UK inflation: CPI, prices and growth explained
A falling inflation rate does not usually mean that prices are falling. The distinction between a price index and its rate of change is central to reading UK inflation data.
Explore Prices & inflation charts ↗Inflation versus the price level
A consumer price index tracks the changing cost of a representative basket of goods and services. Annual inflation compares its value with the same month a year earlier. If annual inflation slows from 4% to 2%, the price level can still be rising, just more slowly. A negative inflation rate describes a fall over the comparison period.
CPI and CPIH are different measures. CPIH includes owner-occupiers’ housing costs and Council Tax; an owner-occupier housing series should not be treated as a component of CPI. Always check the measure named on the card.
Percentage points are not percentage growth
Moving from a 4% inflation rate to a 3% rate is a fall of one percentage point. The rate itself has fallen by 25%, but saying “prices fell 25%” would be wrong. On GB Nomics, changes in rate series are expressed in percentage points to keep that distinction visible.
For an illustrative index of 120 a year ago and 123 now, annual inflation is 100 × (123 ÷ 120 − 1) = 2.5%. The index level and the inflation rate use different units. These are example figures, not a current inflation reading.
Compare categories carefully
The Prices & inflation category separates headline inflation from groups such as food, transport and housing-related costs. A sharp move in one group does not necessarily dominate the headline rate: its weight in household expenditure also matters. Category rates are not additive contributions.
Read the observation period before comparing categories. A recent annual rate also depends on what happened twelve months earlier, so it can move as an unusual earlier month leaves the comparison.
Use the charts in context
Select Prices & inflation, open the relevant card and compare the published rate with its change view. Inspect the data table if a small change is hard to distinguish on the chart.
The standardised Model Chart describes deviations from a fitted trend within the chosen window. It does not show distance from an inflation target, and a zero score does not imply stable prices. Changing the window changes the fitted baseline.
Sources and methodology
General educational information, not personal investment advice. Examples are illustrative. The dashboard’s observations and freshness checks determine which current charts are available.