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UK inflation rate posts biggest increase since records began

City workers and commuters, many of whom wear face masks, walk towards the entrance to Liverpool Street station on Bishopsgate on May 26, 2021 in London, UK.

Mike Kemp | in pictures | Getty Images

LONDON – The UK’s consumer price index jumped 3.2% in the 12-month period to August, official data showed on Wednesday, the largest increase on record month-on-month since the records began in January 1997.

A Reuters poll had predicted a reading of 2.9% for August. The index jumped 2.0% in July on an annual basis.

The Office for National Statistics, which released the data, noted the rise was “likely a temporary change” and said the UK government’s “Eat Out to Help Out” program last year may have stepped up. the jump.

“In August 2020, many prices at restaurants and cafes were reduced due to the government Eat Out to Help Out (EOHO) program, which offered customers half-price food and drink to eat or drink ( up to a value of £ 10) between Mondays and Wednesdays, ”the ONS said in its statement.

“Because the EOHO was a short-term program, the 12-month upward change in the August 2021 inflation rate will likely be temporary.”

The reading is once again above the Bank of England’s 2% target and will no doubt add weight to those calling for an end to the unprecedented stimulus policies of the pandemic era. It also comes amid rising energy prices and as the country continues to reopen after strict coronavirus shutdowns.

Samuel Tombs, UK chief economist at Pantheon Macroeconomics, also pointed out that used car prices were the cause of the surge on the rise.

The larger-than-normal month-over-month increase in core CPI in August was also mainly due to a huge 4.9% increase in used car prices, which pushed up the inflation rate of this component at an eye-catching rate of 18.3% “, he added. he said in a research note.

Ahead, he said the overall CPI rate is unlikely to rise further in September, as restaurant prices rebounded at this point last year.

But he added that an increase in the energy price cap and an increase in a tax levy on the tourism industry could both contribute to a surge in October.

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