In December 2024, the Consumer Price Index (CPIH) including homeowners’ housing costs (CPIH) rose by 3.5% compared to the same period last year. This was unchanged from November 2024, and is down from its peak of 9.6% in October 2022. On a monthly basis, the index rose by 0.3% in December 2024, a slight decrease compared to the 0.4% increase in December 2023.
As for owner-occupied housing costs (OOH), they rose by 8.0% in the 12 months to December 2024, a slight increase from 7.8% in November of the same year. This is the highest rate since February 1992. OOH costs rose by 0.6% in December, compared to a 0.4% increase in the same month a year earlier.
The Household Consumer Price Index (CPI) rose by 2.5% between December 2024 and December 2023, down from 2.6% in November 2024 and reflecting a significant decline from the peak rate of 11.1% in October 2022. On a monthly basis, the index rose by 0.3% in December 2024, the same as in the same month last year.
The factors that influence inflation rates in both indices are broadly similar. However, the overseas sales component of the Household Consumer Price Index stands out, accounting for around 16% of the index. This component is a major factor contributing to the difference in inflation rates between the two indices. Despite this, the Household Consumer Price Index remains the most comprehensive measure of inflation in the UK.
Rising housing costs and general price increases will continue to reduce consumers’ purchasing power in the coming months. Analysts must monitor changes in these indicators closely to determine whether inflation will remain sustainable.
UK CPI Annual Changes: November – December 2024
In December 2024, there were downward contributions from five sections, while upward contributions came from four sections. The largest downward contribution was from the restaurants and hotels sector, while the transport sector recorded the largest upward contribution.
Restaurants and hotels
The annual inflation rate in the restaurants and hotels sector was 3.4% in December 2024. This is down from 4.0% in November of the same year, and the lowest annual rate since July 2021. On a monthly basis, prices fell by 0.1%, compared to a 0.5% increase in December 2023.
The slowdown in the annual rate mainly reflects the impact of hotels, where prices fell by 1.9% on a monthly basis, compared to a 3.1% increase in December 2023. In contrast, restaurants and cafes had a smaller downward impact, with prices rising by 0.2% compared to a 0.3% increase in the same month last year.
Alcohol and tobacco
The alcohol and tobacco sector saw prices fall by 0.2% between November and December 2024, compared to a 1.2% increase in the same period last year. On an annual basis, prices rose by 5.3% through December 2024, which is lower than the 6.8% increase in November of the same year. This easing in the annual rate mainly reflects the downward impact of tobacco, which rose by 0.7% m-o-m, compared to a 4.1% increase in December 2023. The increase in December 2023 reflects the rise in tobacco duty from November 2023.
Alcoholic beverages, which dropped by 1.1% m-o-m, slightly offset the easing in the tax rate on a monthly basis, compared to a 1.6% decline in December 2023. Wine prices also decreased by 1.1% m-o-m, mirroring a similar decline last year and positively influencing the change in the annual rate.
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UK food and non-alcoholic drink prices: December 2024
Food and non-alcoholic beverage prices rose by 2.0% year-on-year to December 2024, reflecting stability compared to November 2024. Despite this stability, the annual rate is still well below its peak in March 2023, when it reached 19.2%, its highest level in more than 45 years.
On a monthly basis, prices rose by 0.5% between November and December 2024, the same rate as in the same period last year. Compared to the same month last year. The annual rate of 2.0% remains well below the 8.0% recorded in December 2023.
Downward contributions to inflation
The change in the annual inflation rate between November and December 2024 saw downward contributions from two food and non-alcoholic beverage categories. These categories were either flat or saw lower increases compared to last year. These downward contributions came from:
Bread and cereals
Mineral water, soft drinks and juices
Upward contributions to inflation
On the other hand, there were upward contributions to the change in annual inflation between November and December 2024 from two different categories. Prices of these categories increased this year, while they had remained flat or decreased in the same period last year. Categories that contributed positively to inflation were:
Fruits, Sugar, Jam, Honey, Syrups, Chocolate and Confectionery
Change in other quarters
Most of the other seven quarters did not see significant price changes between November and December 2024. This suggests that the divergent effects on food and non-alcoholic beverage prices were limited to a few specific categories.
Food and non-alcoholic beverage prices continue to improve moderately, after experiencing a significant peak earlier in 2023. These price changes reflect ongoing challenges in the economy. Forcing consumers to adjust to small increases and slight declines in some categories.
