Inflation rate rises in the United KingdomTop Stories

May 16, 2017 16:44
Inflation rate rises in the United Kingdom

According to official figures, the nation’s inflation rate rose last month to its highest since September 2013.

Inflation now stands at 2.7 percent - up from 2.3 percent in March - and above the 2 percent target of Bank of England.

The officials blamed the higher air fares, which rose due to the later date of Easter this year when compared to 2016.

Rising prices for clothing, vehicle excise duty and electricity also played a part, but a fall in the price of petrol and diesel slightly offset this.

The Bank of England warned last week, the Consumer Prices Index would peak at 3 percent this year because of the fall in sterling after the Britain’s exit vote.

Officials at the Office for National Statistics said that the cost of air travel went up by 18.6 percent from April, with Easter falling on April 16 this year compared with 27 March last year.

The cost of clothes plunged to the highest level for six years, with a rise of 1.1 percent between March and April.

The Retail Price Index, which is a separate measure of inflation that includes council tax and mortgage interest payments, reached 3.5 percent last month, up from 3.1 percent in March.

The, chief business economist at analysts IHS Markit, Chris Williamson said: "The timing of Easter looks to have played an important role in pushing inflation higher in year-on-year terms.

"But sterling's depreciation since the referendum last June is also clearly a significant factor, lifting prices for imports and likely to pile further upward pressure on consumer prices in coming months.

"There are nevertheless signs that inflation could perhaps rise less than many had feared.

"Survey data are already showing companies' costs are rising at a slower rate than earlier in the year, and recent weeks have seen some easing in global commodity prices, notably oil."

Transitory' Suren Thiru, head of economics at the British Chambers of Commerce, said: "Businesses continue to report that the substantial increases in the cost of raw materials and other overheads over the past year are still filtering through the supply chain, and are therefore likely to lift consumer prices higher in the coming months

"However, it remains probable that the current period of above target inflation is transitory in nature, with little evidence that higher price growth is becoming entrenched in higher pay growth.

"This should give the Bank of England sufficient scope to keep interest rates on hold for some time yet, despite their recent warning."

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UK  Inflation  Brexit  IHS Markit  Chris Williamson