UK CPI Inflation falls 1.1% Now Stands at 6.8%

Author: Connor Campbell - Bullion & Economics Editor

Published: 16 Aug 2023

Last Updated: 17 Aug 2023


Learn about the decrease in UK CPI Inflation by 1.1% in July 2023, which is an improvement from the 7.9% of the previous month. See how the numbers in August resemble those during the Russian invasion and understand the changes in different areas, revealing important insights during this time. Explore the details of how the UK CPI has changed and discover the reasons behind these shifts.

Key Takeaways

  • UK CPI Inflation dropped 1.1% in July 2023.
  • CPI remains above 2% target despite the decrease.
  • August 2023 CPI matches levels during Russian invasion in Feb 2022 due to lower energy prices.
  • Notable shifts include lower inflation rates for food, housing, transport, communication, and slight rises in health and restaurants/hotels.

July 2023 CPI Inflation Drops 1.1% In United Kingdom

Despite the Consumer Price Index (CPI) in the UK falling from 7.9% to 6.8% in the previous month, experts have cautioned that the public should still prepare for ongoing challenges in the cost of living. This is because the CPI remains significantly above the 2% target set by the Monetary Policy Committee.

As of August 16, 2023, the CPI rate stands at the same level as that which was observed during the Russian invasion of Ukraine in February 2022. This decline can be attributed to the decrease in energy prices.

Figure 1 - (source)

CPIH Annual and Monthly Inflation Rates

The graph depicts the change in the CPIH (Consumer Prices Index including owner occupiers' housing costs) Annual and Monthly Inflation Rates in the UK from June 2023 to July 2023. In June 2023, the CPIH inflation rate for all items was 7.3%. Notable categories with high inflation rates included food and non-alcoholic beverages at 17.4%, alcohol and tobacco at 9.2%, health at 8.3%, communication at 9.4%, and restaurants and hotels at 9.5%. However, there was a negative inflation rate in the transport category at -1.7%.

Category June 2023 (Rate) July 2023 (Rate)
CPIH All items 7.3 6.4
Food and non-alcoholic beverages 17.4 14.9
Alcohol and tobacco 9.2 9.3
Clothing and footwear 7.2 6.6
Housing and household services 7.3 5.4
of which owner occupiers' housing costs 4.4 4.5
Furniture and household goods 6.6 6.3
Health 8.3 9.0
Transport -1.7 -2.1
Communication 9.4 7.0
Recreation and culture 6.8 6.8
Education 3.2 3.2
Restaurants and hotels 9.5 9.6
Miscellaneous goods and services 6.4 5.8

In July 2023, the CPIH inflation rate for all items declined to 6.4%. Notable changes include reductions in the inflation rates for food and non-alcoholic beverages (14.9%), alcohol and tobacco (9.3%), and housing and household services (5.4%). Health inflation slightly rose to 9.0%, while the inflation rate for transport further decreased to -2.1%. Communication witnessed a slight decrease to 7.0%, and the inflation rate for restaurants and hotels slightly increased to 9.6%. Overall, the graph depicts fluctuations in inflation rates across various categories during this period.

UK CPI Inflation Rate Between June & July 2023

The graph illustrates the changes in the UK's Consumer Price Index (CPI) inflation rate between June and July 2023 across various categories. During this one-month period, notable percentage point changes in the inflation rates include:

Notably, the inflation rate for Food and non-alcoholic beverages decreased by 0.26 percentage points, while Housing and household services witnessed a substantial decrease of -0.69 percentage points. The graph thus showcases the varying impacts of these changes on the overall inflation landscape during this period.

Gold as Hedge Against Inflation

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