UK Retail Inflation Report summary
June 2021
Period covered: Period covered: May 2021
Note: This report summary is one or two months behind the current month as standard reporting practice. The content is indicative only and incomplete with certain data undisclosed. Subscribe to access this data or take out a free 30 day subscription trial now.
In May, CPI inflation rose to its highest level since July 2019, accelerating by 00% year-on-year, from the 1.5% rise in April. This was ahead of the Bank of England’s inflation target and above economists’ forecasts of a 1.8% rise.
As lockdown restrictions eased, the number of unavailable items fell to 27 (3.1% of the basket weight).
The second largest upward contribution came from Recreation and Culture (0.19pp) with Games, Toys & Hobbies (particularly computer game downloads), and Recording Media (principally music downloads, DVDs and CDs) the main contributors to the rise.
Upward pressure from these predominately core components resulted in the core inflation rate (excl. food & energy prices) rising by 00% year-on-year, from the 1.3% in April, significantly ahead of expectations of a 1.5% rise. This gives a strong indication that companies have raised their prices as lockdown restrictions eased, and as such, should only be temporary as the impact of reopening lessens.
Food & Non-Alcoholic Beverages (-0.09pp) was the only category to make a large offsetting downwards contribution, with prices falling this year compared with a rise a year earlier, particularly for Breads & Cereals with a smaller contribution coming from Meat.
Looking ahead, there are further signs that inflationary pressure is building in the supply chain with output inflation rising by 00% year-on-year in May, from 4.0% last month. This follows an acceleration in input inflation (the cost raw materials) which surged by 00% – the steepest rise in almost a decade.
Notably, oil prices also remain at an elevated level as demand expectations rise as economies reopen around the world.
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Retail Price Index and RPIX
Source: ONS
