Analysis of the annual consumer price index in England

The Consumer Price Index (CPI) (y/y) in England is a measure of the average change in prices that consumers pay for a basket of goods and services throughout the year. It is one of the main indicators used to measure inflation in the UK. Here are some important points about the Consumer Price Index (CPI) in England:

Recent trends (as of early 2024)

• Inflation levels: In recent months, the CPI (y/y) has shown volatile levels of inflation, reflecting ongoing economic adjustments after the pandemic and the effects of various economic policies.
• Key drivers: Major contributors to inflation include rising energy prices, food costs, and basic services such as housing and transport.
• Impact of monetary policy: The Bank of England closely monitors the CPI (y/y) to make decisions regarding interest rates and other monetary policies aimed at controlling inflation.

Components of the CPI

• Food and non-alcoholic beverages: This category often shows significant fluctuations due to seasonal factors and supply chain disruptions.
• Housing, water, electricity, gas and other fuels: a major contributor to the overall consumer price index, especially with recent increases in energy prices.
• Transportation: includes costs related to personal and general transportation, which can be affected by fuel prices and regulatory changes.
• Health, Education and Recreation: Reflects changes in the costs of healthcare services, educational expenses and recreational activities.

Economic and political implications

• Interest rates: Continued high inflation often leads to interest rate increases by the Bank of England to calm the economy.
• Wage negotiations: Inflation rates affect wage negotiations as workers and unions seek to maintain purchasing power.

In short, the CPI (y/y) is a crucial economic indicator in England, reflecting the annual inflation rate and influencing a wide range of economic policies and decisions.

UK Consumer Price Indices: A Detailed Look

For the UK, a detailed consumer price index (i.e., the harmonized European CPI), and its analytical variables.

Consumer Price Indices (CPIs) is the UK’s main domestic measure of inflation for macroeconomic purposes. The Consumer Price Index (CPI) is a measure of consumer price inflation produced in accordance with international standards and in line with European regulations. The Consumer Price Index was first published in 1997 as the Harmonized Consumer Price Index (HICP).), which is the measure of inflation used in the government’s inflation target.

The National Statistics Office publishes a set of consumer price metrics and other price inflation, all of which measure inflation for different groups of people or products.

Producer Price Indices (PPIs) measure the prices of goods bought and sold by UK manufacturers. The main measure, known as factory gate inflation, measures the prices of goods that UK manufacturers charge other British companies for their products. This is great if you own a factory or want to understand how this part of the economy is performing, but it’s not very useful if you want to understand the pressures on your personal budget.

The Services Producer Price Index (SPPIS) does similar work to the services industry sector, and has similar types of use of PPIs, but from a services sector perspective.

For private households, there is a consumer price index (CPI) and a retail price index (RPI). From March 2013, the Office for National Statistics will also publish a new metric, CPIH, which includes housing costs for owners that have been excluded from the CPI.

The multiple metrics of private households lead us to the second reason to produce a set of metrics What do you want to do with your measure of inflation? The CPI has been designed to provide a similar measure of inflation across Europe.

The impact of UK inflation data on GBPJPY in March

GBPJPY cut its two-day winning streak around 192.20 during the early European session on Wednesday. Sterling rises to an intraday high of 192.40 and then pulls back after hotter-than-expected inflation data in the UK.

The UK’s main annual consumer price index rose 3.2% in March, less than a 3.4% increase in February. The reading came in above market expectations of 3.1%, but still above the Bank of England’s target of 2.0%, according to the Office for National Statistics on Wednesday. Moreover, core CPI inflation fell to 4.2% y/y in March from 4.5% in February. Meanwhile, the UK’s monthly consumer price index rose 0.6% in March, the same pace as February. The pound is gaining momentum as investors back from market expectations of a rate cut from the Bank of England in September.

On the Japanese yen front, the Bank of Japan (BoJ) has been cautious in normalizing its policy. Japan’s CPI inflation is expected to remain above 2% during fiscal 2024 and slow in fiscal 2025, according to the Bank of Japan’s quarterly outlook report. This raises expectations that interest rates will remain very low for some time, affecting the Japanese yen (JPY)). Investors will keep an eye on new quarterly growth and price expectations scheduled at the April 25-26 policy meeting for any hints about the interest rate trajectory.

England’s Consumer Price Index (CPIH) slows until April 2024

The consumer price index including housing costs for owners (CPIH) rose 3.0% in the 12 months to April 2024, down from 3.8% in the 12 months to March. On a monthly basis, the CPI increased by 0.5% in April 2024, compared to a rise of 1.2% in April 2023.

The Consumer Price Index (CPI) rose 2.3% in the 12 months to April 2024, down from 3.2% in the 12 months to March. On a monthly basis, the CPI increased by 0.3% in April 2024, compared to a rise of 1.2% in April 2023. Lower gas and electricity prices led to the largest downward contributions to the monthly change in the annual rates of both the CPI and CPI, while the largest upward contribution, partially offset by motor fuel, came with prices rising this year but falling a year ago.

The core consumer price index (excluding energy, food, alcohol and tobacco) rose 4.4% in the 12 months to April 2024, down from 4.7% in March; the annual rate of goods CPIH slowed from 0.9% to minus 0.8%, while the annual rate for CPIH services was unchanged at 6.0%.

The core CPI (excluding energy, food, alcohol and tobacco) rose 3.9% in the twelve months to April 2024, down from 4.2% in March; the annual CPI rate slowed from 0.8% to minus 0.8%, while the annual CPI rate for services decreased slightly from 6.0% to 5.9%.

The consumer price index including housing costs for owners (CPIH) rose 3.0% in the 12 months to April 2024, down from 3.8% in the 12 months to March, and down from the last peak of 9.6% in October 2022.