There was a further steep increase in all three inflation measures in June, with the latest figures published by the Office for National Statistics (ONS) showing the Retail Prices Index (RPI) rate at 3.9%, up from 3.3% in May. The Consumer Prices Index including owner occupiers’ housing costs (CPIH) increased to 2.4% and the Consumer Prices Index (CPI) to 2.5%, both up from a level of 2.1% in May.
After housing, the single largest upward contribution to the RPI annual rate change came from motoring expenditure, with average prices for second-hand cars having risen this year but fallen a year ago. Part of the demand for used vehicles stems from a shortage of semiconductor chips used in the production of new cars. A comparatively higher rise in petrol and oil prices compared with last June also had a large upward effect within the motoring category. There were large influences from food and catering prices as well, but to a lesser degree than motoring or housing costs.
There were upward contributions to the change in the CPIH from nine of the 12 divisions analysed for this measure. As with the RPI, there were particularly strong effects from transport and food and non-alcoholic beverages. There was also a large upward contribution from clothing and footwear, where the usual timing of seasonal sales has been affected by the shuttering of non-essential retail. The only offsetting effect, meanwhile, came from health, where prices of pharmaceutical products rose by less than this time last year.
This picture of rising inflation looks set to persist over the short and medium term. For more information on the potential impact on pay, subscribers can visit our article on the relationship between pay awards and inflation.