Published: Wed, September 13, 2017
Markets | By Erika Turner

United Kingdom inflation jumps again as petrol pushes prices higher

United Kingdom inflation jumps again as petrol pushes prices higher

However, the inflation rate still remains below the Reserve Bank's 4 per cent target.

According to data released by the government, the retail inflation rate for the month of July stood at 2.36 per cent.

United Kingdom inflation beat forecasts to rise to 2.9% in August, after stalling at 2.6% in July, with record uplifts in clothing costs contributing to the increase, according to the Office for National Statistics.

Likewise, prepared meals, snacks and candies as a category turned dearer with the rate of price rise at 1.96 per cent from 0.43 per cent in July.

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There was upward pressure on clothing and fuel prices for the month and there was wider upward pressure on finished goods prices for the month. Anjali Verma, economist at PhillipCapital India, said that she does not expect the RBI to cut rate in near future. Meanwhile, the cost of motor fuels and air fares had a "large upward effect", with petrol prices rising 1.8p per litre.

"With the Bank of England meeting this week the hawks may well be emboldened by today's price growth, but with the pay squeeze entrenching itself more deeply month by month the policy hawks (wanting a rate hike) will find their room for manoeuvre sorely limited", said Chris Beauchamp, chief market analyst at IG trading group, said following Tuesday's data.

It stated that Consumer Food Price Index (CFPI) stood at 1.52% in August 2017 as against 5.91% in the same month of past year. "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.

- All eyes on Wednesday's United Kingdom wages and employment releases.

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