The latest figures from the Office of National Statistics (ONS) show that the headline rate of inflation remained unchanged for the third month in a row. The Consumer Prices Index (CPI) showed that prices increased by 2.7% in the year ending December 2012, this is the same annual rate as was seen in the previous two months and continues the trend of, broadly, flat inflation that has been seen since Spring 2012.
Whilst inflation remained unchanged overall, there were some movements at the more detailed level. Gas and electricity costs provided the biggest upwards push on the figures with the anticipated price increases from a number of providers entering the index this month. In addition, some prices did not fall as much as they had twelve months previously when, for example, the fall in the cost of clothing and footwear, particularly coats, jackets and trousers, was significantly greater. These smaller percentage falls contributed to holding the overall CPI rate up.
Transport costs (in particular air fares) pushed inflation back down, with the rise in the cost of flights in December only half of what they were a year ago, and fuel prices continuing to fall. The result was that pre-Christmas prices only rose by 0.7% in comparison with the previous December, when prices rose by 2.2%. Motor fuels also had a downward contribution. Petrol prices fell by 2.8 pence per litre between November and December 2012, compared with a fall of 1.1 pence per litre a year earlier. Diesel prices fell by 1.4 pence per litre in 2012, compared with a rise of 0.1 pence per litre a year earlier.
The long-running Retail Prices Index (RPI) – which includes some housing costs not included in the CPI and excludes expenditure by the richest and poorest – showed that prices increased by 3.1% in the year ending December – up from 3.0%. This difference was due to mortgage interest payments and other housing costs which are excluded from the CPI, as well as the impact of increasing energy costs.
Looking ahead, a new measure of consumer price inflation (which will initially be known as CPIH) including owner occupiers’ housing costs, will be launched in March 2013.