UK Inflation Calculator

The Consumer Prices Index (CPI) is the UK's headline measure of inflation, used by the Bank of England for its 2% inflation target. It is compiled monthly by the Office for National Statistics.

The CPI tracks the percentage change in the price of a basket of goods and services typically purchased by UK households. The CPI covers 12 COICOP divisions (Classification of Individual Consumption According to Purpose): Food & Non-Alcoholic Drinks; Alcohol & Tobacco; Clothing & Footwear; Housing & Household Services; Furniture & Household Goods; Health; Transport; Communication; Recreation & Culture; Education; Restaurants & Hotels; and Miscellaneous. The current series uses a base of 2015 = 100.

The annual CPI inflation rate was 2.6% in the year to June 2026 (released 22 July 2026), down from 2.8% in May. CPIH was 2.8%, down from 3.0%. Monthly, prices rose 0.1%.

The largest upward contribution came from transport, particularly motor fuels: prices in the transport division rose 4.7% annually, easing from 24.6% in May. Petrol fell 2.1 pence per litre between May and June to 155.3 pence, and diesel fell 10.7 pence to 176.4 pence - the first easing since the Middle East conflict began on 28 February 2026. Food and non-alcoholic beverages rose 1.7% (down from 2.2%). Services inflation was 3.6% (eased from 3.7%). Clothing and footwear fell 0.5%.

The CPI basket includes hundreds of goods and services across 12 COICOP divisions. The 2025 basket weights (based on 2024 household expenditure) are approximately:

• Transport: 13.8%
• Housing & Utilities: 12.7%
• Recreation & Culture: 12.0%
• Food & Non-Alcoholic Drinks: 11.3%
• Restaurants & Hotels: 10.2%

The remaining categories are Miscellaneous (8.1%), Clothing & Footwear (5.7%), Furniture & Household Goods (5.5%), Alcohol & Tobacco (3.5%), Education (2.3%), Health (2.2%), and Communication (2.0%). Weights are updated annually. From 2024, the ONS publishes unrounded weights for greater precision. New items added to the basket in 2026 included houmous and non-alcoholic beer.

Core CPI excludes energy, food, alcohol and tobacco - items with volatile prices that can temporarily distort headline inflation. In June 2026, Core CPI was 2.6%, unchanged from May. The Bank of England also closely monitors:

• Services inflation (3.6% in June 2026, eased from 3.7%) - seen as more dependent on domestic costs like wages and considered more "persistent" than goods inflation.
• Goods inflation (CPIH all-goods rose 2.1% in March, up from 1.6%) - more exposed to global commodity and exchange-rate movements.
• Core CPIH (2.8% in June, unchanged from May).

The MPC explicitly looks through transitory headline movements (such as the recent oil price shock) and focuses on these underlying measures when setting policy.

The ONS publishes the CPI monthly, typically about 3 weeks after the reference month ends. For example, the July 2026 CPI was released at 7am on 19 August 2026, and the August 2026 CPI is scheduled for release on 16 September 2026.

The CPI is not subject to revision due to its extensive use for indexation purposes - including the State Pension triple lock, working-age benefits, tax credits, and many private contracts. The current series uses a base of 2015 = 100. The ONS also publishes CPIH (lead measure since 2017), Core CPI, RPI, and detailed breakdowns by COICOP division simultaneously with each monthly release. Historical CPI-equivalent estimates have been modelled back to 1950, and longer composite price series exist back to 1751.

CPIH is the ONS's most comprehensive measure of consumer inflation. It extends CPI to include:

• Owner Occupiers' Housing costs (OOH) - measured using the rental equivalence approach. OOH accounts for approximately 17% of the CPIH basket.
• Council Tax - excluded from CPI, included in CPIH.

In June 2026, CPIH was 2.8% (down from 3.0%) while CPI was 2.6% (down from 2.8%). The two measures usually move together; the difference is driven by housing costs not captured in CPI. While CPIH is the ONS's lead measure for headline reporting, CPI remains the Bank of England's target measure and is used to uprate the State Pension, benefits, and tax credits.

The Retail Prices Index (RPI) is no longer classified as a National Statistic due to technical deficiencies in how it's calculated (the so-called "formula effect"). RPI typically runs higher than CPI - in June 2026, RPI was 3.0% vs CPI at 2.6%.

Despite its limitations, RPI is still used to uprate certain items including rail fares, student loan interest, and some index-linked gilts. From 2030, RPI is being reformed to align with CPIH methods - reducing its measured rate by an estimated 1 percentage point per year. Holders of index-linked gilts maturing before 2030 will continue to receive RPI-linked payments; those maturing after will effectively move to CPIH-linked payments. The reform is expected to save the Treasury significant amounts on debt servicing and student-loan interest.

Not exactly. The CPI measures price changes for a fixed basket. Cost-of-living measures show the change in spending needed to maintain a given standard of living - they can allow for substitution between products when relative prices change.

The ONS provides a free Personal Inflation Calculator that lets households estimate their own inflation rate based on their actual spending patterns. Different household groups can experience meaningfully different inflation rates - for example, retired households who own their homes outright are less affected by mortgage interest cost changes, while renters in tight rental markets may experience higher inflation than the headline figure suggests. The ONS also publishes Household Costs Indices (HCIs) showing inflation rates for different household types (retired, low-income, etc.).

The Bank of England's Monetary Policy Committee (MPC) targets annual CPI inflation at 2%. This is a symmetric point target - not a band - set by HM Treasury under the Bank of England Act 1998.

If inflation deviates by more than 1 percentage point in either direction (below 1% or above 3%), the Governor must write an open letter to the Chancellor explaining why and what actions the MPC is taking. The UK adopted formal inflation targeting in October 1992 (initially at 1-4%, then 2.5% on RPIX, before settling on 2% on CPI in December 2003). The MPC consists of nine members - the Governor, three Deputy Governors, the Chief Economist, and four external members appointed by the Chancellor. Decisions are made by majority vote.

As at August 2026, the Bank of England Bank Rate is 3.75%. The MPC held Bank Rate at 3.75% at its meeting ending 29 July 2026 in a 6-3 vote, with three members preferring an increase of 0.25 percentage points to 4%.

Bank Rate has been cut from a peak of 5.25% (held August 2023 - July 2024) by 1.5 percentage points across six cuts between August 2024 and December 2025. The MPC noted that "CPI inflation has fallen to 2.6% since the previous meeting", while expecting it to rise later in the year as higher energy prices continue to pass through, and pointed to the risk of second-round effects in price and wage-setting the longer those prices persist.

The next rate decision is scheduled for 17 September 2026.

The Bank of England's primary tool is Bank Rate (formerly known as the base rate), the interest rate at which the Bank lends to commercial banks. When inflation is too high, the MPC raises Bank Rate, making borrowing more expensive across the economy.

Higher rates make mortgages more costly, encourage saving over spending, and tend to strengthen sterling - all of which slow demand and ease price pressures. When inflation is too low, the MPC lowers rates to encourage spending. Bank Rate changes flow through to prime rates, mortgage rates, savings rates, and the sterling exchange rate. The MPC meets eight times per year on fixed dates. The Bank also uses quantitative easing/tightening as a secondary tool - the QE balance sheet is being reduced from a peak of GBP 895bn through active gilt sales (currently around GBP 529bn).

The Bank of England expects CPI inflation to remain above target through 2026. In its April 2026 Monetary Policy Report, the MPC said CPI inflation is "likely to be higher later this year as the effects of higher energy prices pass through" - some forecasters expect it could rise above 4% by autumn 2026.

The MPR sets out three scenarios reflecting different paths for the Middle East conflict. In the most extreme scenario, inflation could peak at 6.2% in early 2027. Under the central case, inflation is expected to ease back toward the 2% target as energy prices stabilise. Pre-conflict, the Bank had expected CPI to fall close to 2% from April 2026. Risks include prolonged Middle East tensions, second-round wage and price effects, and a softer-than-expected labour market constraining demand.

Bank Rate flows through directly to tracker and standard variable rate (SVR) mortgages, which adjust within weeks of an MPC decision. Most UK mortgages are fixed-rate (typically 2 or 5 years), so the impact of Bank Rate changes flows through gradually as deals expire and households remortgage.

With Bank Rate currently at 3.75% (down from a peak of 5.25%), households remortgaging are typically still moving to higher rates than their previous deal, but lower rates than peak. According to the Bank of England, the proportion of households still paying ultra-low pandemic-era rates is shrinking each quarter. Fixed-rate mortgage pricing is driven more by swap rates (markets' view of long-term interest rates) than Bank Rate alone - swap rates rose following the Iran conflict, slowing the pace of fixed-rate cuts despite the BoE holding Bank Rate.

Transport prices rose 5.7% in the year to June 2026, down from 6.8% in May. This single category made the largest downward contribution to the fall in headline CPI from 2.8% to 2.6% in June.

The driver was motor fuels, which rose 4.9% on the month: petrol prices increased by 8.6 pence per litre between February and March, while diesel rose 17.6 pence per litre. The cause was the conflict in the Middle East following the US-Israeli attack on Iran on 28 February 2026, which disrupted oil tanker traffic and pushed global oil prices sharply higher. Domestic heating oil rose 95.3% annually - the highest annual rise since September 2022. Energy and motor fuel are typical "first-round" inflation drivers that the BoE looks through provided second-round wage effects do not emerge.

Food and non-alcoholic beverage prices rose 1.7% in the year to June 2026, down from 2.2% in May - the lowest annual rate since August 2024. This is well below the peak of 19.2% in March 2023 - the highest food inflation since 1977 - but remains an important contributor to household budgets.

Food makes up approximately 11.3% of the CPI basket. The slowdown in June 2026 reflected pass-through of higher input costs (producer input prices rose 5.4% in the year to March, up from 0.7% in February, driven by crude oil). Categories that contributed most to the upward move included meat, fish, milk and dairy. The ONS provides a free Shopping Prices Comparison Tool for tracking individual food item price changes.

Housing and household services rose 2.7% in the year to June 2026 - unchanged from May, but well below 2023 peak levels. Within this, owner occupiers' housing costs (the main difference between CPIH and CPI) eased to 4.0%, the lowest since June 2022. Private rents rose 4.4% in the year to November 2025 - average UK private rents reached approximately GBP 1,366/month.

The single biggest mover within housing was domestic heating oil, which surged 95.3% annually - the highest since September 2022 - reflecting the Middle East energy shock. Rent growth has been gradually moderating as supply has caught up with demand. Regional variation is significant: the North East has consistently shown the fastest rent growth and London the slowest.

The State Pension is protected by the "triple lock", introduced in 2011. Each April, the State Pension increases by the highest of:

• September's CPI inflation rate
• Average earnings growth (May-July)
• 2.5%

For April 2026, the full new State Pension rose by 4.8% (the earnings growth figure) from GBP 230.25 to GBP 241.30 per week - approximately GBP 12,548 per year. The basic State Pension (for those who reached pension age before April 2016) rose to GBP 184.90/week. The full new State Pension is now within GBP 22 of the income tax personal allowance (GBP 12,570). The triple lock has been politically contentious because it benefits pensioners more than working-age benefit claimants (who receive only CPI uprating). Future governments are expected to review the triple lock at the next Spending Review.

Most inflation-linked benefits and tax credits are uprated annually each April using September's CPI rate. For April 2026, working-age benefits rose by 3.8% (September 2025 CPI). Universal Credit standard allowances received an additional uplift under the Universal Credit Act 2025, rising by 6.1% total.

Unlike the State Pension, working-age benefits do not enjoy a triple lock - they follow CPI only. This means that during periods of strong wage growth (such as the post-pandemic years), pensioners see materially larger increases than benefit recipients. Other CPI-linked items include income tax thresholds (the personal allowance has been frozen since 2021, creating "fiscal drag"), ISA contribution limits, and the Lifetime ISA threshold. Most inflation-indexed contracts in the private sector continue to use RPI for legacy reasons, despite RPI's technical issues.

Inflation erodes the real value of money. If a savings account earns 4% interest while inflation is 2.6%, the real return is positive but only about 1.4%. If the interest rate is below inflation, purchasing power decreases over time.

To preserve purchasing power, returns must exceed the inflation rate. Some assets - including equities, property, and Index-Linked Gilts (where the principal and coupons are uprated by RPI) - have historically offered some inflation protection. Cash ISAs can lose real value during high-inflation periods. Stocks & Shares ISAs can offer better long-term inflation protection but with greater short-term risk. Pension contributions and growth are typically reported in nominal terms; over the long run, returns net of fees and inflation need to be positive to grow real wealth. The UK's ISA annual allowance has been frozen at GBP 20,000 since 2017 - meaning its real value has fallen materially over the inflation surge.

An inflation calculator helps illustrate how the value of money has changed over time. Common uses include:

• Calculating what an item that cost GBP 100 in 1980 would cost today, adjusted for inflation.
• Estimating how much a salary needs to increase to maintain the same purchasing power.
• Understanding the real value of historical prices when reading historical financial information.

The Money Snap calculator above uses official ONS data covering 275 years (1751-2025) - combining the ONS Composite Price Index (1751-1948) and Retail Price Index (1949-2025). The Bank of England also publishes its own inflation calculator, and the ONS provides a free Personal Inflation Calculator for individual estimates.