You are here: Home » International » News » Economy
Business Standard

UK inflation sees biggest jump in two years to highest since November 2014

Annual consumer price inflation rose to 1.0 per cent from 0.6 per cent in August

Reuters  |  London 

An employee is seen walking over a mosaic of pound sterling symbols set in the floor of the front hall of the Bank of England in London.  Photo: Reuters
An employee is seen walking over a mosaic of pound sterling symbols set in the floor of the front hall of the Bank of England in London. Photo: Reuters

British recorded its sharpest jump in more than two years in September, even without any direct evidence of the weaker pound pushing up prices, official figures showed on Tuesday.

Annual consumer price rose to 1.0 per cent from 0.6 per cent in August, the highest level since November 2014 and the biggest jump from one month to the next since June 2014, the Office for National Statistics said.

Economists polled by Reuters had expected a reading of 0.9 per cent, and Tuesday's figure was at the top end of the range of forecasts. They are likely to view September's rise as only the start of a much broader increase, fuelled by the pound's near 20 percent plunge since June's vote to leave the European Union.

"The worrying factor is that today's figure represents only a tiny part of sterling's steep drop, and no effect from the second big tumble earlier this month," Thomas Laskey, fixed income investment manager at Asset Management, said.

Sterling shot up briefly against the dollar and British government bond prices fell after the stronger than expected figures which will further dampen expectations that the will cut interest rates again this year.

BoE Governor Mark Carney last week said the central bank could tolerate "a bit" of an overshoot against its target, to help accommodate economic growth and employment.

Official statisticians said they were waiting for clear signs of an impact from the weakened currency. Most of the rise in in September was due to the biggest monthly jump in clothing prices since 2010 and a rise in fuel costs, which had been falling a year earlier.

Looking at the three months to September as a whole, prices were up 0.7 per cent on a year earlier versus the BoE's forecast for to average 0.76 per cent over the period.


The central bank forecast in August that would pick up sharply to hit its 2 per cent target in around a year and then overshoot for the next couple of years, as sterling's big fall after Britain's vote to leave the EU pushes up the cost of imports.

But the surge in risks proving bigger, after sterling plunged to its lowest level on record against a basket of currencies last week, something which is likely to force the BoE to revise up its forecasts next month.

The slide in sterling - combined with evidence that the economy is slowing by somewhat less than the BoE thought likely - also means few economists now expect the BoE to press on with plans to cut interest rates to a new record low next month.

A pricing row last week between Britain's biggest retailer, Tesco, and one of the world's largest consumer goods companies, Unilever, was a first clear sign for consumers of the turbulence unleashed by the vote and of higher to come.

The pound's fall - down 19 per cent against the US currency and about 16 per cent against the euro - has left suppliers and retailers battling for profits as imported goods become more expensive.

briefly halted online sales of goods produced by - which owns brands such as Marmite and Ben & Jerry's ice cream - because of the increase in prices.

British has been below the Bank of England's 2 per cent target for nearly three years and last year it was zero, the lowest since comparable records began in 1950.

An ONS measure of core consumer price - which strips out changes in the price of energy, food, alcohol and tobacco - rose to 1.5 per cent from 1.3 per cent, slightly above economists' expectations for 1.4 per cent.

Factory gate prices increased 1.2 per cent, the biggest increase in three years, and slightly stronger than forecasts of a 1.1 per cent annual increase.

The ONS also released figures for August house prices, which showed an 8.4 per cent annual rise across the United Kingdom as a whole compared with 8.0 per cent in July. Prices in alone increased 12.1 per cent.

RECOMMENDED FOR YOU

UK inflation sees biggest jump in two years to highest since November 2014

Annual consumer price inflation rose to 1.0 per cent from 0.6 per cent in August

Annual consumer price inflation rose to 1.0 per cent from 0.6 per cent in August
British recorded its sharpest jump in more than two years in September, even without any direct evidence of the weaker pound pushing up prices, official figures showed on Tuesday.

Annual consumer price rose to 1.0 per cent from 0.6 per cent in August, the highest level since November 2014 and the biggest jump from one month to the next since June 2014, the Office for National Statistics said.

Economists polled by Reuters had expected a reading of 0.9 per cent, and Tuesday's figure was at the top end of the range of forecasts. They are likely to view September's rise as only the start of a much broader increase, fuelled by the pound's near 20 percent plunge since June's vote to leave the European Union.

"The worrying factor is that today's figure represents only a tiny part of sterling's steep drop, and no effect from the second big tumble earlier this month," Thomas Laskey, fixed income investment manager at Asset Management, said.

Sterling shot up briefly against the dollar and British government bond prices fell after the stronger than expected figures which will further dampen expectations that the will cut interest rates again this year.

BoE Governor Mark Carney last week said the central bank could tolerate "a bit" of an overshoot against its target, to help accommodate economic growth and employment.

Official statisticians said they were waiting for clear signs of an impact from the weakened currency. Most of the rise in in September was due to the biggest monthly jump in clothing prices since 2010 and a rise in fuel costs, which had been falling a year earlier.

Looking at the three months to September as a whole, prices were up 0.7 per cent on a year earlier versus the BoE's forecast for to average 0.76 per cent over the period.


The central bank forecast in August that would pick up sharply to hit its 2 per cent target in around a year and then overshoot for the next couple of years, as sterling's big fall after Britain's vote to leave the EU pushes up the cost of imports.

But the surge in risks proving bigger, after sterling plunged to its lowest level on record against a basket of currencies last week, something which is likely to force the BoE to revise up its forecasts next month.

The slide in sterling - combined with evidence that the economy is slowing by somewhat less than the BoE thought likely - also means few economists now expect the BoE to press on with plans to cut interest rates to a new record low next month.

A pricing row last week between Britain's biggest retailer, Tesco, and one of the world's largest consumer goods companies, Unilever, was a first clear sign for consumers of the turbulence unleashed by the vote and of higher to come.

The pound's fall - down 19 per cent against the US currency and about 16 per cent against the euro - has left suppliers and retailers battling for profits as imported goods become more expensive.

briefly halted online sales of goods produced by - which owns brands such as Marmite and Ben & Jerry's ice cream - because of the increase in prices.

British has been below the Bank of England's 2 per cent target for nearly three years and last year it was zero, the lowest since comparable records began in 1950.

An ONS measure of core consumer price - which strips out changes in the price of energy, food, alcohol and tobacco - rose to 1.5 per cent from 1.3 per cent, slightly above economists' expectations for 1.4 per cent.

Factory gate prices increased 1.2 per cent, the biggest increase in three years, and slightly stronger than forecasts of a 1.1 per cent annual increase.

The ONS also released figures for August house prices, which showed an 8.4 per cent annual rise across the United Kingdom as a whole compared with 8.0 per cent in July. Prices in alone increased 12.1 per cent.
image
Business Standard
177 22

UK inflation sees biggest jump in two years to highest since November 2014

Annual consumer price inflation rose to 1.0 per cent from 0.6 per cent in August

British recorded its sharpest jump in more than two years in September, even without any direct evidence of the weaker pound pushing up prices, official figures showed on Tuesday.

Annual consumer price rose to 1.0 per cent from 0.6 per cent in August, the highest level since November 2014 and the biggest jump from one month to the next since June 2014, the Office for National Statistics said.

Economists polled by Reuters had expected a reading of 0.9 per cent, and Tuesday's figure was at the top end of the range of forecasts. They are likely to view September's rise as only the start of a much broader increase, fuelled by the pound's near 20 percent plunge since June's vote to leave the European Union.

"The worrying factor is that today's figure represents only a tiny part of sterling's steep drop, and no effect from the second big tumble earlier this month," Thomas Laskey, fixed income investment manager at Asset Management, said.

Sterling shot up briefly against the dollar and British government bond prices fell after the stronger than expected figures which will further dampen expectations that the will cut interest rates again this year.

BoE Governor Mark Carney last week said the central bank could tolerate "a bit" of an overshoot against its target, to help accommodate economic growth and employment.

Official statisticians said they were waiting for clear signs of an impact from the weakened currency. Most of the rise in in September was due to the biggest monthly jump in clothing prices since 2010 and a rise in fuel costs, which had been falling a year earlier.

Looking at the three months to September as a whole, prices were up 0.7 per cent on a year earlier versus the BoE's forecast for to average 0.76 per cent over the period.


The central bank forecast in August that would pick up sharply to hit its 2 per cent target in around a year and then overshoot for the next couple of years, as sterling's big fall after Britain's vote to leave the EU pushes up the cost of imports.

But the surge in risks proving bigger, after sterling plunged to its lowest level on record against a basket of currencies last week, something which is likely to force the BoE to revise up its forecasts next month.

The slide in sterling - combined with evidence that the economy is slowing by somewhat less than the BoE thought likely - also means few economists now expect the BoE to press on with plans to cut interest rates to a new record low next month.

A pricing row last week between Britain's biggest retailer, Tesco, and one of the world's largest consumer goods companies, Unilever, was a first clear sign for consumers of the turbulence unleashed by the vote and of higher to come.

The pound's fall - down 19 per cent against the US currency and about 16 per cent against the euro - has left suppliers and retailers battling for profits as imported goods become more expensive.

briefly halted online sales of goods produced by - which owns brands such as Marmite and Ben & Jerry's ice cream - because of the increase in prices.

British has been below the Bank of England's 2 per cent target for nearly three years and last year it was zero, the lowest since comparable records began in 1950.

An ONS measure of core consumer price - which strips out changes in the price of energy, food, alcohol and tobacco - rose to 1.5 per cent from 1.3 per cent, slightly above economists' expectations for 1.4 per cent.

Factory gate prices increased 1.2 per cent, the biggest increase in three years, and slightly stronger than forecasts of a 1.1 per cent annual increase.

The ONS also released figures for August house prices, which showed an 8.4 per cent annual rise across the United Kingdom as a whole compared with 8.0 per cent in July. Prices in alone increased 12.1 per cent.

image
Business Standard
177 22

Upgrade To Premium Services

Welcome User

Business Standard is happy to inform you of the launch of "Business Standard Premium Services"

As a premium subscriber you get an across device unfettered access to a range of services which include:

  • Access Exclusive content - articles, features & opinion pieces
  • Weekly Industry/Genre specific newsletters - Choose multiple industries/genres
  • Access to 17 plus years of content archives
  • Set Stock price alerts for your portfolio and watch list and get them delivered to your e-mail box
  • End of day news alerts on 5 companies (via email)
  • NEW: Get seamless access to WSJ.com at a great price. No additional sign-up required.
 

Premium Services

In Partnership with

 

Dear Guest,

 

Welcome to the premium services of Business Standard brought to you courtesy FIS.
Kindly visit the Manage my subscription page to discover the benefits of this programme.

Enjoy Reading!
Team Business Standard