Is inflation ‘continuing to fall’?

28 February 2024

At Prime Minister’s Questions earlier today, the Prime Minister Rishi Sunak said inflation is “continuing to fall”. 

Inflation is measured by the Office for National Statistics (ONS) in two main ways—CPI, which stands for Consumer Prices Index, which measures the change in the price of everyday goods and services, and CPIH, which measures this as well as owner-occupier housing costs and Council Tax. The ONS considers CPIH the more comprehensive measure of inflation. 

In recent years, CPI inflation reached a peak of 11.1% in October 2022, when CPIH inflation also peaked, at 9.6%. 

By both measures, inflation has fallen most months since October 2022. As of January 2024, the most recent month for which we have data, CPI inflation is 4%, while CPIH inflation is 4.2%. 

However, CPI inflation reached 4% in December 2023, slightly up on the previous month, and remained at this level in January. CPIH inflation reached 4.2% in November 2023, and also remained at this rate in December and January. 

So, while CPI inflation has fallen by 7.1 percentage points since October 2022, and CPIH has fallen 5.4 percentage points, both measures have levelled off over the last three months, so arguably aren’t quite “continuing to fall”. 

The ONS still produces inflation stats for another way of measuring inflation, the Retail Prices Index (RPI), which measures the change in consumer goods and services, including owner-occupier housing costs. RPI only covers private households and excludes the top 4% of households by income, as well as pensioner households who receive over 75% of their income from benefits. 

According to RPI figures, inflation also peaked in October 2022 at 14.2%, but has fallen since to 4.9% in January 2024. This measure shows inflation has fallen continuously since September 2023, but RPI inflation is no longer used as a national statistic “due to the shortcomings of the current approach”. 

We’ve written to Mr Sunak about this claim and will update our blog if we receive a response.

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