12 months to October 2023, up from 5.0% in September. This is the highest annual rate since July 1992 where it was 6.9%. The OOH rose by 0.7% on the month in October 2023, compared with 0.3% the same month a year ago.

Food and non-alcoholic beverages
Food and non-alcoholic beverage prices rose by 0.1% between September and October 2023 following a 0.1% decline the previous month; this compares with a rise of 2.0% between the same two months a year ago. This saw an easing in the annual rate to 10.1% in October 2023, down from 12.2% in September and a recent high of 19.2% in March 2023, the highest annual rate seen for over 45 years.

The easing in the annual rate for food and non-alcoholic beverages was driven by price movements which saw 9 of the 11 classes provide a downward contribution in the latest month. The largest downward contributions came from the milk, cheese and eggs category and the vegetables category.

Within milk, cheese and eggs, there were downward effects from three of the six subclasses, notably from yoghurt, with prices in this category falling by 2.9% between September and October this year, compared with a rise of 5.8% between the same two months a year ago. This has led to the annual rate for milk, cheese and eggs easing to 7.9% in the year to October 2023, down from 12.3% in September.

Within vegetables there were downward effects from three of the six subclasses, notably from crisps, with prices for these products falling by 3.4% between September and October this year, compared with a rise of 4.1% between the same two months a year ago. This has led to the annual rate for vegetables easing to 10.8% in the year to October 2023, down from 14.4% in September.

The remaining two classes were oils and fats, and coffee, tea and cocoa, and they provided no change in contribution to the 12-month rate. Every subclass in each of these categories also provided no change in contribution to the 12-month rate.

Although the annual rate at which food prices have been increasing has been slowing, the food price index is still at a high level in comparison to recent years. The price of food in October 2023 was around 30% higher than it was in October 2021.

Restaurants and hotels
Restaurant and hotel prices remained the same between September and October 2023, compared with a rise of 1.0% between the same two months a year ago. This resulted in an easing in the annual rate to 7.6% in October 2023, down from 8.6% in September and a peak of 12.1% in February.

As the negative contribution from catering was small, the easing in the rate reflected the downward effect from accommodation services, where prices fell by 2.5% between September and October 2023 compared with a rise of 1.2% between the same two months last year.

The downward effect came almost entirely from overnight hotel accommodation, where prices fell by 9.2% between September and October 2023 compared with a rise of 1.1% between the same two months last year. Prices for overnight hotel accommodation are taken just before the date of stay and can vary depending on the number of available rooms, resulting in month-to-month volatility.

Transport
Although the transport division did not provide a large negative contribution to the change in the annual rate of inflation, it had sizeable offsetting changes in contribution below the divisional level. Prices in this division fell by 0.2% between September and October 2023, compared with a flat rate between the same two months a year ago. This resulted in an easing in the annual rate to 0.5% in October 2023, down from 0.7% in September.

The largest contributing downward effect came from the purchase of used cars where prices fell by 3.0% between September and October 2023, compared with a fall of 0.6% in the same months last year. On an annual basis, prices fell by 3.6% in the year to October, compared with a fall of 1.2% in the year to September.

The downward contribution from used cars was fully offset by an upward contribution from motor fuels. The average price of petrol rose by 1.5 pence per litre between September and October 2023 to stand at 155.1 pence per litre in October 2023. Last year, prices fell by 2.9 pence per litre to stand at 163.6 pence per litre in October 2022. Similarly, diesel prices rose by 4.8 pence per litre this year to stand at 162.2 pence per litre in October 2023. Last year, they rose by 2.3 pence per litre to stand at 183.9 pence per litre in October 2022. These movements resulted in motor fuel prices falling by 7.6% in the year to October 2023, compared with a fall of 9.7% in the year to September.

Read the full report HERE