LONDON – Britain’s annual inflation rate has soared close to a three-year peak as consumer prices accelerated on easing virus curbs, official data showed today.
The consumer prices index hit 2.5% last month, which was the highest rate since August 2018 and compared with a 2.1% gain last May, the Office for National Statistics said in a statement.
Inflationary pressures were partly stoked by the temporary impact of rising motor fuel costs, which soared in line with the global oil market.
“Inflation rose for the fourth consecutive month to its highest rate for almost three years,” said ONS statistician Jonathan Athow.
“The rise was widespread, for example coming from price increases for food and for second-hand cars where there are reports of increased demand.
“Some of the increase is from temporary effects, for example rising fuel prices, which continue to increase inflation, but much of this is due to prices recovering from lows earlier in the pandemic.”
Increasing clothing and footwear prices had also added upward pressure, he added.
Inflation has accelerated sharply since March, when the UK government began a phased lifting of coronavirus restrictions.
The national inflation rate topped 2.0% in May, breaching the Bank of England’s target level for the first time since 2019.
The economy is, meanwhile, set to fully reopen next Monday, with the lifting of most pandemic curbs in England.
Investors are on red alert over global inflation as galloping prices could force policymakers to raise interest rates, hindering economic recovery.
A key driver of the inflation that countries have experienced in recent months has been surging commodity prices, particularly crude oil.
The BoE warned last month of a temporary inflation spike to 3.0% as the economy reopens, as it left monetary policy unchanged last month.
It remains keen not to snub out any nascent economic recovery by raising rates too soon.
Both the Federal Reserve and ECB have kept their own ultra-low rates and economic support measures intact, insisting also that high inflation would be temporary.
The BoE’s key task is to use monetary policy to keep annual UK inflation close to a government-set target level of 2.0% to preserve the value of the pound. – AFP, July 14, 2021
