Consumer Prices Index (CPI) annual inflation – the Government’s target measure – was 4.4 per cent in July, up from 3.8 per cent in June.
The largest upward pressure came from food and non-alcoholic beverages where prices rose this year but fell a year ago. Within this division, there were large upward effects from meat, bread and cereals, and vegetables.
There were further large upward pressures from:
• transport costs, mainly due to the price of fuels and air transport. The average price of petrol increased by 1.2 pence per litre between June and July this year, to stand at 118.8 pence, compared with a fall of 0.4 pence last year. The other large upward effect came from passenger air transport where fares rose by more than last year particularly on European routes.
• housing and household services due to gas and electricity bills which were unchanged this year but fell a year ago.
• furniture, household equipment and maintenance where overall price discounting was not as great as last year, particularly for furniture and furnishings.
• clothing and footwear, where falls in price due to sales were not as large as last year, particularly for women’s outerwear. Small upward effects came from:
• restaurants and hotels where prices rose by more than a year ago, particularly for hotel accommodation.
• communication where the overall price of telephone equipment and services fell by less than a year ago.
A small downward pressure came from recreation and culture, where the price of computer games fell this year but rose a year ago and the price of pre-recorded DVDs fell by more than a year ago.
Retail Prices Index (RPI) inflation rose to 5.0 per cent in July, up from 4.6 per cent in June. The main factors affecting the CPI also affected the RPI. Additionally, there was a large downward contribution from housing with the main effect coming from house depreciation. Depreciation is excluded from the CPI.
RPIX inflation – the all items RPI excluding mortgage interest payments – was 5.3 per cent in July, up from 4.8 per cent in June.
As an internationally comparable measure of inflation the CPI shows that the UK inflation rate in June, at 3.8 per cent, was below the provisional figure for the European Union as a whole of 4.3 per cent.
Notes: CPI is the Consumer Prices Index. It is the measure adopted by the Government for its UK inflation target. The Bank of England's Monetary Policy Committee is required to achieve a target of 2 per cent. Prior to 10 December 2003, the CPI was published in the UK as the harmonised index of consumer prices (HICP). RPI is the Retail Prices Index - the uses of the RPI and its derivatives include indexation of pensions, state benefits and index-linked gilts. Inflation is the percentage change in the index compared with the same month one year previously.
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Consumer Price Indices (CPI) First Release