Why the latest official UK inflation figures are not what they seem
The discrepancy is to do with an error made in the initial calculation of April's inflation rate.
When April's Consumer Prices Index figure was first reported by the Office for National Statistics (ONS), on May 21, it was stated as being 3.5%.
However on June 5, the ONS issued a statement saying this figure was incorrect and that it should have been 3.4%.
The ONS said it had spotted a mistake in the way April's rate had been calculated.
The error was to do with data from the Department for Transport concerning vehicle excise duty (VED).
This data had overstated the number of vehicles subject to VED – which in turn led to the ONS overstating April's overall rate of inflation by 0.1 percentage points, reporting it to be 3.5% instead of 3.4%.
But while April's rate is now known to have been wrong, the ONS has a policy of not revising official inflation figures in subsequent publications.
This is why, in the inflation data published on Wednesday, the ONS said April's inflation rate was 3.5%, not 3.4% – and why its figures suggest inflation eased month on month, instead of what actually happened, which is that it remained at 3.4%.
April's inflation figure will continue to be stated by the ONS as 3.5%, despite it actually being 3.4%.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
South Wales Guardian
an hour ago
- South Wales Guardian
UK inflation to edge higher if oil prices push up energy costs, experts warn
Experts said that if global oil and gas prices continue to soar then this could drive energy costs higher. The latest figures from the Office for National Statistics (ONS) showed the rate of UK Consumer Prices Index (CPI) was 3.4% in May – slightly higher than the 3.3% forecast by most economists. It came in lower than the 3.5% recorded for April – however, the ONS has since said that that figure was incorrect due to an error in how it initially calculated price rises, and it should have been 3.4%. Inflation remaining elevated was largely due to food prices rising in shops, with items like chocolate, jam and meat spiking last month. Food and non-alcoholic drink prices rose by 4.4% in the year to May – the highest level in more than a year. The end of Easter sales on furniture and homeware is also thought to have contributed to prices jumping across the category between and April and May. On the other hand, air fares, petrol and diesel prices fell between April and May, helping to balance out the overall inflation rate. Experts have said that inflation is set to remain elevated over the coming months, particularly if global oil prices continue to spike. Laith Khalaf, head of investment analysis at AJ Bell, said: 'The escalation of conflict in the Middle East has bumped up the oil price, which will put upward pressure on inflation if sustained.' The price of Brent crude oil has risen to a four-month high in recent days since Israel launched an attack on Iran's nuclear programme and conflict between the two countries has escalated. It has stoked fears over possible disruption to the supply of crude in the Middle East – with Iran a significant exporter of oil, and the potential for oil and gas passing through the Strait of Hormuz to be obstructed. Higher energy prices – which have not been factored into the latest ONS data – threaten to push up inflation in the UK. Rob Wood, chief UK economist for Pantheon Macroeconomics, said he was expecting inflation to 'bounce around these rates for the rest of the year' and to peak at 3.6% in September when energy prices spike. This peak could rise to as much as 3.8% if oil and natural gas prices continue to soar, he said. Matt Swannell, chief economic advisor to the EY Item Club, said: 'Headline inflation is likely to edge upwards over the next few months, and the increase could be more pronounced if the recent rise in Brent crude oil prices is sustained. 'But we expect inflation to cool from October, as the positive contribution from the energy category wanes.' Experts also said that the Bank of England was facing a difficult task in setting interest rates amid price volatility in global markets. Most economists expect the Bank to keep UK rates the same, at 4.25%, when it makes the next announcement on Thursday. Mr Wood said policymakers are likely to 'proceed cautiously' with just one more cut to rates this year, expected in November, amid 'sticky' inflation. Elsewhere, the ONS's data showed the statisticians preferred measure of inflation, Consumer Prices Index including owner occupiers' housing (CPIH), fell to 4% in May from 4.1% in April. Meanwhile, the Retail Prices Index (RPI) rate of inflation fell to 4.3% from 4.5%. However, the ONS said April's RPI figure was also 0.1 percentage points too high, and should have been 4.4%. This happened because of an error that meant the effect of vehicle tax hikes in April was overstated in the data collected for the month. The ONS said it would not be revising the official published figures, in line with its policy which only carries out revisions in exceptional circumstances.
Daily Mail
an hour ago
- Daily Mail
House prices fall £7,365 in one month as rising stamp duty costs bite
House prices fell between March and April this year, official figures have revealed. The average property fell by more than £7,000 in one month from £272,862 in March to £265,497 in April, according to the latest figures from the Office for National Statistics. In percentage terms, it means house prices fell by 2.7 per cent during the month. On a yearly basis, house price growth dropped from 7 per cent in March to 3.5 per cent in April - the first slowdown since December 2023. The sudden drop is being attributed to Stamp Duty Land Tax changes that came into effect at the start of April. From 1 April, home movers found themselves having to pay up to £2,500 more in SDLT as the thresholds were returned to pre-2022 levels. First-time buyers could face extra stamp duty as high as £11,250 depending on the price of the property they are buying. Some areas of the country saw greater and smaller changes in prices, however. For instance in the North East of England house prices fell from £169,751 to £156,010 between March and April - an 8 per cent decrease. Meanwhile, in the West Midlands average prices only fell by 0.7 per cent from £232,797 to £231,159. In London average house prices rose 2.6 per cent between March and April from £552,402 to £566,614. House price growth down year-on-year The annual rate of house price growth has slowed for the first time since December 2023, according to the ONS. While the average property is up 3.5 per cent in the 12 months to April, this marks a huge slowdown from the 7 per cent annual rise in March. The average house price for England was £286,000 in April. This is up 3 per cent from a year earlier but is a slowdown compared to 7.3 per cent seen in the 12 months to March. The North East was the English region with the highest house price inflation in the 12 months to April, at 6.4 per cent. However, this was down from 15.3 per cent in the 12 months to March. Annual house price inflation was lowest in the South West, at 0.9 per cent in the 12 months to April. This was down from 5.9 per cent in the 12 months to March. The ONS house price index, which is based on sold prices, lags other house price indices. More recent data suggests that house prices could be on the rise again. The average home was selling for £273,427 in May, according to Nationwide Building Society's own mortgage data, up from £270,752 in April. 'The UK housing market is still in recovery mode after the stamp duty cliff edge in April, but prices are being kept firmly in check by an overhang of supply,' said Tom Bill, head of UK residential research at Knight Frank. 'We don't expect an interest rate cut before August but the weak state of the UK economy is putting downwards pressure on mortgage rates, which should support demand in the short-term. 'As activity gathers momentum, what buyers and sellers could do without this summer is a re-run of last year and a game of 'guess the tax rise' ahead of the Autumn Budget.' Best mortgage rates and how to find them Mortgage rates have risen substantially over recent years, meaning that those remortgaging or buying a home face higher costs. That makes it even more important to search out the best possible rate for you and get good mortgage advice, whether you are a first-time buyer, home owner or buy-to-let landlord. Quick mortgage finder links with This is Money's partner L&C > Mortgage rates calculator > Find the right mortgage for you To help our readers find the best mortgage, This is Money has partnered with the UK's leading fee-free broker L&C. This is Money and L&C's mortgage calculator can let you compare deals to see which ones suit your home's value and level of deposit. You can compare fixed rate lengths, from two-year fixes, to five-year fixes and ten-year fixes. If you're ready to find your next mortgage, why not use This is Money and L&C's online Mortgage Finder. It will search 1,000's of deals from more than 90 different lenders to discover the best deal for you.
North Wales Chronicle
an hour ago
- North Wales Chronicle
UK inflation to edge higher if oil prices push up energy costs, experts warn
Experts said that if global oil and gas prices continue to soar then this could drive energy costs higher. The latest figures from the Office for National Statistics (ONS) showed the rate of UK Consumer Prices Index (CPI) was 3.4% in May – slightly higher than the 3.3% forecast by most economists. It came in lower than the 3.5% recorded for April – however, the ONS has since said that that figure was incorrect due to an error in how it initially calculated price rises, and it should have been 3.4%. Inflation remaining elevated was largely due to food prices rising in shops, with items like chocolate, jam and meat spiking last month. Food and non-alcoholic drink prices rose by 4.4% in the year to May – the highest level in more than a year. The end of Easter sales on furniture and homeware is also thought to have contributed to prices jumping across the category between and April and May. On the other hand, air fares, petrol and diesel prices fell between April and May, helping to balance out the overall inflation rate. Experts have said that inflation is set to remain elevated over the coming months, particularly if global oil prices continue to spike. Laith Khalaf, head of investment analysis at AJ Bell, said: 'The escalation of conflict in the Middle East has bumped up the oil price, which will put upward pressure on inflation if sustained.' The price of Brent crude oil has risen to a four-month high in recent days since Israel launched an attack on Iran's nuclear programme and conflict between the two countries has escalated. It has stoked fears over possible disruption to the supply of crude in the Middle East – with Iran a significant exporter of oil, and the potential for oil and gas passing through the Strait of Hormuz to be obstructed. Higher energy prices – which have not been factored into the latest ONS data – threaten to push up inflation in the UK. Rob Wood, chief UK economist for Pantheon Macroeconomics, said he was expecting inflation to 'bounce around these rates for the rest of the year' and to peak at 3.6% in September when energy prices spike. This peak could rise to as much as 3.8% if oil and natural gas prices continue to soar, he said. Matt Swannell, chief economic advisor to the EY Item Club, said: 'Headline inflation is likely to edge upwards over the next few months, and the increase could be more pronounced if the recent rise in Brent crude oil prices is sustained. 'But we expect inflation to cool from October, as the positive contribution from the energy category wanes.' Experts also said that the Bank of England was facing a difficult task in setting interest rates amid price volatility in global markets. Most economists expect the Bank to keep UK rates the same, at 4.25%, when it makes the next announcement on Thursday. Mr Wood said policymakers are likely to 'proceed cautiously' with just one more cut to rates this year, expected in November, amid 'sticky' inflation. Elsewhere, the ONS's data showed the statisticians preferred measure of inflation, Consumer Prices Index including owner occupiers' housing (CPIH), fell to 4% in May from 4.1% in April. Meanwhile, the Retail Prices Index (RPI) rate of inflation fell to 4.3% from 4.5%. However, the ONS said April's RPI figure was also 0.1 percentage points too high, and should have been 4.4%. This happened because of an error that meant the effect of vehicle tax hikes in April was overstated in the data collected for the month. The ONS said it would not be revising the official published figures, in line with its policy which only carries out revisions in exceptional circumstances.
