UK Inflation CPI Remains at 6.7% pa

Published / Last Updated on 18/10/2023

The Office for National Statistics (ONS) has this morning (7am) released Consumer Prices Index (CPI) inflation figures for September 2023 and it has remained that same at 6.7% pa, unchanged from August 2023. 

This follows a minor fall in August of just 0.1% from 6.8% pa after larger falls in June and July and is bad news for the economy and the Bank of England given the inflation including housing costs (CPIH) also remained the same in September as in August at 6.3% pa.

Rising fuel/petrol prices made the largest upward contribution to the change in the annual inflation rate whereas food and non-alcoholic beverages prices fell the most on the month for the first time since September 2021 which is welcome news for our household daily spending.  There is a squeeze also on our leisure/holiday time with restaurant, hotels and leisure costs increasing too.

Old Inflation Measure - Retail Prices Index (RPI): What’s the difference between RPI and CPI?

Meanwhile, the old measure of inflation RPI, an arithmetical mean of the average prices of a basket of household spending (rather than the geometric mean for CPI) fell 0.2% to 8.9 % pa after a surprise increase from 9% pa in July to 9.1% in August.  The main contributor to that increase was also transport costs as fuel prices increased.

We prefer RPI as a measure as it tells us that things are tighter for us all when looking at whole expenditure but we understand the Government’s desire not to use RPI as an official national statistic because it would become a ‘vicious circle’ if the Bank of England was using RPI as the benchmark to judge increasing interest rates to bring inflation down because any increase in interest rates would, by default, push RPI up.


Whilst annual figures remain the same for CPI and down for RPI, on a monthly basis, inflation plus housing costs (CPIH) increased by 0.5% month on month.  This is bad news for the Bank of England and consumers as we now expect interest rates to increase from 5.25% pa to 5.50% pa on 2nd November 2023.

Many will be calling for another freeze in interest rate increases but given news earlier this week that average wages inflation (i.e., pay rises) are still at 7.8% pa means there will be even greater pressure on the Bank of England to increase rates even further from 5.25% to possibly 5.50% or even 6.0% pa in November to stop the economy overheating as people have slightly more money in their pockets pushing prices up.  The Bank of England should try and avoid what is happening in the US with inflation starting to rise again due to better jobs and employment data.

Inflation is still higher than desired and central banks may have to force economies into recession to bring inflation truly under control and this may spook stock markets when they open later this morning.

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