Consumer Price Inflation Drops - UK November 2023

21st December 2023

The Consumer Prices Index including owner occupiers' housing costs (CPIH) rose by 4.2% in the 12 months to November 2023, down from 4.7% in October.

On a monthly basis, CPIH fell by 0.1% in November 2023, compared with a rise of 0.4% in November 2022.

The Consumer Prices Index (CPI) rose by 3.9% in the 12 months to November 2023, down from 4.6% in October.

On a monthly basis, CPI fell by 0.2% in November 2023, compared with a rise of 0.4% in November 2022.

The largest downward contributions to the monthly change in both CPIH and CPI annual rates came from transport, recreation and culture, and food and non-alcoholic beverages.

Core CPIH (excluding energy, food, alcohol and tobacco) rose by 5.2% in the 12 months to November 2023, down from 5.6% in October; the CPIH goods annual rate slowed from 2.9% to 2.0%, while the CPIH services annual rate eased from 6.2% to 6.0%.

Core CPI (excluding energy, food, alcohol and tobacco) rose by 5.1% in the 12 months to November 2023, down from 5.7% in October; the CPI goods annual rate slowed from 2.9% to 2.0%, while the CPI services annual rate eased from 6.6% to 6.3%.

The Consumer Prices Index including owner occupiers' housing costs (CPIH) rose by 4.2% in the 12 months to November 2023, down from 4.7% in October and down from 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 November 2023 was the lowest since October 2021.

The easing in the annual rate between October and November 2023 was a result of prices falling by 0.1% on the month compared with a rise of 0.4% a year earlier.

The owner occupiers' housing costs (OOH) component of CPIH rose by 5.3% in the 12 months to November 2023, down slightly from 5.4% in October. OOH costs rose by 0.4% on the month in November 2023, compared with a 0.4% increase in the same month a year ago.

The Consumer Prices Index (CPI) rose by 3.9% in the 12 months to November 2023, down from 4.6% in October and down 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 rate in over 40 years (the CPI National Statistic series begins in January 1997). The annual rate in November 2023 was the lowest since September 2021.

The easing in the annual rate between October and November 2023 was a result of prices falling by 0.2% on the month compared with a rise of 0.4% 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 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. We cover this in more detail in Section 4: Latest movements in CPIH inflation of this bulletin and provide a commentary on the CPI in Section 5: Latest movements in CPI inflation. We also cover both CPIH and CPI in Section 3: Notable movements in prices, though the figures reflect CPIH.

Notable movements in prices
The easing in the annual inflation rates reflected downward contributions from eight divisions, most notably transport, recreation and culture, and food and non-alcoholic beverages. There were no divisions with large offsetting upward effects.

Transport
Overall prices in the transport division fell by 1.4% in the year to November 2023, compared with a rise of 0.5% in October. The annual rate for transport was most recently negative in June to August 2023. Prices fell by 1.7% between October and November this year, compared with a slight rise of 0.1% between the same two months a year ago.

The easing in the annual rate was the result of downward effects from motor fuels and, to a lesser extent, second-hand cars, maintenance and repairs, and air fares.

The average price of petrol fell by 4.1 pence per litre between October and November 2023 to stand at 151.0 pence per litre, down from 163.6 pence per litre in November 2022. Diesel prices fell by 3.2 pence per litre this year to stand at 159.0 pence per litre, down from 187.9 pence per litre in November 2022. These movements resulted in overall motor fuel prices falling by 10.6% in the year to November 2023, compared with a fall of 7.6% in the year to October.

Second-hand car prices fell by 2.1% between October and November 2023, compared with a fall of 0.2% between the same two months a year ago. On an annual basis, prices fell by 5.4% in the year to November, compared with a fall of 3.6% in the year to October.

The small downward effect from maintenance and repairs resulted from prices falling by 0.8% on the month this year compared with a rise of 1.1% in 2022. The effect came from prices of roadside recovery services falling this year but rising a year ago.

Air fares fell as usual between October and November. This year, they fell by 13.9%, compared with 10.1% a year ago. The annual rate was 3.3% in November 2023, down from 7.9% in October and 31.4% in May this year.

Recreation and culture
Prices for recreational and cultural goods and services fell by 0.4% between October and November this year, compared with a rise of 0.6% a year ago. The annual rate eased to 5.5% in November 2023, down from 6.6% in October. The November rate was the lowest since March 2023.

The decrease in the rate between October and November 2023 was the result of small downward effects from a variety of the more detailed classes. The largest came from games, toys and hobbies (particularly computer games), and cultural services (particularly admission fees to theatres and live music events). Short-term movements in these categories should be interpreted with a degree of caution, as these movements depend on the composition of best seller charts and the acts that are performing respectively.

Food and non-alcoholic beverages
Food and non-alcoholic beverage prices rose by 0.3% between October and November 2023, compared with a rise of 1.1% a year ago. The annual rate was 9.2% in November 2023, easing for the eighth consecutive month from a recent high of 19.2% in March 2023, the highest annual rate seen for over 45 years. The November 2023 rate is the lowest since May 2022.

The easing in the annual rate for food and non-alcoholic beverages was driven by bread and cereals, where prices fell by 0.8% on the month, compared with a rise of 1.9% a year ago. Prices of a variety of bread products (including white and wholemeal sliced loaves) and packs of cakes all fell between October and November this year but rose a year ago. The resulting annual rate for bread and cereals in October 2023 was 9.2%, the lowest observed since April 2022.

Other smaller downward contributions to the change in the rate came from classes such as meat; milk, cheese and eggs; and soft drinks. The only partially offsetting upward effect came from fruit, where prices of strawberries rose this year by more than a year ago.

Although the annual inflation rate for food has been slowing, food prices are still high following relatively sharp rises over the latest two years. The overall price of food and non-alcoholic beverages rose by around 27% over the two years between November 2021 and November 2023. This compares with a rise of around 9% over the ten years between November 2011 and November 2021.

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