CPIH or the Household Costs Index: What Each Measures

The Consumer Prices Index including owner occupiers' housing costs, known as CPIH, is the UK's lead measure of inflation. It rose by 3.3% in the 12 months to August 2026, up from 2.9% the previous month, while the Consumer Prices Index, or CPI, rose by 3.1% over the same period¹. The two figures differ mainly because CPIH includes owner occupiers' housing costs, which account for approximately 18% of the index, and Council Tax, which CPI leaves out².

The Household Costs Index, or HCI, is a separate set of figures that tries to answer a different question: not what the average basket costs, but how inflation lands on different kinds of household. In the year to June 2026, the HCI rose by 2.8% for all households, while CPI rose by 2.6% over the same period, a gap of 0.2 percentage points³. The HCI is published quarterly and holds official statistics in development status, which means the estimates can be revised⁴.

If you are trying to work out what inflation means for your own money, the headline figure is a starting point, not an answer. CPIH tells you what is happening to prices across the economy as a whole. The HCI tells you how that experience splits between households with different incomes, tenures and retirement statuses. Neither one is a personalised inflation rate, because the ONS does not produce those.

What an inflation measure tracks: the price of a basket compared with a year ago

Every UK inflation measure works on the same basic principle. The Office for National Statistics collects the prices of a basket of goods and services, usually on the second or third Tuesday of each month, and compares the total cost with what the same basket cost a year earlier². The result is conventionally quoted as an annual price change⁵.

The basket is not fixed. The 2026 weights for CPIH and CPI were calculated using national accounts household final consumption expenditure data for 2024, and the weights are updated each year⁶. That matters because a measure built on last year's spending patterns will not perfectly reflect what households are buying now.

The three main measures differ in what they put in the basket and how they average the prices. CPIH and CPI use predominantly the geometric mean at the elementary aggregate level, while RPI uses arithmetic means, which tends to produce a higher figure². The Retail Prices Index is typically 0.8 percentage points higher than CPIH for that reason, among others⁷.

CPI was first published in 1997 as the Harmonised Index of Consumer Prices, and CPIH became the ONS lead inflation index on 21 March 2017². Both CPIH and CPI hold accredited official statistic status; RPI does not².

CPIH: the official headline measure, including owner occupiers' housing costs

CPIH is the most comprehensive of the headline measures because it includes owner occupiers' housing costs and Council Tax, both of which CPI excludes². The owner occupiers' housing costs component accounts for approximately 18% of the index, making it the main difference between the two figures¹.

The ONS measures owner occupiers' housing costs using an approach called rental equivalence, which estimates what a homeowner would pay to rent the property they own². That is a modelled figure rather than an observed one, and it is one reason CPIH and CPI can move apart.

In the 12 months to August 2026, the housing and household services division rose by 4.3%, up from 4.1% in July, and was the largest contributing division to both CPIH and CPI¹. The owner occupiers' housing costs component within that division rose by 3.9% over 12 months¹. Core CPIH, which strips out energy, food, alcohol and tobacco, rose by 2.9% over the same period¹.

CPIH is the measure the Bank of England targets indirectly: the Government asks the Bank to target the CPI measure, and the Bank's remit is set against that figure⁸. The Bank's own commentary on inflation uses the CPI rate, which reached 3.1% in August 2026⁹.

CPI or CPIH: how the two figures differ

The gap between CPI and CPIH comes down to housing. CPIH includes owner occupiers' housing costs and Council Tax; CPI includes neither². Both measures cover the expenditure of all private households, institutional households and visitors to the UK, so the difference is about what is in the basket, not who is being counted².

In practice, the two figures often move in the same direction but by different amounts. In the 12 months to August 2026, CPIH rose by 3.3% and CPI by 3.1%¹. In June 2026, CPIH rose by 2.8% and CPI by 2.6%¹⁰. The housing and household services division contributed 1.26 percentage points to the CPIH rate in July 2026, compared with 0.59 percentage points to the CPI rate⁶.

The choice between them matters most where a rule or a contract names a specific index. The Pension Protection Fund uses CPI to calculate members' compensation¹¹, and CPI is the measure used to uprate things like benefits and pensions⁸. Where a pension or a savings product is linked to an index, the index named in the terms is the one that applies, and the difference between CPI and CPIH can change the outcome over time.

Latest figures: CPIH at 3.3% and CPI at 3.1%

The most recent figures available show inflation rising for a second consecutive month. CPIH rose by 3.3% in the 12 months to August 2026, and CPI rose by 3.1%, up from 2.9% the previous month¹. Transport, particularly motor fuels, was the largest upward contribution¹².

The monthly path through 2026 has been uneven. Inflation was at 3.3% in March 2026, fell to 2.8% in April, dropped to 2.6% in June after a temporary ceasefire in the Middle East led to lower petrol and diesel prices, then rose to 2.9% in July and 3.1% in August⁹. The July increase reflected the energy price cap rise that month⁶.

Within the August figures, the CPIH goods annual rate rose from 2.2% to 2.7%, while the CPIH services annual rate was unchanged at 3.6% in July⁶. Core CPIH, which excludes energy, food, alcohol and tobacco, rose by 2.9%¹.

The Household Costs Index for the year to June 2026 stood at 2.8% for all households, with a gap of 0.2 percentage points against CPI³. Over the past five years to June 2026, cumulative inflation was similar for high-income and low-income households, at 32.8% and 32.7% respectively³.

What is the Household Costs Index?

The Household Costs Index is not a single number but a family of indices that show how inflation differs between household groups. The ONS publishes figures for income deciles, tenure types, retirement status, and households with and without children¹⁴. The second and ninth deciles are used to represent low-income and high-income households rather than the first and tenth, because the composition of those groups can be unusual³.

The HCI takes a different approach from the headline measures in two ways. First, it uses a payments approach for some items, incorporating owner occupiers' housing costs, interest payments, student loan repayments and the full cost of insurance premiums¹⁴. Second, it includes changes in mortgage interest rates, stamp duty and other costs related to buying a dwelling, all of which CPI omits³.

That means the HCI can diverge from CPI in ways that matter to specific groups. In the year to June 2024, the HCI for retired households was 1.2%, while for social and other renter households it was 1.9%¹⁵. In the year to June 2024, high-income households saw higher contributions from mortgage interest payments, 0.83 percentage points more than low-income households¹⁵.

The HCI is not a personalised inflation rate. Household-specific price indices are not currently available because price data are collected from retailers rather than from households¹⁴. The indices show how groups experience inflation on average, not what any individual household faces.

Where the published figures do not reflect every household's costs

No published inflation measure tells you what has happened to your own costs. The basket is built from average spending patterns, and the weights reflect the average household's share of expenditure¹⁶. If you spend more than average on energy, or less than average on transport, your personal inflation rate will differ from the headline figure.

The HCI narrows that gap but does not close it. It shows, for example, that Council Tax contributed 0.21 percentage points to the HCI annual rate in June 2026, and that Council Tax is not included in CPI at all³. It shows that contributions from housing and household services fell from 1.22 to 0.45 percentage points between March and June 2026³. It shows that non-retired households saw a greater inflationary contribution from private rentals than retired households, by 0.18 percentage points³.

What it cannot show is what any one household actually paid. The ONS has corrected errors in the HCI before: a 2024 correction related to using an outdated CPI weights file affected Figure 2 in the bulletin and tables 26 and 27 in the reference tables¹⁵. The ONS said all CPI publications and HCI data were unaffected by that change¹³.

What rising prices mean for your savings, investments and income

Inflation reduces the purchasing power of money over time⁵. Money left in savings steadily loses its value if the interest it earns does not keep pace¹⁷. The figure that matters is the real return: what is left after inflation is taken out.

The arithmetic is straightforward. If an investment grows by 8% but inflation is 5%, the real return is only 3%¹⁸. The same logic applies to savings: a rate below inflation is a real loss, even though the cash balance has grown. A worked example from one provider shows that £1,000 would be worth £820 after 10 years if inflation ran at 2.0% each year¹⁹.

For income, the picture depends on whether it rises with inflation. The Pension Protection Fund raises payments in line with CPI each year, up to 2.5%²⁰. Where a pension or benefit is not index-linked, or is capped, its buying power falls as prices rise. The Bank of England's explanation of how higher interest rates help to lower inflation sets out why the Bank adjusts Bank Rate when inflation moves away from target⁸.

Inflation is not a form of taxation. It is a measure of how fast the prices of goods and services are rising or falling²¹. It can feel like a tax because it reduces what your money buys, and it can push you into a higher tax band if thresholds do not keep pace, but it is not collected by anyone.

CPIH methods and the RPI: a change not due before the next decade

The Retail Prices Index is the oldest of the three measures and the one most often written into contracts. It measures the rise in the cost of a predetermined basket of goods, including housing costs²². It is not an accredited official statistic².

RPI is due to change. From 2030 at the earliest, CPIH methods and data sources will be introduced into the RPI, and the supplementary and lower-level indices of the RPI will be discontinued¹. That follows a consultation on reforming the methodology, and the change is not expected before the next decade²³.

The reform matters because RPI is still used in some pensions, student loans and rail fares⁷. Where a contract names RPI, the change to CPIH methods could alter future increases. The ONS has said the change will not take effect before 2030, so existing arrangements continue on the current basis for now.

The gap between RPI and CPIH is typically around 0.8 percentage points, with CPIH lower⁷. That gap has been the subject of debate for years, and the reform is intended to bring RPI into line with the methods used for the headline measures.

When does the ONS publish new inflation figures?

Consumer price inflation figures are published monthly, four or five weeks after the prices are collected, and the ONS says publication has never been delayed or missed². The figures are released on GOV.UK²⁴.

The Household Costs Indices are published quarterly. The most recent release, published on 28 May 2026, included estimates for January to March 2026 using updated 2025 weights⁶. The next release is due on 27 November 2026³.

The UK House Price Index, which measures house price inflation, is published on the second or third Wednesday of each month, with Northern Ireland figures updated quarterly²⁵. Private rent figures are published alongside the house price index²⁶.

Rates of change for CPIH and CPI are calculated from unrounded index levels, while RPI rates are calculated from the rounded published indices². That is one reason the published figures can differ slightly from what a simple calculation would suggest.