Source: Office for National Statistics, Consumer Price Inflation Reference Tables, December 2015
The drop in the inflation rate over recent years has been driven by declines in energy prices after years of strong growth, along with falls in food prices. However, the biggest cause has been the major fall in oil prices. Nonetheless, some costs are rising significantly, with a 6.8% acceleration in prices for clothing and footwear, along with a 12.4% rise in travel fares, among the most notable features of the latest inflation figures.
The price of housing also remains one of the biggest issues facing employees and their families. Across the UK, house prices rose by 7.7% in the year to November 2015, taking the average house price to £287,0001. However, the picture varied across the nations of the UK, with England experiencing the biggest increase at 8.3%, followed by Northern Ireland at 4.6%, Wales at 1.3% and Scotland at 0.4% (to see price changes in English regions, click here , or for a borough / county breakdown click here ). The ratio of average house prices to average earnings grew in every country of the UK between 2012 and 2013 except Scotland. The ratio stands at 11.8 in England (14 in London), 8.7 in Wales, 8.4 in Scotland and 7.1 in Northern Ireland2.
The rate of increase in rents has also been well ahead of general price increases, runnining at 4% over the year to November across England and Wales to hit £799 a month3 (for a regional breakdwn of rents click here ). New tenancy rates have been increasing even more rapidly, with a jump of 4.9% across the UK (excluding London) in the year to December 20154 and London experiencing increases of 8% over the same period. For a regional breakdown on new tenancy rental price inflation click here
Though not specifically assessed by CPI or RPI figures, childcare costs represent a key area of expenditure for many staff (UNISON surveys have consistently found that around a third of staff have child caring responsibilities).Therefore, it is also worth noting that the annual Family & Childcare Trust survey5 for 2015 found that the cost of a part-time nursery place for a child under two has increased by 33% since 2010. Over the last year, a nursery place for 25 hours a week has risen by 5.1% to £6,003 a year. The cost of part-time care from a childminder has also risen by 4.3% to £5,411 a year.
Current inflation rates can mask longer term changes in the cost of living that have taken place since 2010. For instance, food price inflation is currently quite low, but between 2010 and 2015 it saw major rises, as reflected in the table below.