Retail inflation in August grew 3.36% on higher food prices

Marco Green
September 14, 2017

The ONS added: "The increase in clothing price inflation may be partly associated with the lagged response to the depreciation of sterling during 2016 as supply contracts with overseas producers may now be renewed on different terms".

Inflation has risen again with the Consumer Price Index returning to its recent high of 2.9%.

The CPI inflation rate of 2.9 percent is just short of the three percent point, which would trigger the need for the Governore of the Bank of England to write and explanatory to the Chancellor of the Exchequer. Price data are received through web portals, maintained by the National Informatics Centre.

However, some food price gains were likely to moderate this month relieving some inflationary pressure, Ms. Nayar wrote in an emailed note.

Wage growth that is lagging behind inflation is also a serious concern for policymakers as this could dampen household spending, going forward. The core CPI inflation increased to 4.36% in August 2017 compared with 3.80% in July 2017.

Analysts said a rise in inflation for two straight months has reduced the chances of another rate cut by the Reserve Bank of India, which has a central inflation target of 4 percent. Economists had forecast 2.8% inflation.

Paul Hollingsworth, an economist with Capital Economics, told Reuters that he expected inflation to peak at 3.1% in October "and the subsequent easing of price pressures would probably leave a clear majority of rate-setters voting for no change". Personal care and effects segment inflation was 2.55%. The latest reading is the highest since March, when the index was up 3.89%.

"Not surprisingly, the pound has jumped on today's news, rising over half a cent against the USA dollar, to $1.3250".

THE pound has surged against the Euro after a surprise jump in inflation.

Output prices climbed 3.4 percent yearly, faster than the 3.2 percent increase in July.

These rises mean those on the lowest incomes will be hit hardest.

"August's reading is likely to frustrate that notion, with a small tick-up expected". The inflation also declined for cereals and products to 3.87%, non-alcoholic beverages 2.55% and spices (-) 1.74% in August 2017.

Sterling is now at $1.327 against the US Dollar, almost half a cent down from the high of $1.332 struck this morning.

Manufacturing production also grew slightly by 0.1 percent after a 0.5 percent contraction in June due to the economic reforms.

Other reports by Click Lancashire

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