UK inflation rate posts biggest increase since records began

UK inflation rate posts biggest increase since records began

City workers and commuters, many of whom wear face masks, walk towards the entrance to Liverpool Street Station at Bishopsgate on May 26, 2021 in London, UK.

Mike Kemp | in pictures | Getty Images

LONDON – Britain’s consumer price index rose 3.2% in the 12-month period to August, official data showed on Wednesday, the biggest month-over-month increase since the records began in January 1997.

A Reuters poll had predicted a reading of 2.9% for August. The index jumped 2.0% year-on-year in July.

The Office for National Statistics, which released the data, noted the jump was “likely a temporary change” and said the UK government’s “Eat Out to Help Out” program last year may have led to the jump. .

“A number of awards were given at restaurants and cafes in August 2020 due to the government’s Eat Out to Help Out (EOHO) program, which allowed customers to eat or drink (up to a value of £ 10) in half for food or drink. The price was offered on Monday and Wednesday, “the ONS said in its statement.

“Since the EOHO was a short-term plan, the 12-month upward change in the inflation rate in August 2021 will likely be temporary.”

The reading is once again above the Bank of England’s 2% target and will undoubtedly weigh on those calling for an end to unprecedented stimulus policies during a pandemic. It also comes amid rising energy prices and the continued reopening of the country after a strict coronavirus lockdown.

Samuel Tombs, UK chief economist at Pantheon Macroeconomics, also pointed out that used car prices were the cause of the surge on the rise.

“The monthly increase in the core CPI in August was also due to a massive 4.9% increase in used car prices, which pushed the inflation rate of this component to an attractive level. by 18.3%, “he said. said in a research note.

Gong further, he said that the overall CPI rate is unlikely to rise further in September, as restaurant prices rose further at this point last year.

But he said an increase in the energy price cap and an increase in taxes on the tourism industry could both contribute to the October surge.

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