Inflation Eases

The Office For National Statistics (ONS) reported last month that in the 12 months leading up to March 2023, the Consumer Prices Index (CPI) increased by 10.1%, a decrease from 10.4% in February and a recent peak of 11.1% in October 2022. Whilst it indicates that inflation has eased it was higher than market expectations of 9.8%.

The CPIH, which measures Consumer Prices Index including owner occupiers' housing costs, increased by 8.9% during the 12 months ending in March 2023. This marks a decrease from the February rate of 9.2% and the recent peak of 9.6% in October 2022. It is estimated that the October 2022 rate was the highest in over 40 years, as indicated by modelled consumer price inflation estimates. In more recent months, the CPIH annual rate has lowered to below 9.2%, which was last recorded over 30 years ago between September and December 1990.

The slowdown in the annual rate between February and March 2023 can be attributed to a 0.7% increase in prices for the month, compared to a 0.9% rise in the same period the previous year.

• The ONS summarised the main points of the latest report:

• The Consumer Prices Index including owner occupiers’ housing costs (CPIH) rose by 8.9% in the 12 months to March 2023, down from 9.2% in February.

• The largest upward contributions to the annual CPIH inflation rate in March 2023 came from housing and household services (principally from electricity, gas and other fuels), and food and non-alcoholic beverages.

• On a monthly basis, CPIH rose by 0.7% in March 2023, compared with a rise of 0.9% in March 2022.

• The Consumer Prices Index (CPI) rose by 10.1% in the 12 months to March 2023, down from 10.4% in February.

• On a monthly basis, CPI rose by 0.8% in March 2023, compared with a rise of 1.1% in March 2022.

• The largest downward contributions to the monthly change in both the CPIH and CPI annual rates came from motor fuels, and housing and household services (particularly liquid fuels), partially offset by upward contributions from food, and recreation and culture.

• Core CPIH (excluding energy, food, alcohol and tobacco) rose by 5.7% in the 12 months to March 2023, unchanged from February; the CPIH goods annual rate eased from 13.4% to 12.7% over the two months, while the CPIH services annual rate rose slightly from 5.6% to 5.7%.

Source: ONS