The UK saw continued changes in price and inflation indices across sectors in December 2024. The figures showed that the Core CPI YoY was 3.5%. Despite this figure, the rate was unchanged from November 2024, reflecting relative stability in the prices of goods and services. However, there was a slight decrease compared to the peak of inflation in 2022.
Core CPI
In December 2024, the Core CPI inflation rate was 3.5% YoY. This represents a slight decrease compared to 3.4% in November 2024, and 3.2% in the same month last year. These figures remain below the peak reached in October 2022.
On a monthly basis, Core CPI increased by 0.3% in December 2024, reflecting relative stability in prices in the market. This figure is lower than the increase recorded in December 2023, which was 0.4%. The index also showed a difference in the impact of economic factors on prices.
Main reasons for the increase in inflation(CPI)
Among the factors contributing to the increase in inflation, housing costs stand out as one of the main drivers. Housing costs are increasing over the long term, which puts pressure on the inflation rate on a continuous basis. prices of food and non-alcoholic beverages also contribute to the increase in inflation, as these items have seen their prices rise at varying rates.
Other indicators of inflation
The consumer price index for the home, which is different from the core index, also saw an increase of 2.5% in twelve months to December 2024. Although this figure is lower than the inflation rate last year, it reflects the ongoing challenges facing the British economy.
The sector with the greatest impact: housing
Housing costs are one of the most influential sectors in the inflation indicators. Housing costs rose by 8.0% in the twelve months to December 2024.
What is the difference between the annual CPI and the core CPI on an annual basis?
The Consumer Price Index (CPI) is a measure used to measure the change in the prices of a basket of goods and services over a specified period of time. It is used to measure inflation and determine the change in the cost of living for consumers. In the UK, the CPI is calculated periodically to measure how price changes affect people’s daily lives. However, there are two main types of CPI.
The annual CPI measures the change in the prices of goods and services for consumers over a twelve-month period. It is calculated on the basis of all goods and services that make up the consumption basket, including food, energy, fuel and utilities. It also reflects the impact of all consumer categories on the cost of living. This index shows the overall change in prices and can include significant fluctuations due to seasonal factors or changes in commodity prices.
The core CPI (CPIH)
In contrast, the core CPI is another measure calculated using the same basic basket of goods and services. However, it excludes some volatile items such as food and energy. Because of this exclusion, the CPIH provides a more stable and realistic picture of inflation over the long term. This indicator is mainly used to determine core inflation, as it is more accurate in measuring changes that are not significantly affected by temporary fluctuations in the markets.
Difference between the two indicators
The main difference between the annual CPI and the core CPI lies in the components that are included in the calculation. The annual CPI reflects all price changes, while the core CPI excludes some of the more volatile items such as food and energy. For this reason, the core CPI is considered a more accurate indicator of the underlying inflation in the economy.
Importance of each indicator
Both indicators are used in analyzing economic conditions and making monetary decisions. The central bank relies on the core CPI to determine long-term fiscal and monetary policies. While the annual CPI helps monitor general changes in the cost of living and plan policies that target price stability in the short term.
UK Transport Price Changes: December 2024
In December 2024, overall prices in the Transport sector fell by 0.6% year-on-year, compared to a 1.1% fall in November 2024. This change reflects changes in fuel and used car prices, as well as the impact of air fares. Despite the fall in overall prices, the sector saw some monthly increases.
Monthly Transport Price Changes
On a monthly basis, transport prices rose by 1.0% in December 2024, compared to 0.6% in the same month last year. This increase was mainly due to increases in fuel and used car prices. This indicates significant volatility in fuel.
Fuel prices and their impact on inflation
Petrol prices saw a slight increase of 1.4p per litre between November and December 2024. The price of petrol reached 136.2p per litre, compared to 142.8p per litre in December 2023. This price reduction has contributed significantly to reducing the impact of fuel prices on the overall inflation rate in this sector. Diesel prices, on the other hand, rose by 2.0p per litre in December 2024, to 142.5p per litre, compared to 151.4p per litre in December 2023. Despite this monthly increase, overall motor fuel prices fell by 5.0% year-on-year to December 2024. This is an improvement on the 10.9% fall in the year to November 2024.
Used Cars: Annual Price Increase
In terms of used car prices, they fell by 0.6% between November and December 2024, compared to a larger 2.8% fall in the same period last year.
