Core Inflation Rate MoM

Core Inflation Rate MoM is the 1-month % change in UK core CPI (Consumer Prices Index excluding energy, food, alcohol and tobacco). CPI began in 1997 as the UK version of the Harmonised Index of Consumer Prices (HICP). ONS (Office for National Statistics, the UK national statistical institute) publishes it monthly for UK private households, institutional households and visitors.

It is not headline CPI or a cost of living gauge. It excludes owner housing (estimated by rental equivalence), Council Tax and house prices.

Prices should reflect monthly averages, but most collection is around the index Tuesday in the second or third week. Petrol and diesel use monthly averages, while fruit and vegetables get an extra check on the Friday before index day. Alternative data average over most of the month.

ONS releases it monthly about 4 or 5 weeks after the index date at 7:00am UK time on a pre-announced date. Those dates are announced 18 to 30 months ahead.

Each release sits alongside headline CPI and CPIH, RPI, goods and services splits, core series, weights and the 12 COICOP divisions. CPIH is CPI plus owner housing and Council Tax.

CPI and CPIH are revised only in the public interest; RPI is never revised. Errors shifting the headline annual rate by over 0.1 percentage points get a public notice. History is never rewritten; corrections feed into the next month only.

Core keeps everything except energy, food, alcohol and tobacco, so services and non-energy goods drive it.

• Clothing and footwear: seasonal fashion prices, often falling during summer sales.
• Housing and household services: actual rentals, maintenance, water and sewerage, excluding energy and owner housing.
• Furniture, equipment and health: furniture, appliances, maintenance and health products and services.
• Transport (excluding motor fuels): new and used cars, maintenance and rail, bus, air and sea fares.
• Recreation, communication and education: phones, internet, recreation, culture and education fees and services.
• Restaurants, hotels and miscellaneous: catering, accommodation and personal goods and services.

In the July 2023 bulletin (released 16 August 2023), headline CPI fell 0.4% on the month. Its annual rate eased to 6.8% from 7.9% in June 2023, while core CPI rose 0.3% and held at 6.9%, unchanged from June.

Energy drove the fall: gas fell 25.2% and electricity 8.6% on the month, and motor fuels fell 24.9% on the year. Services sped up from 7.2% to 7.4% as goods slowed from 8.5% to 6.1%. Core had reached 7.1% in May 2023, its highest since 7.2% in March 1992, while core CPIH held at 6.4%, also unchanged from June.

1. Fixed basket: Within each year CPI is a fixed-quantity Lowe-type index, so it tracks pure price change. Items change only in the annual review.
2. Like-for-like collection: Collectors price the same product in the same outlet each month, adjusting for quality when items change. Local shops, central chains and scanner data feed the sample.
3. Elementary indices (Jevons): Where weights do not exist, ONS mainly uses the Jevons index (geometric mean of price relatives). Some strata use Dutot (ratio of averages), while scanner data use the weighted GEKS-Tornqvist multilateral method.
4. Weighted aggregation and chaining: Stratum indices combine as a weighted average of spending shares in parts per thousand, totalling 1000. Shares are price-updated to the base month, and the series is chain-linked twice a year with 2015 as 100.
5. Month-on-month rate: Divide the core index for month t by the index for month t-1, subtract 1 and multiply by 100, using unrounded (full-precision) levels. For example, 130.39 divided by 130.00 minus 1 times 100 gives 0.3%.
6. Core sub-aggregate: Core repeats the same steps on retained items only, excluding energy, food, alcohol and tobacco. It is not seasonally adjusted, since re-estimated patterns would rewrite history and VAT and duty moves are not seasonal.