The UK’s inflation rate climbed to its joint highest in more than five years in August as the price of petrol and clothing rose. UK inflation measured by the Consumer Prices Index rose to 2.9% in August, up from 2.6% in July, figures show.
The fall in the value of sterling since the EU referendum continued to be a major impetus for rising prices, the Office for National Statistics said. But a rebound in the price of oil also had an impact, pushing up fuel prices.
The bigger-than-expected rise in inflation comes ahead of the Bank of England’s next announcement on interest rates on Thursday. However, economists said the Bank was still highly unlikely to raise rates at the meeting.
According to the ONS, the prices of most goods climbed during August, largely because of rising import costs for retailers. However, clothing and footwear prices had the biggest impact, climbing 4.6% year-on-year, their highest level since records began. Petrol also pushed the overall cost of living higher, increasing 1.8p a litre to 115.7p during the month, while diesel gained 2p to 117.6p.
The TUC’s general secretary, Frances O’Grady, said the “cost of living squeeze” was continuing, with rising inflation outpacing wages. “The government needs to get a grip and get pay rising across the economy,” she said.
The most recent wages data showed average weekly earnings rising at an annual pace of 2.1%. New figures on pay are due to be released on Wednesday.
Ian Stewart, chief economist at Deloitte, said: “It is pretty remarkable that, with inflation near 3% and unemployment at the lowest level in over 40 years, we are not seeing much wage inflation.”
August’s inflation rate is far above the Bank of England’s target of 2%. The Bank has said it expects inflation to reach 3% in October, but start to ease early in 2018.
Source: BBC News (published 12 September 2017)