Inflation Rises Even Higher To 10.1% - It Would Have Been Worse Except Petrol and Diesel Came Down

19th October 2022

The Consumer Prices Index including owner occupiers' housing costs (CPIH) rose by 8.8% in the 12 months to September 2022, up from 8.6% in August and returning to July's recent high.

The largest upward contributions to the annual CPIH inflation rate in September 2022 came from housing and household services (principally from electricity, gas and other fuels, and owner occupiers' housing costs), food and non-alcoholic beverages, and transport (principally motor fuels).

On a monthly basis, CPIH rose by 0.4% in September 2022, compared with a rise of 0.3% in September 2021.

The Consumer Prices Index (CPI) rose by 10.1% in the 12 months to September 2022, up from 9.9% in August and returning to July's recent high.

On a monthly basis, CPI rose by 0.5% in September 2022, compared with a rise of 0.3% in September 2021.

Rising food prices made the largest upward contribution to the change in both the CPIH and CPI annual inflation rates between August and September 2022.

The continued fall in the price of motor fuels made the largest, partially offsetting, downward contribution to the change in the rates.

The Consumer Prices Index including owner occupiers' housing costs (CPIH) rose by 8.8% in the 12 months to September 2022, up from 8.6% in August.

The CPIH annual rate returned to July's level, which was last higher in the constructed historical estimates in December 1990, when it stood at 9.2%. On a monthly basis, CPIH rose by 0.4% in September 2022, compared with a rise of 0.3% in the same month a year earlier.

The Consumer Prices Index (CPI) rose by 10.1% in the 12 months to September 2022, up from 9.9% in August. The CPI monthly rate was 0.5% in September 2022, compared with 0.3% in September 2021. In September 2022, the CPI annual inflation rate returned to the July level, which was the highest annual CPI inflation rate in the National Statistic series, which began in January 1997. Indicative modelled consumer price inflation estimates suggest that the CPI rate would last have been higher around 1982, where estimates range from nearly 11% in January down to approximately 6.5% in December.

The largest contribution to the annual rate in September 2022 for both CPIH and CPI is from housing and household services. The second largest contribution came from food and non-alcoholic beverages, which has overtaken that from transport.

As with last month, rising food prices meant that food and non-alcoholic beverages made the largest upward contribution to the change in the annual inflation rate in September 2022, while falling pump prices for motor fuels made a large offsetting downward contribution.

Notable movements in prices
The increase to the annual inflation rate in September 2022 reflected, principally, rising food and non-alcoholic beverage prices. There were also increases from hotel overnight stays, and from furniture and household goods. A large partially offsetting, downward effect came from price of motor fuels in the transport section.

Food and non-alcoholic beverages
Food and non-alcoholic beverage prices rose by 14.6% in the 12 months to September 2022, up from 13.1% in August. The annual rate of inflation for this category has continued to rise for the last 14 consecutive months, from negative 0.6% in July 2021. The current rate is estimated to be the highest since April 1980, as presented in the consumer price inflation extended historic series.

The increase in the annual rate for food and non-alcoholic beverages between August and September 2022 was driven by price movements across eight of the more detailed classes. The largest upward effects came from bread and cereals, meat products, and milk, cheese and eggs, where prices rose between August and September 2022, but fell between the same two months in 2021.

Overall prices for food and non-alcoholic beverages have risen throughout 2022, however prices rose more slowly (by 1.1%) between August and September 2022, than between July and August 2022 (where prices increased by 1.5%).

Restaurants and hotels
There was an overall upward contribution of 0.08 percentage points to the change in the annual inflation rate from restaurants and hotels. The movement came entirely from accommodation services, which was the result of differing seasonal patterns between this year and last year. The price of hotel overnight stays had fallen in August 2022 but rose by 3.6% between August and September 2022. In 2021, prices peaked in August before falling by 8.4% into September, which has resulted in this year's large upward contribution.

Furniture and household goods
The annual rate of inflation for furniture and household goods rose to 10.8% in September 2022, from 10.2% in August. Prices overall rose by 1.5% on the month in 2022, compared with a smaller rise of 0.9% in September 2021.

The increase in the annual rate between August and September came from four of the six more detailed groups. The largest change came from household appliances, fitting and repairs, where prices for washing machines, electric fans, and vacuum cleaners all rose this year, but had either fallen or had been largely unchanged between August and September 2021.

Housing and household services
The annual rate for housing and household services increased by 0.1 percentage points to 9.3% in September 2022. Housing and household services costs increased by 0.3% on the month in 2022, compared with a smaller increase of 0.2% in September 2021.

The increase in the annual rate between August and September 2022 came from owner occupiers' housing costs, private rents, and electricity, gas and other fuels, where prices rose by more compared with a year ago. Despite electricity and gas prices remaining unchanged, the cost for delivered kerosene increased by 13.6% between August and September 2022, compared with a smaller increase (of 4.6% in 2021). Prices usually increase in October each year when homes reliant on liquid fuels tend to refuel ahead of the colder months.

Transport
The annual inflation rate for transport was 10.9% in September 2022, down for a third month in a row from a peak of 15.2% in June 2022.

As with August, motor fuel price changes are the main driver behind the overall movements within transport. Fuel prices increased by 26.5% in the year to September 2022, down from 32.1% in August.

Average petrol and diesel prices stood at 166.5 and 181.6 pence per litre, respectively, in September 2022, compared with 134.9 and 137.4 pence per litre a year earlier. While prices are still higher than a year ago, petrol prices fell by 8.7 pence per litre on the month and diesel prices fell by 5.0 pence per litre. This explains the further easing in the annual rate for motor fuels which reduced from 32.1% in August 2022.

Elsewhere in the transport division, the price of air fares fell by 25.1% between August and September 2022, as the seasonal demand for flights reduced at the end of the school holidays. In September 2022, prices were 35.7% higher than a year earlier, with the largest increases coming from domestic and European flights.

The annual rate of inflation for second-hand cars reduced to 2.4% in the year to September 2022, down from 4.6% in August. This is the sixth consecutive month since March 2022 that the annual rate has eased. Although prices have fallen between March and September 2022, much of the change in the annual inflation rate is a base effect as prices rose by nearly 22% between March and September 2021 following reports of increased demand, combined with restricted supply.

Note
To read the full report with many more details and charts go HERE