UK Consumer Price Index

The UK Consumer Prices Index is compiled by the Office for National Statistics from around a hundred and eighty thousand price quotes a month, collected in shops and online and supplemented by larger scanner and web-scraped datasets for some categories. It follows the internationally harmonised methodology, which is why it excludes owner-occupiers' housing costs. The ONS's preferred headline measure, CPIH, adds those costs back, but the Bank of England's target is set in terms of CPI.

Released at seven in the morning, before the London market fully opens, the numbers tend to move sterling and short-dated gilt yields immediately. The annual rate gets the headlines, while the Bank's own analysis pays particular attention to services inflation, which is closely tied to domestic wage pressure and which the MPC has repeatedly flagged. Where services diverges sharply from the Bank's latest forecast, market pricing for the next rate decision has historically adjusted quickly.

Several quirks set UK inflation apart. Regulated energy tariffs are revised by Ofgem on a quarterly schedule, so household energy prices step up or down in lumps rather than moving smoothly. Annual increases in duties, tobacco and some regulated prices cluster in April, which can produce large month-to-month moves. Data collection falls on a single index day around mid-month, so timing effects around Easter or airfares can distort one print and reverse the next.

The retail prices index, RPI, is still published, mainly because it is used for index-linked gilts. Producer prices and the ONS wage data come out the same week.