As the economy reopens, UK inflation reaches a nine-year high.
On the reopening economy, British annual inflation soared to a nine-year high in August, while last year’s figure was skewed by a restaurant discount scheme, according to data released Wednesday.
According to the Office for National Statistics, the Consumer Prices Index (CPI) rose to 3.2 percent, the highest level since March 2012.
That was a record acceleration, compared to 2.0 percent in July, and comes after the Bank of England warned that as a result of the Covid fallout, inflation would hit 4.0 percent this year, double its target.
Concerns that central banks will end pandemic support measures to tame inflation have thrown global markets for a loop this year, but policymakers have insisted that the price hikes are only temporary.
“August saw the largest month-on-month increase in annual inflation since the series began almost a quarter-century ago,” said ONS statistician Jonathan Athow.
“However, much of this is likely to be temporary, as restaurant and cafe prices dropped significantly last year as a result of the ‘Eat Out To Help Out’ scheme, while prices rose this year.”
The discount scheme and temporary tax cuts aimed at boosting the Covid-hit economy had kept inflation low in August 2020.
Raw materials increased by 11% in the year to August, up from 10.4% in July, according to the ONS.
As a result of the pandemic, global supply chain bottlenecks, and rising commodity prices, the UK’s economic recovery is flattening.
According to recent data, the economy grew by only 0.1 percent in July, compared to 1.0 percent in June.