Inflation in the United Kingdom - Statistics & Facts

The inflation rate in the United Kingdom reached a thirty-year-high of seven percent in March 2022. Rising housing and transport costs were responsible for much of this increase, with the inflation rate for the transport services sector reaching a record 13.8 percent this month. In 2022, the UK government expects the annual inflation rate to be 7.4 percent, indicating that prices will increase further in the coming months. After several years of relatively low inflation, the global supply chain crisis, a knock-on effect of the COVID-19 pandemic, is one of the main reasons for the rapid onset of high inflation. The Russian invasion of Ukraine has also added to the crisis, disrupting the price of essential commodities in the food and energy market.

UK households face severe challenges in 2022

As of March 2022, approximately 87 percent of UK households reported that their cost of living had noticeably increased. The main reason people gave for their cost of living increase was that their food shop had increased, with the second-most common reason being rising energy bills. Unfortunately for UK households, the situation is likely to deterioate before it improves. At the start of April 2022, energy bills for millions of UK households increased due to the limits that suppliers can charge consumers per unit of energy rising. There was also an increase in National Insurance Tax contributions introduced this month to help fund the UK's healthcare system. Although wages are still growing, these increases are not keeping up with the speed of inflation, with wages growing by four percent in February 2022, compared with the CPI inflation rate of 6.2 percent in that month. Due to these factors, UK consumers have taken measures to curb their spending, such as spending less on non-essentials and using less gas and electricity in their homes

Which index is the right one?

In the UK, the three main inflation indices are the Consumer Price Index (CPI) , the Consumer Price Index including owner-occupiers' housing costs (CPIH), and the Retail Price Index (RPI). Although the CPI is the most recognizable of these three figures, the Office of National Statistics (ONS) promote the use of the CPIH as a more reliable indicator, as it includes some housing costs that the CPI does not. The RPI has been used for a longer period of time than the other two measures, but is seen to be outdated and flawed and has not been an official statistic since 2013. In general, the CPI is the most referenced figure despite the introduction of the CPIH and the historical context provided by the RPI. Although no longer classed as a national statistic, the UK government still uses the RPI rate to calculate annual rail fare increases and interest on student loan debt. As the RPI typically overstates inflation the UK government's continued usage of the index is controversial, especially as the CPI rate is used by them more often, such as for calculating pension payments.

Interesting statistics

In the following 5 chapters, you will quickly find the 39 most important statistics relating to "Inflation in the UK".


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