GBP Rallies as UK Inflation Rises More Than Expected
- Author: Eleanor Harrison Sep 13, 2017,
Sep 13, 2017, 0:25
Inflation rose to 2.36 percent in July, after consistently falling for three straight months.
According to CPI data published by the Office for National Statistics (ONS) the UK's inflation rate leapt from 2.6 per cent to 2.9 per cent last month, outpacing expectations it would only reach 2.8 per cent and reaching its highest rate since May.
The fall in the value of sterling since the European Union referendum continued to be the main impetus for rising prices, the Office for National Statistics said.
The inflation for clothing and footwear increased to 4.58%, while the CPI inflation of fuel and light also rose to 4.94% in August 2017. "Economists have suggested that now is finally the time that the Bank takes a more hawkish turn, after eight and a half years of ultra-loose policy", said Maike Currie, investment director for personal investing at Fidelity International.
He explains that the September numbers used to determine the annual increases in pension and benefit levels are likely to exceed both wage inflation, now running at 2.1%, and the 2.5% underpin used for the triple lock.
United Kingdom consumer prices rose 0.6% in August compared with consensus forecasts of 0.5%. "All in all, I see more deflationary forces than inflationary in the world economy at present".
But the August inflation figure remains below RBI's medium term target of 4 per cent. "Rates are a racing certainty to be left on hold at this week's meeting [on Thursday], but as ever the minutes will be closely scrutinised for clues as to committee members' latest thoughts".
Alex Brandreth, deputy CIO and senior fund manager at Brown Shipley, commented: "Inflation is expected to continue to increase, at least for one more month, with the Bank of England recently stating that they believe inflation will peak at 3%".