NIESR underlying inflation measure hits new series high

The National Institute of Economic and Social Research (NIESR) reported that its measure of underlying inflation rose to a new series high of 8.8 per cent in October 2022, up from 8.3 per cent in September¹. The measure excludes 5 per cent of the highest and lowest price changes¹. NIESR published the figures on 16 November 2022¹.

Headline consumer price inflation increased to 11.1 per cent in October 2022 from 10.1 per cent in September¹. NIESR said the housing, water, electricity and gas, and other fuels sector, together with food and non-alcoholic beverages, were the main drivers of the rise between September and October, contributing 0.93 and 0.18 percentage points respectively to the change in the headline figure, outweighing a 0.23 percentage point reduction in transport¹.

NIESR's analysis suggested that approximately 30.6 per cent of goods and services prices changed in October, with almost 19,000 items recording price increases¹. Underlying inflation rose in each of the 12 UK regions, with the North of England highest at 9.5 per cent and the South East lowest at 8.4 per cent in October¹.

Source: NIESR¹

Why it matters for households

The figures describe how widely price rises were spread across goods and services, not only how fast the average price level rose. NIESR said its underlying measure, which strips out the largest and smallest changes, points to inflation that is persistent and broad-based¹. The regional figures show households in the North of England faced the highest underlying rate at 9.5 per cent, and those in the South East the lowest at 8.4 per cent, in October¹.

NIESR forecast that one in five UK households will see their savings eroded by April 2024, and that more than 2.5 million households will turn to food banks over the coming winter months¹. It attributed the outlook to what it called a "triple shock" to energy, food and housing prices¹. The institute said food prices had risen steeply and that there was no support for households to deal with this cost, while energy prices rose despite the government's Energy Price Guarantee¹.

The rates and economy hub covers how inflation is measured and reported. Our guides explain which inflation measure applies to you and which prices go into the inflation basket.

What happens next

NIESR expects annual CPI inflation to remain around 11 per cent into the first quarter of 2023, mainly driven by the energy, food and housing shocks¹. No further dates have been reported.