CPIH inflation rate has jumped to 1.6%

The Office for National Statistics (ONS) released data for March 2021 shows the Consumer Prices Index including owner occupiers’ housing costs (CPIH) rose by 1.6% in the 12 months to April 2021 up from 1.0% to March.

This brings inflation levels towards the Bank of England’s medium-term target of 2% without causing immediate short term pressure on monetary policy and the Bank Base rate currently 0.1%

The largest contributors to this inflation rate increase came from housing and household services at 0.57%, and transport at 0.56%.

On a monthly basis, the CPIH rose by 0.7% in April 2021, following a 0.2 increase in March 2021. Prices for both household utilities and clothing rose between March and April 2021, compared with a fall between the same two months a year ago.

The Consumer Prices Index (CPI) rose by 1.5% in the 12 months to April 2021, up from 0.7% growth to March.

On a monthly basis, the CPI rose by 0.6% in April 2021, following a 0.3% increase in March 2021. This compares with a fall of 0.2% in April 2020. Again, price movements for household utilities and clothing are the main reasons for the higher monthly rate this year than a year ago.

Given that the owner occupiers’ housing costs (OOH) component accounts for around 19% of the CPIH, it is the main driver for differences between the CPIH and CPI inflation rates.

Following this month’s increase in gas and electricity prices, housing and household services provides a contribution of 0.57% to the CPIH 12-month rate.

The contribution from transport has shown more variation than any other group over the last two years. It has ranged from a downward contribution of 0.20% in May 2020 during the first lockdown, before gradually increasing to have an upward contribution of 0.56% in April 2021 – its highest contribution since April 2019. Within transport, the movements have been caused principally by changes in the price of motor fuels.

There was also a 0.22% in contribution to CPIH from clothing and footwear, although this division, along with food and non-alcoholic beverages, continues to have a negative effect.