NIESR monthly CPI Tracker: Inflation unchanged after fuel price falls
17 Oct 2019 09:56 AM
According to figures released yesterday by the ONS, consumer price index inflation remained unchanged at 1.7 per cent in the year to September 2019.
Our new analysis of 130,023 locally-collected goods and services prices suggest that consumers benefitted from declines in motor fuel prices. The reduction in both petrol and diesel prices offset upward contributions from the furniture, household equipment and maintenance categories. While the underlying rate of inflation, which excludes the most extreme price changes, remained unchanged at the national level, underlying inflation contracted in 7 of the 12 national regions. This pause in underlying inflation remains consistent with the 2 per cent inflation target.
Main points
- Underlying inflation remained unchanged at 1.0 per cent in the year to September 2019, as measured by the trimmed mean, which excludes 5 per cent of the highest and lowest price changes (figure 1).
- At the regional level, underlying inflation was highest in Yorkshire and The Humber at 1.2 per cent and lowest in the South East, South West and East Midlands at 0.8 per cent in the year to September 2019 (table 1).
- 18.4 per cent of goods and services prices changed in September, implying an average duration of prices of 5.4 months. 4.3 per cent of prices were reduced due to sales, 3.5 per cent fell for other reasons and 10.6 per cent were increases (figure 2).
- The historical relationship between current trimmed mean inflation and future CPI inflation implies CPI inflation of 2.1 per cent in the year to September 2020.
NIESR economist Janine Boshoff said: “ Headline CPI inflation remained unchanged at 1.7 per cent in the year to September 2019. Our analysis of more than 130,000 goods and services included in the basket, suggests a pause in inflationary pressure. Our measure of underlying inflation, which excludes extreme price movements, remained unchanged at 1 per cent for the third consecutive month. Large price decreases in both motor and domestic fuels offset increased prices in the furniture, household equipment and maintenance categories. Underlying inflation fell in most of the United Kingdom regions. On this basis, we expect CPI inflation to settle just below the Bank of England’s target of 2 per cent in the coming year.”
This analysis builds on the work presented in the National Institute Economic Review, which constructs a measure of trimmed mean inflation based on the goods and services prices that underlie the consumer price index.
Our next analysis of consumer prices will be published on 13 November.
Figure 1 – CPI and trimmed mean inflation (per cent)
Note: Our measure of trimmed mean inflation excludes 5 per cent of the highest and lowest price changes. The level of trimmed mean inflation is typically lower than CPI inflation due to differences in how the largest price changes are treated and to how the prices are weighted. Source: ONS, NIESR calculations.
Figure 2 – Decreases due to sales, decreases due to other reasons and increases (per cent)
Table 1 – Regional trimmed mean inflation (per cent)
|
|
2018
|
2019
|
|
Region
|
Sep
|
Oct
|
Nov
|
Dec
|
Jan
|
Feb
|
Mar
|
Apr
|
May
|
Jun
|
Jul
|
Aug
|
Sep
|
|
London
|
1.2
|
1.0
|
1.0
|
1.0
|
0.9
|
1.1
|
1.0
|
0.7
|
1.1
|
1.2
|
1.1
|
1.1
|
1.0
|
|
South East
|
0.8
|
0.7
|
0.5
|
0.4
|
0.6
|
0.8
|
0.5
|
0.4
|
0.7
|
1.0
|
0.9
|
0.8
|
0.8
|
|
South West
|
0.8
|
0.4
|
0.4
|
0.5
|
0.6
|
0.7
|
0.7
|
0.4
|
0.7
|
0.9
|
1.0
|
0.8
|
0.8
|
|
East Anglia
|
0.9
|
0.7
|
0.7
|
0.7
|
0.8
|
0.8
|
0.8
|
0.5
|
0.7
|
1.0
|
1.1
|
1.0
|
1.1
|
|
East Midlands
|
1.0
|
0.9
|
0.8
|
0.8
|
0.8
|
0.8
|
0.7
|
0.5
|
0.7
|
1.0
|
1.0
|
0.9
|
0.8
|
|
West Midlands
|
1.1
|
0.7
|
0.6
|
0.8
|
0.6
|
0.7
|
0.7
|
0.2
|
0.7
|
0.8
|
1.0
|
1.0
|
1.0
|
|
Yorkshire and the Humber
|
0.4
|
0.5
|
0.4
|
0.5
|
0.4
|
0.6
|
0.6
|
0.3
|
0.7
|
1.3
|
1.1
|
1.0
|
1.2
|
|
North West
|
1.0
|
0.6
|
0.6
|
0.6
|
0.8
|
0.9
|
0.9
|
0.6
|
0.8
|
1.1
|
1.1
|
1.3
|
1.0
|
|
North
|
1.0
|
0.6
|
0.7
|
0.8
|
0.8
|
0.7
|
0.8
|
0.4
|
0.9
|
1.2
|
1.4
|
1.2
|
1.2
|
|
Wales
|
1.0
|
0.8
|
0.7
|
0.8
|
0.9
|
0.6
|
0.7
|
0.6
|
0.9
|
1.0
|
1.0
|
0.7
|
0.9
|
|
Scotland
|
1.0
|
0.8
|
0.8
|
0.8
|
0.9
|
0.8
|
0.7
|
0.4
|
0.7
|
0.9
|
0.9
|
0.8
|
1.0
|
|
Northern Ireland
|
0.8
|
0.3
|
0.6
|
0.7
|
0.8
|
0.9
|
0.7
|
0.4
|
1.0
|
1.0
|
1.3
|
1.0
|
1.1
|
|
United Kingdom
|
0.9
|
0.7
|
0.6
|
0.7
|
0.7
|
0.8
|
0.7
|
0.5
|
0.8
|
1.0
|
1.0
|
1.0
|
1.0
|
Note: Our measure of trimmed mean inflation excludes 5 per cent of the highest and lowest price changes. The level of trimmed mean inflation is typically lower than CPI inflation due to differences in how the largest price changes are treated and to how the prices are weighted. Source: ONS, NIESR calculations.
Notes for editors
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Paola Buonadonna on 020 7654 1923 /p.buonadonna@niesr.ac.uk
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Consumer price inflation, UK: September 2019