The UK recorded its biggest jump in annual inflation last month as global supply shortages and rising wages raised the scale of price increases after a pandemic-related relaxation a year ago
LONDON – The UK recorded its biggest jump in annual inflation last month, as global supply crunch and rising wages raised the scale of price increases following pandemic-related relaxation a year ago.
The Office for National Statistics said on Wednesday that consumer price inflation rose to 3.2% in the 12 months during August from 2% in the previous month. Economists had estimated an inflation rate of 2.9%.
According to economists at the Bernberg Bank, an unexpected jump in prices could mean that inflation will reach higher levels and remain higher for a longer period than previously expected. This will increase pressure on the Bank of England to raise interest rates as it targets 2% inflation.
“In an uncertain winter amid rising COVID-19 infections and supply issues, the BoE may need to signal a faster pace of policy normalization to come without shaking up already panicked markets,” Bernberg said in a note to clients. can.”
Jonathan Atho, deputy national statistician at the ONS, stressed that the surge in inflation was the result of an expected rebound in prices hit by the pandemic during the summer of 2020. Notably, the government’s Eat Out to Help Out program offered discounts on restaurant meals as officials sought to bolster the economy after the first national lockdown.
“August saw the biggest increase in annual inflation months since the series was launched nearly a quarter century ago,” he said. “However, much of this is likely to be temporary as restaurant and cafe prices fell significantly last year due to the Eat Out to Help Out scheme, while prices rose this year.”