UK inflation jumps to 3.2%, boosted by higher food and restaurant prices – business live
Inflation rises to highest level since March 2012; ONS says rise likely to be temporary, as China retail sales and industrial production slow
Paul Dales, chief UK economist at Capital Economics, has crunched the numbers.
The leap in CPI inflation from 2.0% in July to a nine-year high of 3.2% in August is the first step in a rise that may take inflation to 4.5% by November. But as inflation will fall back almost as sharply next year, we don’t think the MPC will raise interest rates until 2023.
About 0.9ppts of the rise in CPI inflation in August was due to base effects linked to the sharp fall in consumer prices in August 2020, most of which was driven by the Eat Out to Help Out restaurant discount scheme.
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News just out: UK inflation jumped to 3.2% in August, from 2% in July, the highest rate since March 2012. The ONS says:
The increase of 1.2 percentage points is the largest ever recorded increase in the CPI National Statistic 12-month inflation rate series, which began in January 1997; this is likely to be a temporary change.
BIG jump in UK CPI inflation. Up from annual rate of 2% in July to 3.2% in Aug. Not just the highest level of inflation since 2012, it’s also the biggest month-on-month change in the level in the history of this inflation measure (going back to 1997) pic.twitter.com/vpayK1ziq7
Renewed inflationary surge – @ONS data shows UK #inflation rose to 3.2% in Aug-21, highest rate since March 2012.
Sharp rise largely due to major base effects from last year’s VAT cut & Eat Out to Help Out which lowered restaurant prices in Aug-20, while this year prices rose. pic.twitter.com/nKrDDnh0RW
If investors weren’t worried about a slow down in China’s economy before today’s numbers they probably are now. As a gauge of how much damage the resurgent delta variant is doing to economic activity you couldn’t see a starker example.