The UK inflation rate over the past few years has been the highest in a generation, peaking at 11.1% in October 2022.
This prompted an aggressive policy reaction from the Bank of England, which raised interest rates 14 times between December 2021 and August 2023, bringing the base rate to 5.25%. The Bank finally cut rates to 5% on 1 August, bringing some mild relief to mortgage customers and first-time buyers.
The good news is the rate-raising cycle seems to have had the desired effect in bringing inflation down. The rate of UK inflation slowed to 2% in May and June, hitting the Bank of England’s target, before inching up slightly to 2.2% in July and holding steady at this level in August. The rise in July was widely expected, with energy prices falling by less than they did a year ago.
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Analysts predict inflation could increase further in the months to come, potentially climbing to 2.6% by the end of the year, as average household energy bills are set to rise 10% from 1 October.
“With inflation expected to continue to creep up over the coming months, savers and investors would be wise to bear this in mind when making decisions with their money,” says Craig Rickman, personal finance and pensions expert at Interactive Investor.
“If left unchecked, price rises can have a punishing impact on your financial future, silently eroding the ‘real value’ of your portfolio and reducing its future buying power,” he adds.
If you are following each CPI release with interest, these are the key dates you need to know.
For the outlook on interest rates and details of when the Bank of England will next meet, see: “When will UK interest rates fall further?” and “When is the next Bank of England base rate meeting?”
Next UK inflation figures
In the UK, the main measure of inflation is the Consumer Prices Index. The Office for National Statistics (ONS) releases this once a month.
The first eight inflation readings of the year (covering January, February, March, April, May, June, July and August) were released on 14 February, 20 March, 17 April, 22 May, 19 June, 17 July, 14 August and 18 September. These are the dates for the rest of 2024:
- 16 October (covering September)
- 20 November (covering October)
- 18 December (covering November)
The final inflation reading for 2024 (covering December) will be released early in the new year on 15 January 2025.
What time is CPI released in the UK?
Each month, the ONS releases the latest CPI data at 07:00. You can access the data by going onto the ONS website and clicking on its release calendar. All published and upcoming releases are listed there.
The report you are looking for will be titled, “Consumer price inflation, UK”, followed by the month and year in question.
MoneyWeek regularly reports on the latest inflation data and what it means for you.
What is CPI and how is it calculated?
As mentioned previously, CPI is the main measure of inflation used in the UK. It tells you how much the cost of living is going up or down.
It is calculated using a typical basket of household goods and services – from eggs, flour and milk to hotel costs, vinyl records and air fryers. Yes, that is correct, vinyl records are back in the CPI shopping basket for the first time since 1992 after a recent resurgence in popularity.
The Bank of England keeps a close eye on CPI when setting interest rates. If inflation is too high, the Bank raises interest rates to slow consumer spending and cool the economy. This works in bringing prices down because households have less money to spend when mortgage rates are high and debts are more expensive to repay.
Meanwhile, if inflation is too low, the Bank may lower interest rates so that consumers have more disposable income to spend. Thanks to the laws of supply and demand, this pushes prices back up.
Are household costs still rising?
An inflation rate of 2.2% means household costs are still going up, but at a far slower rate than the double-digit inflation we have seen in the past.
“Low and stable inflation is vital for a healthy economy,” the Bank of England explains. Too much inflation places a burden on household finances and erodes the value of savings, but a small amount of inflation can be a sign of a growing economy.
As mentioned, the headline CPI figure is based on a basket of goods and services, but the rate at which different items go up or down varies from category to category.
One important area where consumers have enjoyed a fall in prices recently is energy. The Ofgem price cap was cut by 12.3% from 1 April and a further 7% from 1 July, pushing energy bills down to their lowest level since the start of the cost-of-living crisis.
Despite this, energy prices remain higher than their pre-pandemic norms and they are set to rise again this autumn, with the price cap surging 10% from 1 October.
Where is inflation heading next?
According to forecasts, the path ahead is unlikely to be completely straight. The Office for Budget Responsibility (OBR) expects inflation to average out at 2.2% for 2024 as a whole, before dropping to 1.5% for the duration of 2025.
Meanwhile, the Bank of England has said it expects inflation “to increase to around 2¾% towards the end of the year before falling again after that”.
The British public’s inflation expectations are coming down, according to the Bank of England’s quarterly attitudes survey. The latest edition, published on 13 September, revealed expectations have now fallen to their lowest level in three years.
Survey respondents said they expected the rate of inflation to come in at 2.7% over the next year (to August 2025), down from 2.8% when they were last surveyed in May.
Wage growth and costs in the services sector will remain important in determining the inflation outlook going forward. Both metrics are still higher than the Bank of England would like, and are signs that inflationary pressures are still embedded in the domestic economy.
The services sector, which accounts for around 80% of the UK economy, had an annual inflation rate of 5.6% in August, up from 5.2% in July. Meanwhile, the latest labour market report shows that regular wages (excluding bonuses) grew by 5.1% annually in the three months to July.
While this is the slowest rate of wage growth in over two years, it is still more than double the headline rate of inflation. As a result, “there are still niggles of worry that those high wage bills might be passed on as higher prices for goods and services,” says Susannah Streeter, head of money and markets at Hargreaves Lansdown.
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