UK Inflation Rate Rises

The UK’s consumer price index surged by 3.2% in the 12 months to August. Official data showed on Wednesday, the largest ever month-on-month increase since records began in January 1997. The index jumped 2% in July on an annual basis. Last year, the Office for National Statistics noted that the surge was “likely to be a temporary change” and said the UK government’s “Eat Out to Help Out” program may have accentuated the jump. It also comes amid rising energy prices and as the country continues to reopen after strict coronavirus lockdowns. A 4.9% increase in used car prices was also partially to blame for the upside surprise. Going forward, it is not expected that CPI will rise further in September, but an increase in an energy price cap and an increase on a tax levy on the tourism industry could both contribute to a jump in October. The 3.2% rate is once again above the Bank of England’s target of 2% and will no doubt add weight to those calling for an end to pandemic-era stimulus policies.