UK consumer price growth slowed sharply in August

According to the report from Office for National Statistics (ONS), the Consumer Prices Index (CPI) 12-month rate was 1.7% in August 2019, down from 2.1% in July 2019. Economists had expected a 1.9% increase. On a monthly basis, consumer prices rose 0.4% in August after stabilizing in July. Economists had expected a 0.5% increase

The Consumer Prices Index including owner occupiers’ housing costs (CPIH) 12-month inflation rate was 1.7% in August 2019, down from 2.0% in July 2019. The largest downward contributions to the change in the CPIH 12-month rate between July and August 2019 came from a range of recreational and cultural goods and services (principally games, toys and hobbies, and cultural services), clothing and sea fares. Rises in air fares resulted in the largest, offsetting, upward contribution to change.

The headline rate of output inflation for goods leaving the factory gate was 1.6% on the year to August 2019, down from 1.9% in July 2019. The annual rate has remained positive since July 2016. The monthly rate fell to a negative 0.1% in August 2019, down 0.4 percentage points from July 2019.

The growth rate of prices for materials and fuels used in the manufacturing process was negative 0.8% on the year to August 2019, down from 0.9% in July 2019.

Transport equipment provided the largest upward contribution to the annual rate of output inflation. Crude oil provided the largest downward contribution to the annual rate of input inflation.