City workers and commuters, many of whom wear face masks.
Mike Kemp | In pictures | Getty Images
LONDON – The UK’s consumer price index rose 3.2% in the twelve months to August, official data showed on Wednesday, the largest monthly increase since records began in January 1997.
A Reuters poll had predicted a value of 2.9% for August. The index rose 2.0% on an annual basis in July.
The Office for National Statistics, which released the data, noted the increase was “likely a temporary change” and said the UK government’s “Eat Out to Help Out” program last year may have compounded the jump .
“In August 2020, many prices in restaurants and cafes were reduced as a result of the government’s Eat Out to Help Out (EOHO) program, which allows customers to eat and drink at half the price to eat or drink (up to a value of £ 10). offered on Mondays and Wednesdays, “said the ONS in its statement.
“Since EOHO was a short-term program, the upward shift in 12-month inflation from August 2021 is likely to be temporary.”
The figure is again above the Bank of England’s 2% target and will no doubt add weight to calls for an end to the unprecedented stimulus policies of the pandemic era. It also comes amid soaring energy prices and as the country continues to reopen after strict coronavirus lockdowns.
Samuel Tombs, British chief economist at Pantheon Macroeconomics, also stressed that used car prices were responsible for the positive surprise.
“The month-on-month increase in core CPI above average was also mainly due to a huge 4.9% rise in used car prices, which drove the inflation rate for that component to a noticeable 18.3%.” he said in a research note.
He said the CPI headline rate is unlikely to rise any further in September, as restaurant prices had rallied by that point over the past year.
However, he added that an increase in the energy price cap and an increase in the tax levy on the tourism industry could add to a jump in October.