Indicator Showing YoY Change in Core Consumer Prices Excluding Food and Energy in the UK

The year-over-year Core Consumer Price Index (CPI) measures the percentage change in consumer prices, excluding food and energy, compared to the same month of the previous year. The Core CPI is crucial for accurately understanding underlying inflationary pressures by excluding elements that are prone to volatile price changes. This data is published monthly by the Office for National Statistics (ONS).

If the Core CPI increases year-over-year, it indicates rising underlying inflationary pressures, potentially reducing consumer purchasing power. Conversely, if the Core CPI decreases, it suggests a risk of deflation, which may improve consumer purchasing power. Policymakers use Core CPI data to adjust monetary and fiscal policies to stabilize the economy.

For example, if the Core CPI shows high growth, the central bank might consider raising interest rates to mitigate inflation risks. Conversely, if the Core CPI decreases, it may indicate a need to strengthen economic stimulus measures. Additionally, the Core CPI is an important indicator for businesses and investors, helping them forecast price trends and inflation outlooks.