Galina Potjagailo, Boromeus Wanengkirtyo and Jenny Lam
CPI inflation in the UK has markedly increased over the last year, reaching 10.1% in September. The aggregate increase reflects potentially different dynamics across disaggregated prices, from which CPI inflation is constructed. How much of the increase has been broad-based across a wide range of prices? We assess this through a measure of ‘underlying inflation’ that captures comovement across many disaggregated prices – energy, food and other (‘core’) price items. We observe a substantial rise in underlying inflation, hence many prices have increased jointly. Broad-based energy price increases have been the main driver of underlying inflation. Furthermore, about a quarter is due to core price items which reflect more persistent inflation.
