The annual fee of inflation rose by 3.2% in August, up from 2% within the 12 months to July, Britain’s Workplace for Nationwide Statistics (ONS) stated Wednesday.
The rise is the most important recorded since ONS report holding started in January 1997.
Among the uplift mirrored coronavirus aid packages that have been in place final summer time, reminiscent of gross sales tax reductions within the hospitality sector and the federal government’s Eat Out to Assist Out scheme, which closely discounted restaurant meals.
However the unexpectedly sharp enhance might pressure the Financial institution of England to hike rates of interest ahead of anticipated, in response to Berenberg senior economist Kallum Pickering.
“Heading into an unsure winter amid rising Covid-19 infections and worsening provide points, the [Bank of England] might must sign a quicker tempo of coverage normalization to return with out spooking seemingly already nervous markets,” Pickering stated in a analysis observe on Wednesday.
“Though the forces inflicting inflation are well-known (world provide points in opposition to strong demand development), the height and size of ongoing inflation spike stays extremely unsure,” he added.