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CPI falls to 1.6%
The Consumer Prices Index (CPI) grew by 1.6% in the year to March 2014, down from 1.7% in February.
The largest contribution to the fall in the rate came from transport, particularly motor fuels. Other smaller downward effects came from the clothing and furniture & household goods sectors.
These were partially offset by upward contributions from restaurants & hotels and alcohol & tobacco. CPIH grew by 1.5% in the year to March 2014, down from 1.6% in February. RPIJ grew by 1.8%, down from 2.0% in February.
Latest Figure and Long-Term Trend
The CPI 12-month rate (the amount prices change over a year) between March 2013 and March 2014 stood at 1.6%. This means that a basket of goods and services that cost £100.00 in March 2013 would have cost £101.60 in March 2014. The latest CPI 12-month rate continues the recent trend which has seen inflation fall slightly but remain broadly in the region of 2%.
Over the last five years, the three main contributors to the 12-month inflation rate have been food & non-alcoholic beverages, housing, water, electricity, gas & other fuels and transport (including motor fuels). Combined, these three sectors have, on average, accounted for half of the 12-month inflation rate each month. While having a small downward impact on the change in the CPI 12-month rate between February and March 2014, prices for housing, water, electricity, gas & other fuels accounted for around a quarter of inflation in March.
Consumer Prices Index (CPI): What are the main movements?
The CPI rose by 0.2% between February and March 2014, compared with a larger rise of 0.3% between the same two months in 2013. The 1-month movement was therefore 0.1 percentage points lower this year compared with last year. This led to the CPI 12-month rate falling from 1.7% in February to 1.6% in March.
The largest downward contributions to the change in the CPI 12-month rate between February and March 2014 came from:
Transport: prices, overall, were little changed between February and March 2014 compared with a rise of 0.6% between the same two months a year earlier. Within the transport sector, the main downward effect came from motor fuels. Petrol prices were unchanged between February and March this year compared with a rise of 2.2 pence per litre between the same two months a year ago. Diesel prices fell by 0.4 pence per litre this year compared with a rise of 1.9 pence per litre in 2013. There was also a smaller downward contribution from air transport where fares rose between February and March but by less than a year ago.
Clothing & footwear: prices rose, as usual, between February and March but by less than in 2013. The downward effect came from garments, particularly women’s outerwear.
Furniture, household equipment & maintenance: prices, overall, rose by 0.3% between February and March 2014 compared with a rise of 0.8% between the same two months a year earlier. Downward effects came from a variety of classes, including furniture & furnishings and household textiles.
The largest upward contributions to the change in the CPI 12-month rate between February and March 2014 came from: Restaurants & hotels: prices, overall, rose by 0.5% between February and March 2014 compared with a rise of 0.2% between the same two months a year earlier. The main upward effect came from price changes for overnight stays in hotels.
Alcohol & tobacco: prices, overall, rose this year but fell a year ago, particularly for spirits.
Retail Prices Index (RPI) and RPIJ In accordance with the Statistics and Registration Service Act 2007, the Retail Prices Index and its derivatives have been assessed against the Code of Practice for Official Statistics and found not to meet the required standard for designation as National Statistics. The full assessment report can be found on the UK Statistics Authority website.
The RPI is a long-standing measure of UK inflation that has historically been used for a wide range of purposes such as the indexation of pensions, rents and index-linked gilts. For further information see 'Users and uses of consumer price inflation statistics'. RPIJ is an improved variant of the Retail Prices Index, which is calculated using formulae that meet international standards. The rationale for creating RPIJ was to give users a better alternative to the RPI if their needs were for a measure of inflation based on the same population, classifications weights etc as the RPI. Currently, RPIJ also acts as an analytical series, in that it allows users to see the impact of using the Jevons (which meets international standards) in place of the Carli formula (Which does not meet international standards) in the RPI. The use of the different formulae at the elementary aggregate level is currently the only difference between the two indices. ONS does not produce detailed goods and services indices for RPIJ.
In March 2014, the 12-month rate for RPIJ stood at 1.8%, down from 2.0% in February and notably lower than the rate seen through the first three quarters of 2013. CPIH and RPIJ moved in the same direction this month and broadly continue to track each other as they have done for the last two years. The RPI 12-month rate for March 2014 stood at 2.5%, meaning that it was 0.7 percentage point higher than it would have been had it used formulae that meet international standards.
For more information, http://www.ons.gov.uk/ons/dcp171778_358581.pdf
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