Consumer price inflation rises to 2.9% in August

Gladys Abbott
September 13, 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".

According to the latest release from the Office for National Statistics (ONS), the annual Consumer Prices Index (CPI) inflation rate for August 2017 was 2.9 percent.

Vegetables prices grew 6.1 percent in August as compared with a decline of (-) 3.57 percent in July.

It would end a momentary pause at 2.6% throughout June and July, keeping the rate above the Bank of England's 2% target and pulling CPI closer to the near four-year high of 2.9% in May.

Among non-food categories, the "fuel and light" segment's inflation rate accelerated to 4.94 per cent in August.

Martin Beck, lead United Kingdom economist at Oxford Economics, said: "Annual CPI inflation of 2.6% in July was unchanged from the previous month, offering some cause to think that "peak-pain" for consumers from elevated inflation had been reached".

"We expect the RBI to maintain status quo on policy rates at the October monetary policy meet".

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Retail price inflation, which is rarely used as an official measure of price rises, rose to an annual rate of 3.9% from 3.6%.

CPI was last higher in April 2012 when the rate reached 3%.

Rising clothing and fuel prices caused inflation to rebound last month, intensifying the squeeze on cash-strapped households grappling with low wage growth.

"On balance, we think that Brexit uncertainty will continue to trump inflation concerns, and rates will remain on hold for now - but the risks are shifting".

Industrial output contracted 0.2 percent in June. This is up from 2.6 percent in July. The headline inflation figure was also matched by the move in RPI inflation that pushed up to 3.9 percent in August, with both this and the RPI index at 274.7, well ahead of consensus expectations.

However, the decline was countered by food prices notching a 0.1% rise on the month in July following a fall of 0.2% over the period a year ago.

However, economic growth is expected to pick up in the coming quarters and India might get its "fastest-growing major economy" title back. Consumer durables, too, contracted in July, by 1.3%, compared with a contraction of 2.1% in June.

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