UK DATA: CPI weightings will reduce impact of energy price rises on headline CPI
Looking at the main weight changes for the UK CPI (note that these weights are provisional for 2025 and will be further revised next month with next month's weight applying for the reset of 2025) there are a few takeaways. Services and core goods increase their weight by 1.09ppt and 0.29ppt respectively with falls in the weight of energy (1.08ppt decrease) and FAT (0.30ppt decrease). Falls in the weighting of energy will be particularly welcomed by the MPC - with utilities bills due to increase later this year having less of an impact on headline inflation and making the narrative to cut Bank Rate easier. However, we also note that holiday-related volatile components have increased in weight, which may lead to more volatility in the overall headline index.
- Services' weighting has increase 50.10% from 49.01% (a 1.09ppt increase).
- Energy's weighting has dropped from 7.18% to 6.09% (a 1.08ppt decrease).
- FAT (food, alcohol and tobacco) has seen its weighting marginally fall from 15.23% to 14.93% (0.30ppt decrease).
- Non-energy industrial goods have increased from 28.59% to 28.87% (0.29ppt increase).
- In terms of other notable changes, within services we group accommodation, package holidays and air fares together as volatile holiday-related services. Combined these have seen a weight increase of 0.22ppt: Package holidays have increased by 0.38ppt from 3.36% to 3.73%, air fares has increased in weight from 0.58% to 0.63% while hotels has fallen in weight by 0.20ppt from 2.62% to 2.42% (with other accommodation services remaining broadly unchanged).
- "Clothing and footwear" has increased by 0.34ppt to 6.20%
- "Recreational and cultural services" has seen its weight increase by 0.36ppt from 3.47% to 3.82%.
- "Restaurants and cafes" has seen its weight fall by 0.53ppt and hotels by 0.20ppt.
- "Furniture, furnishing and carpets" has seen its weight reduced by 0.36ppt to 2.18%.