The Consumer Prices Index including owner-occupiers’ housing costs (CPIH) in the UK increased by 7.3% in the 12 months leading up to June 2023, marking a slight decrease from the 7.9% recorded in May. On a monthly basis, CPIH rose by 0.2% in June 2023, compared to a more substantial increase of 0.7% in June 2022.
Similarly, the Consumer Prices Index (CPI) also saw a decline in the annual rate of inflation, standing at 7.9% for the 12 months ending in June 2023, down from 8.7% in May. The monthly change in CPI showed a rise of 0.1% in June 2023, contrasting with a 0.8% increase observed in June 2022.
The reduction in inflation rates can be attributed to falling prices for motor fuel, which had the largest downward impact on the monthly changes in both CPIH and CPI annual rates. Additionally, while food prices increased in June 2023, the rise was not as substantial as seen in the same month the previous year, contributing to the easing of inflation rates.
Notably, there were no significant offsetting upward contributions to the change in inflation rates during this period.
Core CPIH, which excludes energy, food, alcohol, and tobacco, experienced a 6.4% rise in the 12 months leading up to June 2023, a slight decrease from the 6.5% recorded in May. This rate was the highest seen in over 30 years. The CPIH goods annual rate also slowed from 9.7% to 8.5%, while the CPIH services annual rate remained unchanged at 6.3% from May.
Similarly, Core CPI, excluding energy, food, alcohol, and tobacco, recorded a 6.9% increase in the 12 months ending in June 2023, down from 7.1% in May, which was the highest rate since March 1992. The CPI goods annual rate also saw a slowdown from 9.7% to 8.5%, while the CPI services annual rate eased from 7.4% to 7.2%.
The easing of inflation rates provides some relief to consumers and businesses amid the recent surge in prices. The reduction in motor fuel costs and a more moderate increase in food prices have contributed to the overall easing in inflation pressures. However, it remains essential to closely monitor economic trends and developments in the coming months to assess the potential impacts on inflation and overall economic stability.
As the UK economy continues to recover from the effects of the pandemic, policymakers will be paying close attention to inflation dynamics to implement appropriate measures to support sustainable economic growth and maintain price stability.
